Alternatives In The Money Transfer Industry

Oct. 7, 2009 - PRLog -- There is a perceived lack of information available for those wanting to send money abroad. Whether financially assisting close family in developing countries with a £500 wire transfer or purchasing your dream villa in the South of France for £500,000, key savings can be made. In the UK alone over £4.6 billion is sent annually to other countries by individuals for family support, overseas property purchases, travelling or business.

Lower End Transfers

The average migrant worker propping up a $400 billion global remittance industry are often oblivious to the fact that alternative money transfer services exist, so they do not question the extortionately high fees charged by some providers. Expensive advertising campaigns can often lead to understandably naive and costly consumer choices when selected a preferred Money Transfer Operator (MTO).

Money sent by migrants, known as remittances, is typically between £50 and £500. Western Union as a brand has dominated the market for a long time, providing a fast yet arguably costly method of transferring money back home. Given the world’s largest money transfer operator (MTO) can charge $15 a time to send just $100 to Mexico and make strong profits when converting the cash, questions must be raised as to what the alternative options are. Often, a sense of disappointment is felt by the end amount that is received when transferring funds overseas. Customers do not feel they have enough information about money transfer products, providers, or ID requirements, and do not know where to look. They often rely on word of mouth.

For example, Julia Ashikowa has family living in West Africa with whom she has forged close relationships through annual visits and regular chats on the phone. Julia enjoys being able to provide valuable financial assistance to them but finds that her bank charges around £20 on each occasion. She comments, “The bank charges really mount up after a while, especially with the amount of times I need to transfer throughout the year, plus Christmas I’m spending almost £100 a year just to send them small gifts.’’

The rule of thumb when transferring smaller amounts overseas is to send as much as you can as infrequently as possible; reducing the number of times you get hit with fees. There are several companies that operate globally, such as MoneyBookers, MoneyGram or iKobo, who also offer better rates than the big banks. These are anywhere between 50p and £8, again depending on the method of transfer and the country the money is being sent to.

When a migrant worker, pensioner or overseas student wishes to transfer money abroad, the advice is simple: try not to settle for the very first option you stumble across, investigate four or five different options to drive down the price on both fees and exchange rates. Whether the transfer is for personal reasons (e.g. sending money home to family) or business reasons (e.g. overseas investment and real estate acquisition) it certainly pays to shop around.

Comparison Sites.

It can prove to be difficult and time-consuming to explore the range of options and costs involved prior to transferring money. www.sendmoneyhome.org  and its sister site www.sendfundsoverseas.com  (for higher end comparisons) offers an independent and comprehensive money transfer comparison site that allows consumers access to a range of alternative products available when transferring money worldwide. The site was originally government backed and funded by the Department for International Development (DIFD), aimed at promoting transparency in the remittance industry. Visitors can compare services by speed, method of transfer, fees charged and exchange rates offered. Huw Jenkins, technical director of SendMoneyHome states ‘‘banks can charge you as much as 40 per cent of the amount sent so we are striving to get the message out that there are other options.’’

High End Transfers.

Emmanuel Addy, director of www.sendmoneyhome.org argues, "for high-end transfers of several thousand pounds, or regular payments such as pensions or mortgages, it pays to go for the best possible exchange rate – the one closest to the interbank rate. Foreign currency exchange specialists will be able to offer extremely competitive exchange rates without charging a fee or commission."

Getting into contact with a reputable FX broker rather than a high street bank will invariably lead to significant savings on higher end currency transfers. These firms are knowledgeable in the currency markets, take on a hand-held and personalised approach with the client, and can assist when transferring funds overseas through the range of services they offer. For example, they will let you fix the exchange rate (forward contract) to protect against any currency fluctuations or volatility. The buy now and pay later approach certainly has its advantages. According to Marc Bodega at HIFX, "The high-risk strategy would be to buy your currency when you needed it, but this means that you don't know what the property is going to cost. If you have strong views about future exchange rates, you could wait and buy your currency when you think the rate looks good. But there is no guarantee that the currency will move in the direction you want it to. If you want a risk-free option, fix the exchange rate. We always remind people that they would never agree to buy a property in Britain if they did not know the final cost."

For example, take the case of Mary Peacock who retired and is transferring her pension regularly into Euros while living in the Costa Del Sol. Mary was able to fix her exchange rate for up to 2 years and is guaranteed a fixed amount of income per month in Euros at the pre-determined rate. She comments, ‘‘this is a wonderful facility that lets me budget effectively and takes away all the aggravation of calling the bank manager in the UK.’’

Brokers also offer better currency exchange rates than high street banks as they purchase currency in bulk. These savings are then passed on customers. Foreign exchange brokers will offer rates within around 1 per cent of the Interbank rate, though those rates constantly change, and a good deal from a specific broker often depends on the destination country. However, it should be mentioned that most of the currency specialists often have a minimum transfer amount and by and large do not deal in smaller transactions.  It is important to check their credentials with HM Revenue & Customs, and try to get quotes from several brokers.

The moral of the currency story is thus, for both smaller and higher-end payments, it makes a big difference to shop around and explore various MTO’s and FX providers’ service offering before committing to a final decision.

ENDS

Notes to Editor
•   British and Irish citizens own 3.81 million properties overseas. The total overseas property market is worth £44.4billion and more than 70% of those surveyed paid cash for their overseas home. (source Datamonitor, 2006)

•   The World Bank estimates that globally more than US $328 billion worth of remittances were sent to developing countries in 2008. India is the world’s biggest recipient, with an estimated $52 billion a year (2008 figures).

The SendMoneyHome project was initially government backed and funded. The project was co-launched with the Department for International Development (DIFD) This formed the basis for our transition into a fully edged currency transfer price comparison site for consumers. At present, SendMoneyHome works with over 200 strategic partners and is regularly regarded as the ‘champion for consumers’ in the money transfer industry.

• Our windows sidebar gadget can be integrated easily onto your site and provide an excellent added value tool.

It can be downloaded from our homepage www.sendmoneyhome.org


Media Enquiries To:

Daniel Abrahams
+442071005655
www.sendmoneyhome.org
www.sendfundsoverseas.com

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SendMoneyHome is the leading international money transfer price comparison site.

At present, SendMoneyHome works with over 200 strategic partners and is regularly regarded as the ‘champion for consumers’ in the money transfer industry.