Best way to send money internationally

The best way to send money internationally is important to me because when we moved to Canada from the UK one of the admin irks I hadn’t foreseen was having to transfer money internationally back and forward to Canada.

Sending money internationally is something we have to do with surprisingly regularity!

So based on my own experiences and a lot of research as to the cheapest way to send money overseas I’ve produced this guide.

Having worked in Financial Services I know that more often than not just transferring money internationally via your bank is not the cheapest way to send money internationally. So we’ll explore your options what to look out for when selecting a money-transfer provider.

We’ll cover the different types of international transfer providers available and when they might be a good fit, and my top 10 tips for how to get the best international money transfer deal.

The best way to send money internationally depends on the situation

Unfortunately there’s no one easy answer to what is the best way to send money internationally because the best option will vary depending on your situation.

The main points that influence the best way to send money internationally are:

• How much money you’re sending
• What currencies you’re sending from-to
• How quickly you need the money to arrive

Let’s look at some of the money transfer options available and when each might be the best fit for you.

International money transfer options

There are a few different types of international money transfer companies out there, each having their own pros and cons and situations in which they might be worth considering.

Let’s explore the options…

Online specialist currency transfer service

In most situations where you’re sending anything up to tens-of-thousands of dollars, an online currency transfer specialist is normally the best way to send money internationally.

By online currency transfer specialist I’m meaning firms that tend to be FinTechs that have been set up to compete with the traditional financial services firms and methods.

They tend to be online businesses where you do the transaction through their website or app.

There are quite a few firms in the space but the one I use is Wise (previously called TransferWise). It’s more often than not either the cheapest or nearly cheapest option of the online money transfer services.

Aside from being the cheapest:

You can check out Wise here.

Whoever you go with here you should make sure they stack up well against the top 10 tips below.

Regular banks

Your bank will be able to send money internationally for you and this can often be quite a cheap way to do it depending on the combination of bank accounts.

Some banks offer attractive rates to transfer money internationally between your accounts if you have an account with them in both countries (or another arm of the same banking group).

Often you’ll have to have one of their premium-style bank accounts for the fees to be competitive but it’s definitely something you should look at.

For example if you have an HSBC Premier or HSBC Advance account in Canada you can make free transfers between HSBC accounts in over 30 countries using your online banking.

If you’re going to be transferring money back and forth between India, it’s worth checking out some of the Indian banks with operations in Canada. For example ICICI Bank allows fee-free Canadian dollar transfers to India if you have a HiVALUE PLUS account in Canada.

You can check out my article on the best bank accounts for newcomers if you want to get a feel for some options and generally how Canadian banking works (which is different to what I’d been used to!).

Foreign exchange brokers

If you need to send large sums of money internationally, like buying/selling a house, foreign exchange brokers are normally the best option to go for.

Many have no fees (or low fees) and almost all will have better rates than you’d be offered by your bank.

They offer personalised service to help with things like exchange rate timing and generally just guiding you through the process.

Do keep in mind however that there isn’t inherently more protection of your money than an online foreign currency specialist so you should do the same due diligence (or more given the sums of money!) as you normally would (see tip 4 below).

You should make sure to spend serious time shopping around for the best broker. Given the sums of money involved even a tiny difference in the exchange rate or fee could make a huge difference to how much money you get.

Top 10 tips: the best way to send money internationally

Beyond the basics of does the provider deal in the currencies you need in the format you need (physical cash / electronic funds), here are my top 10 things you should consider when choosing the best way to transfer money internationally.

Follow these tips to make sure you get the best way to send money internationally:

1. Know the exchange rate being offered

This is the exchange rate that is to be used for your transaction. Different firms will use different exchange rates which can often vary significantly from the “real” exchange rate that you’d see if you Googled it (the mid-market rate or interbank rate). 

This is because the money transfer firm will add a margin on top of the mid-market exchange rate. It’s here that the company will make their money.

This is often the “hidden” cost of doing the money transfer as it won’t show up in the quote as a separate fee.

2.  Don’t be put off by fees

Fees will vary and will be a fixed amount or a percentage of the amount being transferred – or a combination of the two.

Not all providers will charge a fee and might advertise that they’re fee-free. But don’t be sucked in by that somewhat empty term. It doesn’t mean they’re going to be cheaper than a firm that does have fees.

The combination of fees charged and exchange rate used is what’s crucial to know. It’s this combination that will determine what the cheapest way to send money internationally is.

Remember that these firms have got to make money somehow so they’re going to be charging you money either through fees or exchange rate margin – don’t fall for fee-free marketing.

