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Avoid hidden fees when sending money overseas

Sending money overseas - it’s as simple as logging into your bank app, and hitting send, right?

Avoid hidden fees when sending money overseas
Photo: TransferWise

Wrong.

While this is one option, it’s not likely to be the cheapest – and there are a range of other services that you should consider before sending your hard-earned cash across borders. Unlike domestic payments, there are a multitude of fees and exchange rate spreads to think about.

Read on for a guide to the best options for international transfers.

How much does it cost to send money abroad?

This depends entirely on what service you choose to use to send money overseas. But there are a few key costs to watch out for.

  • Fees: Most providers will charge some kind of upfront fee. This may be a percentage of your transfer amount, or a fixed rate fee. This is the easy part – the charge to watch out for is…
     
  • Hidden fees and the exchange rate spread: This is often charged on top of your standard fee. Many providers will use their own exchange rate that doesn’t match the mid-market rate (the one you see on Google or XE), allowing them to take an extra cut on top of the declared fee. Watch out for providers who say they let you send money abroad ‘free’. They’ll often be taking a cut on the exchange rate.

What are my options?

There are three main options when sending money abroad – each have their advantages and disadvantages.

Your bank

Using your bank may seem like the best option, but be wary of hidden fees. While your bank may claim to offer free or commission free international payments, they will often use their own exchange rate that differs from the one you’ll see on XE or Google. This means they can skim an extra fee from your transfer – some charge as much as 5 percent in hidden fees.

Using your bank may be convenient, but it’s worth comparing their rates to other providers too – you might find you can save some money.

High street providers and brokers

You’ve probably seen them on your local high street. The likes of Western Union and Moneygram have a presence in many cities worldwide. While they also offer convenience – and cash pickup globally – they’re also guilty of overcharging for their transfers.

On top of the fees they charge up front, take a look at the exchange rates they offer. Often both the buy and sell rates on their LED boards will be significantly wide of the Google or XE quoted mid-market rate.

Online providers

Over the past few years a number of ‘FinTech’ (or financial technology) providers have emerged offering a much better solution for sending money overseas. 

TransferWise is one such service. Built around transparency, TransferWise charge a small one-off fee for their transfers (as low as 0.5 percent on many routes) – and always use the mid-market rate for their transfers. That’s the same rate quoted on XE or Google. 

TransferWise can send direct to bank accounts in many countries worldwide – and while it doesn’t offer cash pickup like some high street providers, it’s up to eight times cheaper than using your bank or a high street broker.

How safe is it to send money abroad?

It’s generally safe to use online providers for international money transfers – but there are a few things to consider. Financial services are heavily regulated globally.

In the UK, for instance, providers are regulated by the FCA (Financial Conduct Authority). Online services also have to comply with the same KYC (Know Your Customer) regulations as the banks that were bought in in 2007 to tackle money laundering.

Something to consider with any provider is whether they are authorised or registered by the FCA. There are different risks associated with both.

  • Authorised: If a company is authorised by the FCA (meaning it’s trading over £2.4 million a month) then at the end of each day the firm must separate its customers money from its own. This means if it goes bust, the customer's money is still safe.
     
  • Registered: Many smaller firms are only registered with the FCA, this means that they don’t have to fence off money as above – and if they get into financial difficulty your money may be lost.

To find out whether a firm’s authorised or registered, you can search the FCA register here.

How do I choose the best provider for international money transfers?

While the best deal likely depends on where you’re located and who you bank with, it’s worth carefully weighing up your options to make sure you don’t get ripped off when you send money abroad.

Here are a few simple steps to take:

1. Get a quote from your bank. While it’s unlikely to be the cheapest option, it gives you a starting point. Ask them for any fees they charge – and for the exchange rate and exchange rate spread they charge (they may not declare the latter). Compare the rate they’re offering to the one on Google or XE to get an idea of any fees hidden in the exchange rate.

