How to Transfer Money to Another Country’s Bank Account: transferring money internationally between banks

The post How to Transfer Money to Another Country’s Bank Account: transferring money internationally between banks appeared first on Oak Laurel.

There are more options than ever before to do business internationally and some of the most significant changes are happening in the world of transferring money around the globe. Sending money overseas still has its issues for many, including long wait times, costs and security. Keep reading for more info how we got to the way things are when transferring money internationally between banks and about how to transfer money to another country’s bank account.

Basically, experts say the financial economy has to catch up with the dramatically shifted business world. Technology is becoming increasingly important and the competition for a spot on the world stage is creating change.

The Way Things Were

There have always been ways to move money from country to country. It’s in humans’ nature to seek out new business and expand. One of the first known money transfer systems were the Knights Templer.

The Knights were the security providers for travelers to the Middle East, particularly Jerusalem, after the Crusades. This was necessary as native factions continued to seek revenge for being driven out of their lands.

The Templers developed a system where people would give them money to send to these areas, either to a relative or for business.

It was recommended for travelers to allow the Templers to hold their valuables during travel, sending them a different way and returning their items once the travelers reached their destination. The Knights also acted as a secure bank deposit box.

A New Industry is Born

In America, the financial world shifted as more people moved out West. There quickly grew a need for the new pioneers to not only communicate with families back East, but to send and receive merchandise as well as money and gold.

Stage coaches were the primary source of transport for money and items, but that was risky as thieves often would lay in wait along the trail.

Wells Fargo entered the financial transportation market in 1852 with its stagecoaches safely transporting gold. The gold, sometimes weighing between 100 and 150 pounds, was put into the famous “treasure boxes,” along with other important items such as legal papers, checks and drafts. The green boxes traveled under the stagecoach driver’s seat.

Security was provided by what was known as the “shotgun messengers” protecting the driver. These men had the sole job of watching the area and warding off any potential thieves. Banks then became synonymous with safely sending money.

Even with these protocols, 27 Wells Fargo stagecoaches were robbed over the years with most of the robbers being tracked and apprehended by bank detectives.

Transferring money overseas began to rise in the 20th century in America when businesses grew and the country fought in two World Wars. It meant more soldiers abroad and those fleeing war-torn countries were migrating overseas.

The need for foreign communications grew and the telegraph company known as Western Union was there to fill it. Western Union started in 1851, like many other companies, when people started moving out West.

By the time of the World Wars, it was perfectly situated to perform communication tasks for the government such as sending telegrams to relatives of deceased soldiers. It participated in many government projects, some of which led to the creation of the Internet.

However, growing technology was eventually too much for the company to keep pace with and it began selling off its assets in the 1980s. That’s when Western Union began creating an international market for sending and receiving money. It became known as “the fastest way to send money worldwide.”

Sending Money Internationally Today

The Internet gave rise to new companies, like PayPal, which used it to digitally send money anyway in the world. That worked well as you could do it from home without going to a bank or to a Western Union office. Rates were cheaper than the traditional methods as well.

The world changed again with Bitcoin entering the world markets in 2009. Bitcoin was different because a person could send money anonymously, without it being tracked, as it was in all other methods.

Cryptocurrency has since risen out of the depths of the dark web to merge into mainstream society because of its convenience and cost effectiveness.

However, the real power brokers behind international money transfer is the blockchain providers. These are the technical engines that make accepting cryptocurrency possible. As the market and use for cryptocurrency grows, so grows the competition in blockchains.

What to Consider When Choosing a Method?

There is more than one factor when considering how to send money internationally.

You must consider:

  • The fee of sending the money.
  • The exchange rate cost.
  • The time it takes for the transaction to be completed.
  • Safety and security.
  • Rules and regulations of individual companies.
  • How you will use the service.

While most transmitting services post their fees up front, the exchange rate can change daily. That will affect your final cost as most services have an exchange rate markup. The lowest is 1 percent, but some can be as high as 10 percent.

What Are My Choices?

There are many ways to send money internationally today including:

  • Traditional banks
  • Western Union
  • MoneyGram
  • PayPal
  • OFX
  • TorFX
  • Prepaid Card Services
  • Cryptocurrency

There are various degrees of efficiency and cost with each of these services, so all of that should weigh into your decision of which to use.

One of the things to consider when choosing a transfer service for international money transmission is to know how you are going to use it. Some will need it to regularly conduct international business, while others may want to send small amounts of money home or pay a bill.

Will it be used regularly or just one time? How quickly is the money needed? These are questions to consider when trying to choose a service provider.

The important thing to remember is you are not bound to a method. You can change the way you transfer money abroad as your needs change.

Traditional Banks

Traditional banks have several ways to send money internationally, including computer and phone apps that allow you to send money directly from your account to another account easily with just a phone number.

The downside is they can be frightfully expensive. Many of the national banks charge $45 per transaction, making it financially impossible for individuals to send small amounts of money back home.

