Introduction
Sending money internationally is one of the most important things to migrants. As people who live thousands of miles away from home, remaining a part of both the big and small events of their loved ones’ lives — and staying committed to causes close to their hearts are some of the ways they try to feel close to home.
For some, this means sending money home for a sibling’s wedding, sponsoring a younger sibling’s education, contributing to charities, religious organisations, and old boys’ associations. Reasons for sending money abroad are countless and dear to the hearts of the over 281 million migrants living across the world. (World Migration Report, 2020).
If you’re reading this, chances are that you’re a migrant looking for the best options to send money home easily, quickly and at an affordable rate. Welcome, that’s why we wrote this guide. By the time you’re done reading, you’ll know:
- How international money transfers work
- Popular ways to send money internationally
- Things to consider when choosing an international money transfer service
- Requirements for sending money internationally
- The best way to send money internationally
You can click on any of the links above to go directly to the sub-topic you’re interested in or you can read through the full guide to get all the information.
Let’s dive in!
How International Money Transfers Work
You might be asking “why do I need to know how international money transfers work? All that’s important to me is to send money home”. But what if we replied and told you that understanding the process can help you save money? By understanding how the process works, you’ll know exactly how to choose the best, fastest, safest way to send money internationally — and at an affordable rate.
An international money transfer involves three parties:
- The Sender
- The Receiver
- The money transfer service provider i.e. Bank or money transfer operator
The Process
The SWIFT system for international money transfer
Mostly used by banks, Society for Worldwide Interbank Financial Telecommunications (SWIFT) system is a vast messaging network used to send and receive information, such as money transfer instructions through the use of standardized codes.
So let’s say you live in Canada and want to transfer 500 CAD from your personal bank account to your dad’s personal bank account in Ghana, you’ll need to visit your bank with your dad’s account number and the unique SWIFT code for your dad’s branch.
What happens afterwards is dependent on the relationship between the banks involved:
If both banks have a direct relationship, maybe because they have commercial accounts with each other, then funds can be transferred directly between the two banks. Using the example above:
- Your bank will debit 500 CAD from your personal account
- Your bank will credit your dad’s bank’s commercial account with 500 CAD
- Your dad’s bank will credit his personal account with the equivalence of CAD 500 in GHC depending on the exchange rate they provided to you at the point of transfer
- You’re also charged a transfer fee
If the banks don’t have a direct relationship, one or more intermediary banks must be found to facilitate the transfer, thereby extending the transfer timeline. Again, using the example above:
- Your bank will debit 500 CAD from your personal account
- Your bank will ask the intermediary bank to debit their (intermediary bank’s) commercial account by 500 CAD and credit your dad’s bank’s commercial account with 500 CAD
- Intermediary bank deducts a fee for acting as an intermediary from the amount being transferred and credits your dad’s bank with the remaining amount
- Your dad’s bank will then credit his personal account with the
remaining amount in GHC depending on the exchange rate they provided to you at the point of transfer - You’re also charged a transfer fee
Money transfer apps
Compared to banks, this is the contemporary, easier and faster way to send money
internationally. Most money transfer apps use a similar process in helping migrants send
money abroad:
- You download an app, register and complete identity verification
- Initiate a transfer by inputting the recipient’s details i.e. name and account number
- Select the currency you have and need, as well as the amount you want to transfer
- You’re presented with the exchange rate (this can come earlier)
- Fund your wallet with the amount you want to transfer and submit your request. The money transfer company completes your transfer through their commercial bank accounts held in different countries.
- They receive your funds in the currency you sent them
- They send money to your recipient in the (recipient’s) home currency through their (money transfer app) commercial bank account in that country
Popular Ways To Send Money Abroad
Having understood how international money transfers work, you’ll be better positioned to weigh your options when presented with different ways of sending money internationally.
Below are the most popular ways of sending money overseas:
Banks
You can send money worldwide through your Bank simply by visiting the nearest branch, via internet banking or using their app.