2. Compare this quote to online providers like TransferWise for the best price. It’s also worth considering how quickly you need your money to arrive at its destination – many online providers provide a delivery estimate tool to give you an idea.

3. If you decide to go with an online provider, do your research. Check their reviews on TrustPilot, look at their status with the FCA and compare their rates to the Google and XE rate to make sure you’re getting the best deal.

Ultimately, the choice is yours, but it’s always worth comparing different providers – and TransferWise has a reputation as one of the cheapest and most reliable.

This article was sponsored by TransferWise.

 

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MISSING PEOPLE

Why is this Italian football club posting missing people pics?

On the left, the smile of a footballer, happy to join his new club. On the right, another smile, but one which hides a dramatic story. AS Roma are using transfers to highlight the plight of missing children.

Why is this Italian football club posting missing people pics?
When the AS Roma signed Pau Lopez, it put out a search for a missing 15-year-old. Photo: AS Roma/Twitter
Roma is one of the two major clubs from the Italian capital along with eternal rivals Lazio and on Sunday both will go head-to-head in a fiery derby clash at the Stadio Olimpico.
   
On social media, clubs compete for originality when it comes to announcing new signings, and in recent years Roma have built a solid reputation for their quirky humour and style.
   
But in 2019, the three-time Italian champions decided to take another approach to announcing new signings, using the club's extensive digital media following for social good.
   
New recruits are now presented alongside the face of a missing child, with information, a phone number and a video clip.
   
The project is run with 13 associations and since June 30 and the signing of Italian defender Leonardo Spinazzola, six children featured have been found, in Great Britain, Belgium and Kenya.
   
“I don't think any of us expected a child we'd featured in a video to return home safely, obviously we prayed it would happen but we didn't expect it,” Paul Rogers, AS Roma's Chief Strategy Officer told AFP.
 
“When I got the first call from the charity Missing People to say a teenage girl from London who had featured in the Mert Cetin video six days earlier had been found safe, it was one of the best days I have ever had at work. I was so excited to tell everyone. It was just brilliant.”
 
In Septemer, the club announced that the 13-year-old Kenyan boy featured alongside the transfer of Chris Smalling had also been found. 
 
   
In total, Roma broadcast 72 videos last summer, presenting 109 missing children from 13 different countries.
   
It was truly global with the focus on the United States, South America, Europe and Africa. These videos were viewed 11 million times, the club said.
   
At the launch of the initiative, Jo Youle, CEO of the British association Missing People, stressed how precious the power of Roma on social media could be.
   
“AS Roma is giving us a fantastic opportunity to reach a wide audience by sharing appeals for missing children and young people with their millions of fans,” she said. “Raising awareness among as many people as possible is crucial.”
 
'Painful context'
 
The concept was inspired by American rock band Soul Asylum's 1993 video 'Runaway Train' which featured missing children, 21 of whom were later found.
   
“Obviously, there was no public internet and no social media back then, so the band used MTV, which I guess was the best way to reach young people across America and the world at the time,” explained Rogers.
   
“With Roma, we thought we could try and do something similar but updated for the social media generation.”
   
The fact that footballers, who have millions of followers on Twitter and Instagram, are associated with the campaign means that it reaches an even bigger audience.
   
“I have spoken with some players like Chris Smalling, whose video announcement featured a teenager who later returned home safely, and I can say that they were beyond proud,” said Rogers.
   
The initiative was to continue during the January transfer window which closes next Friday, but Roma have not yet recruited a new player.
   
And the recent announcement of the death of a young American who had been due to appear in the next video was a stark reminder of the painful context.
   
“The NCMEC (National Centre for Missing and Exploited Children) told us that many brands are scared off by this subject but that only made us more determined to do what we could to help them,” continued Rogers.
   
The Roman club are now trying to convince other big names in European football to join them for a joint initiative on May 25, International Missing Children's Day.
   
“With the help of clubs like Real Madrid, Chelsea, Borussia Dortmund and Marseille, we can help reunite some families,” added Rogers.
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