How do you send money overseas?
Although tradition dictates that anything related to money would have to go through the bank, modern times have opened up a whole stream of options for people sending money abroad. And with these new money transfer and remittance options, people also get better deals when it comes to the money they send.
What makes non-bank options better than the old methods of sending money?
The Huge Difference
The huge difference is that banks could charge jaw-dropping fees, with a lot of them hitting you without you even knowing it. The difference can actually cost you hundreds to thousands of dollars in the long run.
Why the huge difference in fees?
Well, for one thing, banks have larger overhead costs to take care of. They have tellers manning each booth, managers running the business, people guarding the vaults, and so on. They come from huge institutions and have to meet quotas and targets. They have to keep up with the flow of money going in and out, in and out as they think about loans they are approving and payments they will be receiving.
Banks are financial giants that have complicated structures, and they can never afford to cut back on costs and still deliver the quality of service that people require of them.
Non-banks, on the other hand, are less complicated.
A lot of transactions are done online, which means that there are less people to pay and less utilities to worry about. Especially for small remittance services that are run by one or two individuals, their needs are not as huge.
A Question of Foreign Exchange
As for a lot of banks, they also reason out that their fees would often depend on the exchange rate. Seeing that the foreign exchange market has been extremely volatile recently, people sending money abroad are surprised to see that a huge chunk of the money they send is lost not only due to the fees, but due to unexpected exchange rates as well.
Through banks, consumers have no control on when the transfer is completed and what exchange rate is applied to that transaction.
With non-banks however, the consumer can time their transaction according to when the exchange rates are more favourable. Online remittance services like iRemit to the Philippines, for example, applies a single exchange rate the entire day. This means that should you find the rate they use to be okay to your standards, you can expect the money you sent to be intact, using a fixed transaction fee and not having to worry about market volatility that could affect your transfer throughout the day.
At the end of the day, it’s all about shopping around for the available options before deciding on a single service. Compare fees, exchange rates, and reviews and see which options would be giving you more value for your money.
Special thanks to denyse.decipeda for the main image.