Pros:
- Secure
- Slightly good exchange rate
Cons:
- High transfer fees, usually between 3-4% of the transfer fee. This means, you might be paying more than 20 CAD on a 500 CAD transfer
- Hidden fees due to the use of intermediaries and foreign exchange charges
- Banks make more money by marking up exchange rates. This means, if the mid-market exchange rate is 1 CAD to 300 Naira, they might mark it up by about 2.5-5%
- Slow i.e. transfers can sometimes take between 1-5 days
- Bureaucratic process
- Your recipient may end up receiving less than the amount you sent because of all the hidden costs
Money Transfer Apps
There are hundreds, if not thousands of money transfer apps waiting to be downloaded through your Play store or Apple store. They allow you to send money internationally in a fast and more affordable way compared to banks. Like we discussed earlier, their processes are quite similar.
Pros:
- Fast
- Easy to use
- Secure
Cons:
- Most money transfer apps make money by marking up exchange rates. This means, the standard practice of marking up mid-market rate of 1%-2.5% could end up costing you well over $500 in a year if you send money regularly.
- Hidden fees due to charges from the commercial banks accounts they hold in several countries
- Transfer fees of between 1%-2%
- Transfer limits
Peer to Peer
This is another category of money transfer apps that lets you send money internationally through peer to peer exchange. These platforms serve as a marketplace for buyers and sellers of currencies to exchange and send money to their recipients.
Pros:
- More value for your money
- Affordable
- Easy to use
- Secure
- Fast
- Access to several offers
- Ability to negotiate
- Democratic and transparent
- Gives you control over your transfers
Cons:
- Transfer limits
- May not be available in all countries
Cash
Another popular way of sending money internationally is through money transfer services that use agents in different countries. When you make a transfer through these services, their agents then give your recipient cash.
Pros:
- Great for older people who may be averse to using tech
- Fast
Cons:
- Expensive
- Depending on the destination country, the transaction may take days
Personal exchange
People can choose to send money to each other in the currencies they have in order to meet an international money transfer need. For example, if Anjali lives in the UK and needs to send INR home, she may send GBP to someone who has some extra INR then that person helps her to send the money to her recipient’s bank account in India. These people can be friends, family or complete strangers they met through social networking platforms like WhatsApp or Telegram.
Pros:
- You don’t have to pay any transfer fees
- Can be fast and convenient
Cons:
- Not a safe means of sending money especially when sent to a complete stranger you meet on WhatsApp or Telegram
- Not secure because you may be exposing your personal details or those of the recipient to the other party
- The exchange rates can be ridiculously high since they are not based on the mid-market rate
- Can be sometimes tasking to get someone to exchange with
- You may not be able to send high transfer amounts because of lack of trust
Money order
Money can be sent abroad via cheque. This is done by getting an international bank draft from a financial institution abroad in any desired currency — and using funds from your account to cover the amount of the international guaranteed cheque. The next thing would be to post the cheque to your recipient abroad and they can choose to cash it out or
deposit into their bank account.
Pros:
- Great for older people who may be averse to using tech
- Good for high transfer amounts
- Safe
Cons
- It can take weeks to process so may not be the best option for urgent transactions
- Can be expensive
Things To Consider When Choosing An International Money Transfer Service
By now, you have gained a lot of knowledge about how money transfer works and are in a better position to make informed choices. Below are important things to consider when choosing a way to send money internationally:
- Exchange rates
Does the provider you’re considering offer great exchange rates a.k.a the mid-market rate? Or do they mark up exchange rates? This is very important as the exchange rate you buy at has a huge impact on the amount your international money transfer will cost you. Before you commit to a money transfer service, make sure to check the mid-market rate for the day and compare it with what they’re offering. Reuters a great platform to check the live, mid-market exchange rate for several currencies.
- Speed
How fast does their transfer take? Money transfer service providers often give an estimate of how long their transfers take. A good processing timeline for international money transfers is within minutes and up to 24 hours (for exceptional circumstances).
- Transfer costs
How much will you be charged for the transaction? Is it a percentage fee or a flat fee? Take for example, you want to transfer 50 GBP, if the transfer cost is 1%, that means you’ll be paying 5 cents. If the transfer cost is a flat fee of 1 GBP then you’ll be paying 1 GBP for the transaction.