Another downside of using banks is the wait time. Some take up to three days to process payments abroad.

Western Union

Western Union’s advantage is it allows the recipient to pick up the money where they are located, so they get cash. That fact has proven a great asset to college students requiring more money from parents’ back home over the years.

But, like the banks, it is expensive to use for sending money internationally. Fees can rise as high as $80 and Western Union has a high exchange markup rate. Sometimes, it can also take days to receive the money when doing international transfers.

MoneyGram

MoneyGram faces some of the similar problems as Western Union with lag time and expense, although it uses a computer platform model to deliver. Fees can be between $9 and $25 with its service.

Online Exchange Platforms

PayPal expanded its platform to include Xoom, which allows for international money transfers to occur in minutes. There are some restrictions though, including the $2,999 limit. and there is a mark-up of between 1 and 3 percent in the exchange rate. There is generally a $5 fee also.

There are other platforms that offer zero fees for transfer.

OFX gives you the convenience of both a mobile and a computer app. It has a low exchange rate markup of less than 1 percent and it even sends you an alert notifying you when the exchange rates will save you money.

It offers services to 91 countries, which is convenient for many.

The downside of OFX is that the recipient can’t pick up their money directly. The platform only exchanges between bank accounts. You must send at least $150 and it could take several days to process.

TransferWise is a United Kingdom company that offers services in many countries. The key advantage in this service is it has incredibly low exchange rates as it uses the same rates bank use when they exchange money.

This service is relatively inexpensive also, charging 1 percent of the sending amount, making it affordable for sending small amounts of money.

Prepaid Card Services

Prepaid card services offer security because it doesn’t come from your bank account and they also use electronic transfer, making them convenience. Their downside is in expense. These services charge to put money on the card and then again to actually use it to send money, making it a somewhat impractical method if you send money routinely.

Cryptocurrencies

Then there are the cryptocurrency methods, which are rapidly growing in number. There are literally dozens of blockchain companies out there with more starting up every day. However, there are two who are gaining ground in the world of international currency.

Ripple offers a seamless strategy for sending money abroad as it connects banks, digital providers and corporations. The base of its operations is XRP, which was developed for enterprise use.

XRP is used to provide on-demand liquid payments across borders. The company states this allows for both connectivity across payment networks, real time transactions, traceable transfers and lower operational costs. The lower costs equate to savings for users.

The company remains small, but is growing as it is becoming more recognized.

While Ripple is aiming its market at expanding businesses, another company wants its service to be for individuals sending money back home. Steller.org has a platform for people immigrating from poor countries to send money back to families.

Co-Founder and CTO Jeb McCaleb said sending money should be as easy as sending an email. McCaleb, once an officer at Ripple, believes the global economy is not reaching its potential because of lagging financial systems with limited money in certain countries.

His company focuses on services to areas like the Philippines, Africa and India. He has four partnerships with financial institutions to allow for cross border money exchanges across Europe as well as Africa, India and the Philippines.

How Do I Stay Safe?

The federal government has guidelines for how you can keep your transfers to other countries safe and secure.

You should:

  • Verify the money transmitter is properly licensed.
  • Get a receipt. This will show how the money can be tracked.
  • Contact the transmitter if the transaction takes longer than 10 days.

Security when using any of these services is paramount. Obviously, the most secure forms of transferring money internationally are going to be traditional methods like banks or Western Union.

All money is tracked with these methods and all have both origination and destination codes. Staff is also trained to spot scams and have alerted the consumer and police when scams are recognized.

However, online platforms and cryptocurrency methods are also implementing safety protocols to protect money in transfer and delivery. They must in order to stay competitive in a tight market. You will need to look at each company’s standards individually to get a picture of their policies and protocols.

The federal government has a way to go to catch up on regulations governing all of these new and creative methods of transferring money abroad. Some current regulations may not apply directly to all the given methods. Still, it doesn’t hurt to investigate on how each method has applied federal laws to ensure the proper standards are met.

Conclusion

Understanding how international money transfer systems work and your options is the best way to avoid scams or problems. Those who perform transfers regularly will back these services.

As technology grows, there will be faster and easier options for conducting business overseas and choices will likely expand as well. This is positive for you, the consumer, as competition tends to lower prices for services.

The biggest advantage could be for entrepreneurs who seek to expand business in places in Europe and Australia. It is likely many may need to integrate payment systems into their online business platform to gain more international customers. This could mean a more global economy in the future.

About the Author

David Warren is a lead researcher and senior writer at HardStacks. He has been a financial engineer for over 30 years and has been investing in alternative assets since 2008. He has a passion for learning about economic cycles and educating others on how to protect and grow their wealth by investing in precious metals, real estate and cryptocurrencies.

 

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The post How to Transfer Money to Another Country’s Bank Account: transferring money internationally between banks appeared first on Oak Laurel.

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