People send money overseas for many reasons: to buy or rent property, pay tuition and school fees, gift money to friends, book a vacation abroad, or buy something from a foreign vendor or merchant. As an expat myself, whose investment accounts are in the United States, I frequently send money from abroad to my U.S. bank accounts.
Unfortunately, the world of international banking is a byzantine mess of regulations, fee types, and different ways of sending money. Start with a quick overview of the ways to transfer money, then check out the cheapest options.
Ways to Send Money Internationally
Depending on how you want to send or receive money, you have several options available.
Third-Party Transfer Services
These international money transfer companies move money in a variety of ways, but as a general rule they tend to be cheaper than sending money directly through your bank using a wire transfer.
More on the best of these services shortly.
Direct Bank-to-Bank Transfers
Most banks offer international wire transfers, which are fast and secure — and expensive. Some banks offer slower, cheaper transfers to an international recipient’s bank account within the same bank or with a partner bank.
Bank-to-bank transfers typically require providing the account and routing numbers for both parties — usually an IBAN (international bank account number) for foreign accounts.
You can also send money from your bank account to someone overseas who doesn’t have a bank account. Particularly in the developing world, many people are underbanked.
For that matter, the sender doesn’t need a bank account either. You can take cash to a money transfer service location, such as a Western Union counter, and have that money sent to someone in another country, where they can pick it up in cash in their local currency. It’s a fast and often convenient way to transfer money when one or both parties don’t have a bank account.
With ease of access comes risk. Although Western Union requires cash recipients to show both a photo ID and the transaction number, fraud remains possible. And of course carrying large amounts of cash in general comes with risks of theft or loss.
Digital Wallet Transfers
Alternatively, you can transfer money between digital wallets rather than bank accounts. Digital wallets offer another popular option, even in developing countries without much traditional banking infrastructure.
Both parties must typically have the same app installed for digital wallet transfers to work. And they must have a way to access the money in that digital wallet to spend or invest, such as a connected bank account or direct debit card.
In recent years, cryptocurrency exchanges have become more mainstream, making them a viable way to transfer money anywhere in the world.
But they come with several downsides, even when both the sender and recipient use the same cryptocurrency exchange. To begin with, cryptocurrencies are extremely volatile. You could send $1,000 worth of cryptocurrency in the evening, and by the time your recipient converts it back to their local currency the next morning, the value could have dropped to $700.
Which raises a second downside: conversion fees. Unless you already hold the money in a cryptocurrency and the recipient plans to leave it in cryptocurrency, you need to convert a standard currency to crypto, and then your recipient needs to do the same on their end. But crypto exchanges charge a fee on both transactions. For example, Coinbase charges 1.49% on either end, for a total of roughly 3%. Exchanges may charge even more for low transaction amounts in the form of minimum flat fees.
Prepaid Debit Cards
Another option is loading funds onto your recipient’s prepaid debit cards. The recipient can then spend the money directly with their card.
Not all prepaid debit cards work in every country however. And those that do still likely charge high currency exchange fees and other fees.
Read the fine print closely before pursuing this option, because the fees can add up to be downright predatory.
Common International Transfer Fees
The fees for international money transfers get complicated quickly. Making matters worse, not all banks or transfer services are particularly transparent about their fees and margins.
Exchange Rate Margin
Whether you use a third-party transfer service, move money using a digital wallet, or go directly through your bank, the service will almost certainly take a margin for the currency exchange. Even when financial institutions claim no or low fees for transfers, this is where the “hidden fees” lie.
For example, imagine 1 U.S. dollar equals 5 Brazilian reals, and you want to send money to your friend in Brazil. Your bank or transfer service doesn’t give you the full market value of the currency exchange, offering to exchange it at a rate of US$1 to R$4.70. So when you send US$1,000 to Brazil, the recipient only receives R$4,700 rather than R$5,000.
Third-Party Transfer Fees
When you use a third-party transfer service, they often charge an explicit transfer fee in addition to the exchange rate margin.