Often companies might not advertise up-front what exchange rate they will be using, or how their fee is calculated.

And often the fee will vary depending on what payment method you use (see the screenshots below in tip 3 for an example)

So really the only way to accurately compare which transfer firm is the cheapest is go through the process of setting up a transfer and checking the final quote for how much you’re actually going to receive in the foreign currency you want.

You want to be seeing something like the below screenshot that’s from Wise. It should be really clear what fees they’re charging and what the total amount you’ll receive is.

That way you know you’re comparing like for like.

And do make sure you compare providers in one go (see tip 6).

3.  Know how quickly the money will arrive

A pretty basic one but how quickly will the money end up with the recipient?

This can vary from provider to provider and currency to currency.

Some providers charge different fees depending on the payment method which in turn affects how quickly the money will arrive at its destination (as per the example below from Wise again). So when you’re comparing fees (as above) make sure you’re looking at the timeframe you need.

4.  Do your due diligence

Obviously if you’re doing an international money transfer you’re going to need to give your money to whichever institution is going to convert it to the foreign currency.

This could be a seriously substantial amount of money. So you’re going to want to make sure you trust the company to protect your money properly.

If you use any transfer company that holds your money and it goes bust whilst it has your money there’s no guarantee you’ll get your money back.

You should check that the firm is authorised by a country’s financial regulator that you trust. This is a good indication that they are financially reliable and responsible. And that there are financial safeguards in place to minimise the risk of you losing money.

5.  The cheapest first time might not be next time

Or put another way, the cheapest method of sending money internationally for one situation might not be the cheapest for the next.

For example if you’re sending anything up to the low-tens-of-thousands of dollars, an online currency transfer specialist is probably going to be the cheapest way to send money internationally.

But if you’re looking to transfer a very large sum of money, a specialised foreign exchange broker would likely be cheaper.

If you’re converting dollars to rupees your bank might have a good deal but if your sending pounds then you might be better with a online currency transfer specialist again.

That kind of thing.

Point being, don’t just always assume that because the provider you found for your first international transfer was the cheapest it’s always going to be the cheapest way to send money internationally.

With that said, you might not want to do a thorough review of the market each time you want to transfer $100 to your mate back home. But you should know roughly that if I’m sending up to x amount in x currency then this provider is normally the cheapest.

Oh and, check out tip 10 below for another way your first choice might not be the cheapest second time around.

6.  Compare your options in one go

When you’re looking for the cheapest way to send money abroad, try and compare your options in one go, not over a couple of days.

This is because exchange rates are fluctuating all the time so the amount that you’re quoted to receive will vary with it.

Basically you just want make sure you’re comparing companies on the same terms.

7.  User experience is more important than you think

Their website or app isn’t easy to use; or you’re struggling to set up an account; or there’s no customer support; or they don’t take the payment method you want to use…

On the face of it this one might seem somewhat trivial but if you’re going to be transferring money a few times, you want the process to be as painless as possible. Especially when there might not be a substantial difference in the cost between providers.

8.  Check other customers’ reviews

Tied into the user experience and a good way of helping to get you comfortable transferring your money to them. Check out the reviews from other customers on things like Trustpilot.

9.  Get the most out of your other financial products

Some banks allow you to transfer money abroad to linked banks without a fee. Often this is only if you have one of their premium style accounts which will have monthly fees or substantial minimum balance requirements.

But if you’re going to be needing a bank account anyway, and you’re going to be making regular international transfers, and you like some of the other benefits of the premium account then maybe this is a good option for you.

Do keep in mind however that the exchange rate that the bank offers might not be competitive,  so even with the fee-free transfers it might not be the cheapest.

Incidentally, if you’re looking for an overview of the best bank accounts in Canada you can check out our article here.

10. Hunt out discounts for new customers

This is quite a nice one to look out for. Some companies, particularly online money transfer specialists, offer incentives for new customers. Like a certain number of fee-free transfers or money off your first transfer.

So even if that company’s standard exchange rates or fees are not the absolute cheapest, the discount might make it the best option – at least for your first transfer!  

All of the products and services I recommend on Canada for Newbies are independently selected based upon what I’ve personally found to be useful. When you sign up to use Wise using the link above I might earn a small affiliate commission. It won’t cost you anything at all and I would never recommend something I don’t believe in and use myself.

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I hope you’ve found my overview on the best way to send money internationally helpful.

I’d love to hear any comments you have on it or if you thinks there’s anything I’ve missed. Please drop me a comment below!