5 Cheaper Ways to Transfer Money Overseas

Using a bank is one of the easiest ways of sending money overseas, but it is also the most costly. Here are 5 cheaper alternatives:

1. A Bank Transfer Minus the Bank

Transferring money online

A bank transfer allows you to send money from your account in Australia to another bank account overseas. There are Australian and international companies that specialise in doing exactly the same thing, except with much lower fees and better exchange rates.

Some alternatives in Australia include TorFX , XE and Western Union

When and why it’s cheaper:

If you are sending more than $1000, ‘non-bank’ money transfer companies are cheaper because their fees are lower and their exchange rates are more competitive. Transfer fees vary between $10-$15 for small amounts. Most companies offer fee free transfers for amounts over $10,000.

See: VIDEO: How to Transfer Money to an Overseas Bank Account Without High Fees

2. Peer to Peer Transfer (P2P)

Peer to peer transfer

Transferwise and CurrencyFair are the 2 biggest companies that offer P2P transfers. Instead of going through a bank, they match people buying currency in one country with people in other countries who are selling currency.

When and why it’s cheaper:

This peer matching allows them to offer better exchange rates. Make sure you read the fine print. In some cases, if they can’t find a match, the fees and exchange rates could change. P2P transfers can be a much cheaper option for transfers between $1000 and $100,000.

See: Transferwise Review

3. Money Remitters (for smaller amounts under $2000)

Transferring money online

According to the World Bank, international remittances totalled 585 billion dollars in 2017. The cost of these transfers is coming down, largely thanks to increased competition from money remitters. Unlike companies like TorFX or OFX, these companies rarely have a minimum transfer amount. They also tend to focus on transfers to countries like India, the Philippines, Mexico and Thailand.

The more popular remitters include WorldRemit, Orbit Remit and InstaRem

When and why it’s cheaper:

Money remitters like WorldRemit specialise in smaller payments, also know as remittances. They can be a much cheaper option for transfers under $2000, because their fee structure and exchange rates, particularly to less common destinations in Asia, Africa and South America.

See: WorldRemit Review

4. PayPal

Transferring money with bitcoin

Yes – Paypal. When you use Paypal to send money overseas, the currency conversion rates aren’t great, but the fees are almost non-existent. It’s also super quick when the person you are paying already has a Paypal account.

When and why it’s cheaper:

If you are paying someone under $1000, like an overseas freelancer, Paypal is cheaper than using a bank. This is because they don’t charge a bank transfer fee, which can range between $18 and $32.

5. Bitcoin

Transferring money online

You can use Bitcoin to send money overseas, but be aware that it can be quite complicated, particularly if you are not familiar with using a digital currency. You’ll have to set up a wallet with a Bitcoin company, like Coinjar, then fund your online wallet with Australian dollars, convert it to Bitcoin and send it to the person you are paying overseas. They also need to have a Bitcoin wallet and will then convert it to their local currency.

When and why it’s cheaper:

Bitcoin transactions costs are much lower, because you don’t have to go through any banks to send the funds. The exchange rates are better than a bank, but you add some exchange rate risk because you are converting currency twice instead of once.


Exchange Rate Comparison Tool

 
 

Comparing Your Options

The overall cost of the transfer comes down to 2 things:

Money transfer fees

1. Transfer Fees

Every Australian bank and money transfer company will charge you a different fee to send money overseas. Usually it's between $10 and $32.

Exchange rate margin fees

2. Exchange Rate Margin

There is no "standard" exchange rate. Each bank will offer you a different exchange rate based on the currency you want to send overseas and the amount you need to send.


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