Receiving money from abroad has always been a challenge for the people of Africa. Faced with high transaction fees, unfavorable exchange rates, and lots of red tape, many people have watched in dismay as their money gets eaten away by charges and the final total dwindles.
As the number of remittances to low and middle-income countries grows — the World Bank estimates that in 2022 they will grow by 4.2 percent to reach $630 billion — many money transfer operators are starting to offer better foreign exchange rates and low-fee transactions.
This is good news for folks wanting to carry out cross-border payments throughout the African continent and beyond.
If you’re wondering which is the most cost-effective way to send and receive international payments, this article has got you covered. We’ll explore four of the most popular and low-cost ways to receive money from abroad so you can make an informed choice.
1. Set up a local bank account
Let’s say you have a relative in Canada who regularly sends you money, and that’s the only country you receive payments from. In this case, one option could be to set up a Canadian bank account and have your relative deposit funds directly into it.
Opening a local bank account can minimize the costs you’ll both need to pay in transfer fees, as well as the time each payment takes — especially with bank transfers made through the same bank.
That said, setting up a non-resident bank account in another country is rarely a straightforward process and often requires providing a lot of documentation and filling out paperwork. The requirements will vary from one country to another.
It can be a lengthy process, but once it’s done, you’re good to start receiving payments. However, once set up, the next hurdle is withdrawing the money in your local currency, so you’ll need to choose a bank that allows you to do that.
Be aware of other conditions the bank may set — such as maintaining a certain amount of money in the account or limits on non-resident accounts — to avoid being unable to access your money.
2. Use Western Union
Although Western Union is sometimes considered obsolete with the emergence of new financial apps and online banking, its international wire transfers are still one of the most reliable global payment options available.
This is because Western Union has long had a presence in parts of the continent that many banks haven’t reached yet. So if you live in a remote area and want to use a secure method to receive money from multiple countries, this might be the option for you.
However, the main drawback of Western Union is its fluid transfer fees, which change depending on where you’re transferring from and to, as well as the amount of money being sent. In well-connected areas, transfer fees may be fairly low, but they could rack up in harder-to-reach places.
3. Set up a Coinbase wallet for crypto payments
If you want to receive payments in cryptocurrencies such as Bitcoin, Ethereum, or Litecoin, Coinbase is a good option. Coinbase is a cryptocurrency exchange platform that allows you to receive payments from almost any country in the world — as long as you have a digital cryptocurrency wallet.
To receive money through Coinbase, the sender uses their debit card, credit card, or bank account details to buy crypto through the platform. Then, they transfer it to your crypto wallet. You can then choose to keep it as cryptocurrency — many online providers now accept crypto as payment — or you can cash it out in your local currency.
One of the main advantages of this method is that there’s no minimum transfer amount — you can send and receive as little as you need. This method can be useful if you’re a regular crypto user and don’t want to cash in your crypto earnings to make an online transfer.
However, if you don’t make regular crypto payments and still need to go with this option, you’ll have to go through the process of opening a digital crypto wallet.
The main downsides of Coinbase include a 3% transaction fee (which is still cheaper than other international payment methods through a credit card), the one-day waiting period to finalize crypto payments, and — most importantly — the volatility of cryptocurrency.
Dipping your toes in the crypto world and need advice on how to invest? Check out our article on the dos and don’ts of Bitcoin trading.
4. Use a financial service like Chipper Cash
While local bank accounts, Western Union, and crypto all have their advantages, they have their drawbacks, too — from the time and paperwork involved in opening a bank account to WU’s unpredictable transaction fees and the intricacies of opening a crypto wallet.
If all that sounds like too much hard work, Chipper agrees with you. That’s why we created one elegant solution to Africa’s money transfer service woes — the Chipper Cash mobile app and Visa Virtual Card.
Chipper Cash is one of the only international payment services that allow you to instantly send money to anyone within or outside Africa, with the lowest cross-border rates and free transfers.
What’s more, you can use your Chipper wallet to invest in cryptocurrency and stocks, allowing you to buy and sell Bitcoin and other assets, no matter where you live. Once you and the person you want to receive money from are both Chipper account holders, you’ll be good to go.
Take control of your international payments with Chipper Cash
Chipper Cash was founded to empower the people of Africa to take control of their money and provide a way to send and receive international payments at the lowest possible rates.
Whether you receive regular payments from relatives or friends in the diaspora, want to dabble in crypto, or would like to start investing in publicly-traded companies, you can do it all with Chipper.
All you need to do is download the app, set up your account, and get started right away.