What if there’s no transfer cost? Ted Hughes once said “Nothing is free” and we agree with him on this. Even if the app says all transfers are free, you should know that you’re paying one way or the other inasmuch as the company is doing business to make profit and isn’t a charity organisation. Such money transfer apps often make money from marked up exchange rates so somehow, you actually pay. These markups can be as high as 3%. But is this cheaper? We don’t think so.
Using the example above where you want to send 50 GBP to your brother in Pakistan. If the mid-market exchange rate is 1 GBP = 237.326 PKR, the money transfer app may sell to you at a marked up rate of up to 2% meaning your brother gets less money than he should get. That, friends, is how you pay.
- Transfer Limit
Is there a cap to the amounts you can transfer internationally on a daily, weekly or monthly basis? Based on your needs, evaluate if the limits work for you or not.
- Hidden Fees
Since you can’t go to their back-end to see what hidden fees they might be charging, reading online reviews is a great way to find out. You can also try them out by transferring small amounts first.
- Security
Is the platform secure? Is your money safe? These are important questions to ask when looking to send money internationally through money transfer services.
Requirements For Sending Money Abroad
So now you know how international money transfer works, the available options and things to consider in choosing your preferred money transfer service provider. The next question is “What information, documents or details do you need to provide to make your international money transfers?”
This is a generic and non-exhaustive list, however, most money transfer apps will need these from you to send money internationally:
Verification
Upon downloading an app and registering, you’ll be required to verify your identity. Verifying the identity of customers is a government requirement to help fight criminal activities like money laundering and terrorists financings.
Below are the general requirements for verification:
- A government-issued identification e.g. your international passport or drivers’ licence
- A liveness check: this is a biometric screening process to determine if the account is being created by a real human or an inanimate object e.g. a bot. You may be required to carry out tasks like taking photos of different sides of your face.
Once you’re done with this step, a verification process will take place and if you pass, you’ll be approved within minutes or hours.
Transfer
To complete an international money transfer, you’ll need to provide some details, Depending on the company, you’ll need to input the following:
- Name and account number of the recipient
- Your name and account number or email address
- The currency you have and the currency you need
The best way to send money internationally
You’ve gained all the knowledge you need to go out there and get the best money transfer service that lets you send money internationally in an affordable, easy and fast way. But what if we told you that you don’t even need to go on a search?
What if, right now and right here, you can access a money transfer service that checks all the boxes?
- Affordable transfer fees
- Mid-market exchange rates
- Transparent
- Accessible
- Fast
- Secure
- Gives you control over your transactions
- Multiple offers and options
Introducing FiatMatch, a peer to peer money transfer marketplace that makes sending money and supporting your family back home achievable in the most affordable way possible.
FiatMatch is a currency exchange marketplace where you can find the best money transfer offers from people just like you and at great mid-market exchange rates.
On FiatMatch, you can negotiate offers, set your own rate, exchange over 10 currencies and transfer funds to your recipient within minutes.
Why FiatMatch?
Your international transfers are treated as local transfers saving you cross border charges
Remember how we broke down the international money transfer process to show you how your money moves from country A to country B? On FiatMatch, we make your international transfers local through our peer to peer marketplace. When you exchange currencies with a fellow FiatMatcher, you’re actually carrying out a local transfer and saving money on international/border charges. Let’s break it down:
- You have USD and need NGN
- Fill the boxes with how much you want to send
- You will be presented offers created by other users on our platform
- Explore the offers and pick the exchange rate that works best for you
- Contact the match, negotiate, agree on rates and confirm to proceed with the transaction
- You send the amount you have in USD to FiatMatch USD account, the other party also sends the NGN equivalence to FiatMatch NGN account (based on the agreed exchange rate)
- We act as an escrow to ensure both parties fulfil their obligations
- We disburse funds to recipients in their home currencies within minutes
Can’t find a suitable match
With FiatMatch, you have multiple options and can choose how you want to transact. You can post an offer and wait for a match. You can also choose to use one of our preferred partner rates.
