In a world where we've come to expect money to move as quickly as our next delivery from Uber Eats, it comes as a real shock when sending money abroad to friends and family just how long it can take for them to actually receive the funds.
In a world that is only getting smaller due to the ever-expanding reach of technology, moving money should be simple, fast and most importantly safe. After all, in most instances, all that's being moved are some 0s and 1s from one computer system to another. Whether you send money home for the Festive Season or are a monthly remitter of money to help support your family in another part of the world, you'll intuitively understand the cost and challenges of sending money across borders - and the data supports this.
The World Bank reports the average transaction cost for these types of remittances as 7%. Which means about $38 billion is lost to fees. And it gets worse. Transfer fees to Sub-Saharan Africa, in particular, are higher than the average, at 8.2% for every $200 sent. To put it another way, sending $1000 will cost you around $80 in fees.
Thankfully, numerous digital payment providers have developed simple, safe, and swift ways to send money to your friends and family in Africa. In this post, we discuss what you should look for when choosing an international money transfer service.
What is an International Cash Transfer?
An international money transfer happens when money is sent directly to an individual or business abroad.
How does an international transfer work?
Once you initiate an international transfer, the bank or money transfer platform deducts funds from the sender's account. The instructions or transfer are typically routed through the SWIFT network, passing through up to three intermediary or correspondent banks before arriving at their final destination.
How long does an international transfer take?
Because of the numerous intermediaries, international bank transfers usually arrive within one to five working days. But, that only applies if you’re sending money through banks, which have the added disadvantage of charging high transfer fees.
How Much Does an International Money Transfer Cost?
International transfer costs vary depending on the carrier and the amount you’re sending.
It also depends on the country you're sending money to or from. Or how you’ll pay for the transfer. Another factor that affects the cost of sending money is the exchange rate between countries.
Companies that charge a flat fee across the board have the best rates. But, typically, there are four fees you need to look out for:
This fee depends on your funding method. If you choose to fund your transfer with a bank transfer, this is usually free of charge.
If you choose to pay for your transfer with a credit or debit card, your card issuer will usually charge you a 3% convenience fee.
You might pay a sending fee if you fund your transfer with cash through a third-party agent.
This is the fee your provider platform charges for the transfer. The transfer fee is typically calculated based on the transfer amount and the currency pair.
Exchange Rate Offered
When selecting a provider to send money internationally, it is important to consider the platform’s exchange rate. Exchange rates are never static, and they even differ from platform to platform.
You want to be extra careful with this bit because even a slight difference in exchange rates can save you and your recipient a lot of money.
How to Get the Best Exchange Rates for International Money Transfers
When there is a margin on the current exchange rate, it is difficult to calculate how much currency conversion fees you are paying. And if you're not careful, you could end up paying far more for your transfer than you intended.
However, there are a few things you can do to ensure you get the best exchange rate:
- Look around before making a decision. You’re shopping around for the best deal, so don’t hesitate to compare rates on different platforms. Also, it might be helpful to study the recipient’s country’s economic trends for a while to see if there are any patterns or times of the month or year where the rate is better.
- Create rate alerts. After you register with a transfer company, you can usually set up rate alerts. If you're not in a rush, it's worth waiting until your currency pair reaches the desired rate before transferring.
If your recipient has chosen to receive cash, the receiving bank or agent will charge a receiving fee, which will reflect your total transfer cost.
Now that you're up to speed on the basics let's look at what to look for when selecting an international money transfer service.
What to Look Out for When Choosing an International Money Transfer Service
With so many digital payment options available, deciding on the best way to send money can be difficult. Here are some of the most important factors to consider to make an informed decision.
Exchange Rates and Transfer Fees
Despite an annual increase in the global remittance market, transaction costs remain high, especially in the African market. Some regions’ average remittance fees are typically higher than the global average, as they may include a markup on currency conversion and additional commissions. If there are too many intermediaries, these costs can quickly add up.
In those cases, the total transfer fees typically skyrocket, and hardworking expats may feel ripped off. So, how can you send money overseas without having to pay exorbitant fees?
At Chipper, we take pride in our operational transparency, as our international money transfer fees do not include any hidden fees or other unpleasant surprises. We offer free transfers, and you can see the amount your recipient will get before you even complete a transaction.
Safety and Security
A guarantee of security is paramount to choosing and trusting an international transfer provider. An unreliable operator not only puts your money at risk but may also compromise your financial information and lead to more significant problems.
You need a channel like Chipper that guarantees encryption technology to keep your financial data and money safe for secure transactions.
When it comes to sending money internationally, time is often of the essence. Your loved ones may need funds urgently for a medical emergency, pay college fees, or complete a transaction.
On Chipper, you can use the transaction tracker feature, which keeps you up to date on the status of your money at each stage until the intended recipient collects it.
Better rates as amounts increase
Transfer fees are the bane of money transfers. And the larger the amount, the more fees you often have to dole out to the international transfer operator. So you most likely keep hopping from one provider to the other hunting for great rates every single time you need to make a transfer.
On Chipper, you don’t need to bother about transfer fees. Transfers are FREE — but both parties must have the Chipper app. The cross-border/exchange rate also doesn’t change based on the amount you transfer.
So no matter the amounts you send, you get the best available rates.
Customer support quality and general user experience
Customer experience is at the heart of every service, from the moment a customer inquires to when the transaction is completed.
Many things can go wrong when money is involved. Transactions may delay due to KYC issues, server downtimes, or regulatory checks.
You need a service provider who understands your concerns and can proactively resolve problems and assuage your fears.
Send support, feed a passion, or strengthen a bond
Money is what makes the world go round. And being able to send it anywhere you want, as quickly as possible, is essential, especially now that the world is so interconnected.
At Chipper, we are committed to delivering the highest possible service of international money transfers at the lowest possible cost. We understand how crucial it is to show love and support to a family member who needs financial support, especially in these chaotic times.
Sign up for Chipper today on iOS or Andriod to enjoy hassle-free transfers and be more present for those who need you.