These are sometimes fixed fees and sometimes a percentage of the amount sent. Some companies don’t charge any transfer fees at all and simply earn their money through the currency exchange rates they offer, as described above. Just beware that these “fee-free transfer services” are hiding their fees in the currency exchange rate, where it’s less obvious — and probably higher than their fee-charging competitors.
Many companies offer expedited transfers for a higher fee as well. If your transfer isn’t urgent, avoid these expedited fees.
Inbound and Outbound Bank Fees
Just because you use a third-party transfer service doesn’t mean your bank doesn’t want in on the action. Banks often charge both outbound and inbound fees on money transferred to or from your account.
For example, a foreign airline refunded my ticket fare recently to my U.S. bank account. My bank charged me a $25 fee to receive a foreign transfer — even though my bank didn’t initiate the transfer or exchange the currency.
That said, some of the best international transfer services find ways to minimize or avoid users’ bank fees.
Best Services to Send Money Internationally
Now that you understand the basic mechanics and fees involved, what are the best ways to actually send money internationally?
The following services each work well for different types of transactions.
Best For: Small international transfers (up to $500)
If both you and your recipient have a PayPal account and you aren’t sending much money, PayPal combines speed, convenience, and low fixed transfer fees.
Transfers are instantaneous and your recipient can either transfer the money to their connected bank account or spend it directly with a PayPal debit card. Or, for that matter, with the many online merchants who accept PayPal.
PayPal charges high margins on exchange rates, but relatively low fixed foreign transfer fees. That makes it a good choice for sending small amounts overseas but as the amount climbs, the high exchange rate markup starts to bite deeper.
Look elsewhere when sending larger amounts.
2. Wise (Formerly Transferwise)
Best For: Medium international transfers ($500 to $7,000), world travelers
Based in London, Wise has been around since 2011. It was founded by Estonians frustrated with the fees and poor rates associated with living in one country and frequently needing to send money to another.
Wise keeps its costs low by routing payments in a unique way. Instead of simply routing the sender’s money directly to the recipient, Wise matches the money with other users who are sending currency in the other direction. That way, Wise doesn’t have to pay the currency conversion on every single transaction — only on those they can’t match with money traveling in the other direction.
For instance, you send US$1,000 to me in Brazil (worth R$5,000). My neighbor here in Brazil has meanwhile sent R$5,000 to her cousin in Phoenix. Rather than change currencies, Wise simply moves your $1,000 to the person in Phoenix, and moves my neighbor’s R$5,000 to me.
By matching exchanges in this way, Wise minimizes the amount of money they actually have to convert to a different currency.
To send money with Wise, register for an account with either an email address or with your Google or Facebook account. Your recipient does not need to sign up for a Wise account, but they do need to have a bank account into which the money will be deposited. You can even send money with your credit or debit card, but expect much higher fees than sending from a bank account.
Wise also displays the exact amount your recipient can expect to receive. That kind of transparency has helped Wise become one of the most popular international transfer services on the planet.
Wise doesn’t require a minimum transfer limit. However maximum transfer amounts vary by currency, country, and your account documentation. Create an account to check the maximum allowed for you.
As a final perk, Wise offers a “borderless bank account” where you can store money in up to 56 different currencies. You can spend it directly with Wise’s debit card or transfer money to your or other people’s bank accounts.
The downside to Wise is that it can sometimes take up to five business days for transfers to complete.
Best For: Large international transfers to and from bank accounts
Australia-based OFX has offices across the world, including in London, Toronto, San Francisco, Hong Kong, and its headquarters in Sydney. It also operates the money transfer abilities of companies such as Travelex and MoneyGram.
OFX sometimes charges a flat transfer fee of $15, which can make it ill-suited for small transfers. However OFX’s currency exchange markup drops on a declining scale, as the transfer amount rises. In other words, the more you transfer, the lower the cost on a percentage basis. That often makes it the cheapest way to send money abroad.
Note that OFX is known for their stringent customer identification and verification. Have your photo ID handy to upload an image when you first register.
OFX routinely earns high ratings for their customer service, which is available 24/7 thanks to all those office locations. It also offers users the chance to compare rates with other money transfer services — again a nice bit of transparency.
Your recipient can only receive funds into their bank account. If your recipient doesn’t have a bank account, look elsewhere.