Preferred Partner Rates
Everyday, we source for the best rates available from some of our local partners offering currency exchange. We then pick the best partner rate and make it available to you so you are never stuck whether you need to send money urgently or cannot find a suitable match. Partner rates are usually a bit higher than standard peer to peer rates but are guaranteed and offer speed when you need it
Transparency
When you send money internationally on FiatMatch, you experience the true meaning of transparency. We show you the exact exchange rate you agreed with the seller/buyer and the transfer fee. Nothing else is deducted from your transaction, meaning what you see and pay for is what you get.
Affordable transfer fees
We charge a flat fee of $2 on each international money transfer irrespective of the amount e.g. whether you’re sending $100 or $3000. Imagine all the money you get to save.
Have control over your international money transactions
Exchange and send money now or schedule for later, it’s all in your hands.
Live mid-market rate
See the current daily mid-market rate on our platform and use it as a guide for all your exchanges and transfers.
Fast
As soon as the buyer and seller agree and send funds, their recipients receive funds within minutes and in rare cases, up to 24 hours max.
Secure
Bank-graded security, efficient verification process, confidentiality of personal information, not sending money into a stranger’s account, and acting as an escrow are some of the ways we help to keep you safe.
How to use FiatMatch to send money Abroad
On FiatMatch, you have three options for sending money abroad. Below is a step by step guide for each.
Use available offers
Select currencies and amount
Input the currency you have, the amount you would like to exchange and the currency you need.
Explore and filter offers
We’ll present you with a list of offers from users within our community. An offer consists of an exchange rate, expiry date, user ratings, and negotiation preference. Apply filters to get more offers that suit your needs.
Add recipient’s details
Input recipient’s name, account number and transfer amount.
Select preferred offer and negotiate
After you find a great offer, you can proceed to negotiate with the seller (if they are open to negotiation). Or you simply choose your preferred offer. To go ahead with this step, you must complete our verification process.
Choose a payment method
We have a free tier with which you can send a limited amount of money for free, forever. To send higher amounts of money, you can choose to pay a one-time flat fee of $2 or subscribe to one of our low-fee monthly, quarterly or annual plans.
Send money and complete the transaction
Send money to us in the currency you have and pay the transfer fee.
Recipient receives money within minutes
The money will be exchanged at the rate in the offer you chose and the recipient
will receive it within minutes.
Post an Offer
Set up your offer and post
To begin this step, you must first complete our verification process. Once that is done, you can set your preferred exchange rate, amount, expiry date and other details then post.
Add recipient details
Input recipient’s name, account number and transfer amount.
Wait for a match
Allow us some time (usually within a few minutes to an hour) to match you with the best offer that meets your requirements.
Negotiate and agree
If you’re open to negotiation, the buyer will reach out to you so you can both come to an agreement. See our community guidelines.
Choose a payment method
We have a free tier with which you can send a limited amount of money for free, forever. To send higher amounts of money, you can choose to pay a one-time flat fee of $2 or subscribe to one of our low-fee monthly, quarterly or annual plans.
Send money and complete the transaction
Send money to us in the currency you have and pay the transfer fee.
Recipient receives money within minutes
The money will be exchanged at your agreed rate and the recipient will receive it within minutes.
Use Preferred Partner offer
Select “use Preferred Partner offer”
On the right pane, right above the list of community offers, you can select Preferred Partner offer as your preferred method. You’ll be presented with the exchange rate.
Add recipient details
Input recipient’s name, account number and transfer amount.
Choose a payment method
We have a free tier with which you can send a limited amount of money for free, forever. To send higher amounts of money, you can choose to pay a one-time flat fee of $2 or subscribe to one of our low-fee monthly, quarterly or annual plans.
Send money and complete the transaction
Send money to us in the currency you have and pay the transfer fee.
Recipient receives money within minutes
The money will be exchanged and sent to your recipient within minutes.
Start sending money internationally at a fraction of the cost
