Monthly Archives: February 2017

Why money transfers should be easy as ABC

Money transfers seem to be something quite simple when we talk about it but for many of us it is not that easy. The main problem is that we do not know how to proceed or are misinformed about the process and end-up paying outrageous fees. According to the World Bank, each year around $600 billion are transferred internationally and it generally costs 10% of the amount transferred. Here is an article explaining why it does not have to be so expensive and complicated to make money transfers.




Why money transfers are expensive?

The main reason for that is because most people who make international transfers are using either their banks or dinosaurs such as Western Union. These operators are notorious for incurring outrageous fees on each transfer. Most of the time the exchange rate they apply is poorer than the real one at the moment of your transfer and they keep the difference for themselves. They also generally apply a fixed fee for each transfer regardless of the amount you transfer.

Money transfers are expensive because these actors have been operating on the market for ages and are in a relatively monopoly situation. As you know such situations do not encourage decreases in prices like when the competition is intense. However, for the last couple of years, new actors entered the market and they offer much better prices for international money transfers. These actors operators 100% online which helps them reduce their fixed costs but the main thing about them is that they do not incur hidden or outrageous fees.


Why money transfers should be easy?

The money transfer industry is quite an old one (Western Union was created in 1851!) but it seems that it has not evolved much lately. Sending money abroad is still complicated for many of us as we lack information about all the solutions that exist out there. We could compare it to the airplane industry a couple of years ago before comparison platform such as Google flights or Skyscanner were created. At that time, it was no easy to choose the company from which you’d buy tickets. I guess we would always go for the same without taking time to compare them as it was too time consuming. If we had to travel from the USA to France, we would go for a French or American airline company but certainly not a Spanish or Australian one as we could choose today.

Applying this to money transfers helps you realize that there are so many options today that it is a nonsense to say that your bank or Western Union is the cheapest solution to send 1’000€ between France and the USA for example. Given the number of actors on the market there is an increasing need for comparing them.


It might take some more time but money transfers are on a good way to become simple and cheap!


Everything you need to know about international money transfer

You probably guess what is at stake when one speaks about international money transfer. Indeed the expression is pretty obvious. However it is a bit more complicated than just wiring money from 2 banks accounts located in different countries. Here is a short article that will give you a bigger picture.



What is behind international money transfer?

Basically we talk about international money transfer when foreign currencies are exchanged. Most of the time it happens through a wire transfer between two banks. The World Bank estimates that each year around $600 billion are sent worldwide as remittances. They are mainly sent by expats, foreign students (or their parents) and migrant workers.

To get back to the transfer itself: what happens is that a certain amount of US dollar for example is sent to Mexico. This means that this amount as to be converted into Mexican pesos. This conversion is defined by the exchange rate. For example 1 USD = 20,64 MXN. This equation means that for 1 US dollar you can get 20,64 MXN. However this amount can vary as exchange rates are defined by the foreign exchange market which fluctuates depending on the market demand. Therefore, it means that some days are better than others to make an international money transfer, depending on the value of the exchange rate.


How to make an international money transfer?

Now that you have understood the importance of the exchange rate when making an international money transfer, let see what are your options.

Let’s say that you are a French student living in San Francisco for a year. Your parents have to send you money each month to pay for your day-to-day life. You have open a bank account in a local bank as it will cost you too much to use your French debit card. However, you should tell your parents not to send you money through a wire transfer from their French bank to your US account. Indeed, you’ll get a very bad surprise if you do so: the fees generally applied by banks are extremely high. Moreover they apply a poorer exchange rate than the real one and keep the difference for themselves.


Today there are more and more options to make international money transfer and the cheapest ones are probably online operators. Indeed, they charge you around 3 to 5% of the amount sent, whereas banks will charge you around 10%. One thing you should get used to do is to compare the solutions before making your international money transfer.