Best For: Sending money to developing countries
Founded by Somali-born Ismail Ahmed in 2010, WorldRemit provides online money transfer services to migrant communities and other underbanked populations around the world. WorldRemit doesn’t have brick-and-mortar offices where users can convert cash to transfers, which helps reduce costs.
Customers sign up using a mobile app, and must verify their identity by uploading their photo ID.
You can send money electronically to recipients’ bank accounts, in cash at pickup locations, via mobile wallet, and in the form of minutes debited to recipients’ prepaid cellphones. This last option is especially appealing in countries without a vast network of landlines where many residents rely on prepaid phones for communication. WorldRemit allows transfers in 70 currencies among 130 countries around the world.
Like all the best international payment services, WorldRemit offers transparency on costs. Once you input your bank account number, how much money you want to send, and to whom, the app shows you the exchange rate you’ll get and how much it will cost to complete the transfer. You can double-check this amount before hitting “submit.”
As flexible as it is for your recipient, WorldRemit requires the sender to have a bank account. That makes it a great way for banked people in developed countries to send money to underbanked people in the developing world — but not vice versa.
5. Western Union
Best For: Flexibly sending or receiving cash anywhere in the world
Originally used to send telegrams from one end of the U.S. to the other, Western Union is also the granddaddy of sending and receiving money abroad. It’s been helping people send money far and wide since the late 1800s.
You don’t need to set up an account or input your bank routing number to send money to someone in another country using Western Union. You can simply visit a Western Union branch in person with cash or your credit or debit card. You can also send money from your bank account if you prefer. Once you fill out the necessary forms, the money is whisked off to its recipient, who only needs the tracking code and ID to pick it up.
Recipients can collect money in cash, on a prepaid debit card, as a deposit into their bank account, or via mobile wallet. That means Western Union works for underbanked senders and recipients alike. And they operate nearly everywhere in the world — over 200 countries and counting.
Western Union’ fees vary widely depending on where you and the recipient are located, how quickly you need to send the money, and how you choose to send the money. You can play around with Western Union’s price estimator to get a clear idea of how much it will cost you to send money internationally with them. Still, expect Western Union to cost more than its newer, more nimble, disruptive competitors.
6. Xoom by PayPal
Best For: Speed
Launched in 2001, Xoom was acquired by online payment giant PayPal in 2015. Often Xoom can transfer money to the other side of the world near-instantly — although it will cost you in fees.
You can only send money with Xoom via checking account, debit card, or credit card; it does not accept cash as a way to send money. Recipients, on the other hand, can receive money via bank deposit or cash pickup.
Xoom works for recipients nearly anywhere in the world, allowing customers to send money to 131 countries. But you can only send money from a few developed countries such as the U.S., United Kingdom, and Canada.
Expect to pay more for Xoom than the other options above. Check its fees and exchange rate calculator before you send money.
Best For: Cash alternative to Xoom
MoneyGram can send money same-day to over 200 countries. And like Xoom, it costs more than the other payment methods above.
With its abundant physical locations however, the platform does allow you to send cash, which makes it a good fit for unbanked senders. Likewise, recipients can pick up the money in cash if they prefer. In some markets, MoneyGram even offers home delivery.
You can also send money using your bank account, credit card, or debit card. Transfers max out at $10,000, so if you want to send more, consider OFX or Western Union.
MoneyGram offers customer service by email and live chat, although it only offers fraud reporting by phone. Some users complain that customer service can be slow and difficult to reach.
The bottom line: MoneyGram has a wide reach, but it’s expensive and caps transfer amounts relatively low.
Gone are the days when you had only one company to turn to (cough, Western Union) when sending money abroad.
Whichever option you choose to transfer money internationally, make sure you verify the recipient and their details. Keep records of your transaction and beware fraud or scams. “Nigerian prince” scams come to mind.
Compare pricing between platforms before sending money. The best transfer platforms show you exactly how much your recipient will receive before you submit payment.
Finally, pay attention to how long the transfer will take to ensure the money gets to the recipient on time, especially if they’re on a tight deadline or need it to pay an upcoming bill. And always, always read the fine print.