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

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 TorFXOFX, XE, Western Union and World First. 

 

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.

 

 

2. Peer to Peer Transfer (P2P)

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.

 

 

3. Paypal

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. 

 

 

4. Bitcoin

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.  

 

 

5. Blockchain Technology

 

Overseas Money Transfer Online

The next generation of international payment apps are blockchain based. Blockchain is the technology behind Bitcoin that removes the need to go through a channel of banks to send money from one place to another.

They have similar aspects to using Bitcoin, including the benefit of super fast payments and very low transaction fees. The main difference will be the complexity.  You won’t need to set up a wallet and the person you are paying won’t need a digital wallet to get the money.  

 

When and why it will be cheaper:

Blockchain technology will allow international transfers to go through in seconds and at a fraction of the cost that bank transfers have. Unfortunately, the technology is still relatively young and needs greater acceptance both from the banking fraternity and regulators. You won’t have to wait too long, though. Watch out for these exciting new solutions in late 2016 and 2017.

 

 


Exchange Rate and Fee Comparison Tool

 
 

 

 

Comparing Your Options

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

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

  2. Exchange Rates: 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.

The tool compares both the fee and exchange rate depending on your currency and amount. 

 

What you should know: This covers most common ways of sending money. it doesn't cover EVERY single method of payment. Some, but not all of the companies mentioned are affiliated with The Currency Shop. If you choose to use any of these companies, we may receive a referral fee. Exchange rates change constantly and so do the indicative quotes provided by currency exchange outlets. This information is not advice nor is it a recommendation in any way.


 

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