The main four methods for transferring money internationally (in no particular order) are:
- Your bank
- Remittance companies
- Money transfer apps
- Currency brokers
Which one you should choose depends on your situation.
Each option has its pros, cons and reasons to use.
Keep reading to find out what the best ways to transfer money abroad are, and which one is right for you.
What do you need to consider when transferring abroad?
As always, doing your own research will lead you down the right path.
Here are the questions I would ask myself:
- How quickly do I need the money transferred?
- Do I need physical money or a bank transfer?
- How much am I sending?
- What country am I sending to?
Some methods can handle certain types of transfers, and others can’t.
Answering these questions should filter down your options.
I’ve included a handy flow chart at the bottom of the article to help you.
4 ways to transfer money abroad
Let’s run through each method with its pros, cons and use cases.
This is the most commonly used method for transferring funds internationally.
It’s the first thing that most people think of.
However, it’s far from the best option.
Using a bank will almost always cost you the most amount of money.
They provide bad exchange rates, and hefty transfer fees.
On top of that, the service provided isn’t the best.
I’d say that the only reason to use your bank is if you’re in a big rush.
I’m talking hours, not days or weeks.
This is because there isn’t a sign up process with your bank.
If you already have an account, you can freely make transfers whenever.
However, when signing up with a new company, the process might take a few hours or even days.
You’re probably worried about safety, too.
Bear in mind that most other providers are regulated by the Financial Conduct Authority.
This provides the same level of protection for you as the banks.
I’ll talk about the safety of your funds near the end of the article.
Remittance companies specialise in cash transfers.
The recipient doesn’t need a bank account.
Once you’ve paid for the transfer, they can just pick up the cash from the designated pickup point.
It’s usually pretty quick, too. Sometimes the cash can be collected instantly.
This is because the money doesn’t have to pass through the banking system first.
However, there’s usually a limit to how much you can send in one time and over a period of time.
For example, Xoom implements a limit of €500 per day, and a €15000 lifetime limit.
You have to contact them to up the limit, and it’s not guaranteed either.
I personally wouldn’t send more than £2000 using a remittance company.
They’re one of the more costly methods, so transferring high amounts would get expensive.
Their exchange rates are usually uncompetitive and there may be a fee, too.
However, you might not have a choice if the recipient requires physical cash.
Use cases include:
- Sending cash quickly to family and friends abroad
- Paying for small goods or services abroad using cash
Here are some remittance companies you can look at:
- Western Union
Money Transfer Apps
Money transfer apps are a new type of payment company.
They’re often described as “FinTech” companies.
You do all the work yourself on an online platform or mobile app.
The caveat is that you can’t speak to anyone.
Or if you can, you’ll probably be waiting a while.
You’ll usually be pushed onto the webchat or email function instead.
When sending large amounts abroad, it’s important to have someone there to speak to.
That’s why I wouldn’t send more than £5000 with a money transfer app.
Simply because if anything goes wrong, it’s a lot of money to be worried about.
You would need problems to be solved quickly, which you just won’t get with money transfer apps.
Don’t get me wrong though, they’re a great modern solution for small payments.
They usually offer some of the most competitive rates, too.
Some use cases include:
- Sending payments to family and friends abroad
- Loading up a debit card for travelling
- Sending business payments for goods or services
- Repatriating salary
Currency brokers provide a personalised service over the phone.
They’re best for larger transfers, for example if you’re buying a house abroad.
Sending large amounts of money without speaking to a human is scary.
That’s where currency brokers come in.
If there’s an issue with your transfer, there’ll always be someone there to help you out.
Some brokers offer the best exchange rates, with zero fees.
Your broker can give you information on the markets and help you time your exchange.
This way, you can get the most for your money.
This kind of service isn’t offered by other types of money transfer providers.
However, most brokers won't let you transfer less than £5000.
Or if they do, it’ll cost you more.
Some use cases include:
- Buying a house abroad
- Repatriating funds from a house sale abroad
- Converting funds from the sale of a business
- Purchasing goods or services abroad in large amounts
- Sending living funds
Click here to get a quote and compare rates from our recommended providers.
What is the process of a money transfer?
The process is actually quite simple:
- Sign up
- Go through the verification process
- Lock in the exchange rate
- Pay for your transfer
- Funds are converted and dispatched
The verification process involves sending a few documents to your provider.
This might be a copy of your passport and proof of address.
This allows the company to verify that you are who you say you are (and comply with FCA legislation).
A currency broker might ask for you to pay for the transfer before locking in the rate.
With larger transfers, defaulting customers can cost a company a lot of money.
So, they’ll usually get you to send either the full amount or just a small deposit before locking in.
You can pay for your transfer via bank transfer or debit card, depending on what’s offered.
Is your money safe?
I would say the safety of you and your funds is the most important aspect.
That’s why a lot of people choose to use their bank for money transfers.
However, banks only offer ‘perceived’ safety.
If a money transfer provider is regulated by the FCA, they are just as, if not more safe than a bank.
You’re probably thinking, how is that?
If you hold money with a bank and they go bust, you will only recover up to £85k.
This is part of the FSCS scheme that banks offer.
However, with an app or broker, you will recover the full amount.
This is because the FCA requires these companies to “safeguard” client money.
This basically means keeping your money in a separate account to their own money.
These accounts then have a lock put on them, meaning they can’t be touched if the company fails.
All funds are then returned to the respective clients.
To make it easy for you, all companies listed on TopMoneyCompare are fully regulated by the FCA.
Transferring money abroad can seem like a long and arduous task.
Nowadays, most brokers and apps make it really easy.
There are different methods of money transfers, of which you need to pick the one that suits you.
As mentioned, I would pick between your bank, a remittance company, an app or a currency broker.
Each one has its pros, cons and specific uses.
Check out the diagram below to know which option is best for your situation.