Cheapest International Money Transfer: How to Send Money for Cheap

By 
Alon Rajic
Alon Rajic is the managing director of Finofin, the company behind Money Transfer Comparison. He was previously a senior manager for XLMedia PLC (LON:XLM). His financial commentary could be found on INC, Forbes, Entrepreneur, The Motley Fool, Nasdaq.com, Yahoo! Finance and more.
Read more about Alon Rajic
Last Edited Nov 02, 2022

Transferring money internationally for cheap is just one of many aspects which determine the best international money transfer company.There are a number of other factors beyond which company offers the cheapest money transfer method that are also vital to consider, but for many the cheapest money transfer solution is the most important.

Wise is a £10bn company built around this very ethos – offering customers a no frills and simple online money transfer system facilitating cheap international money transfers with a great level of convenience and at high speed. In this guide we’ll compare the cheapest ways to transfer money internationally and answer questions like what makes for a cheap international money transfer? Will one provider always offer the cheapest money transfers? And, is the cheapest international payment always the best?

Cheapest ≠ Best When Sending Money Internationally

While the two concepts (cheap and best) are heavily correlated when it comes to money transfers, price is meaningful but isn’t everything. Most consumers believe that cheap could also signify lower quality products, and there is an actual merit to this claim because when money transfer companies try to slash their own costs they also willingly give up on certain aspects of their business.

For example, the aforementioned Wise – which is considered one of the cheapest ways to transfer money internationally today – does not have a dedicated currency dealer function.This is something that competing currency brokers do offer; and whilst these competitors may be not as cheap when it comes to offering the best foreign exchange rates on lower-volume transfers, they can still offer guidance that will theoretically enable customers to transact when the rates are in their favour, and in practise, get more bang for their buck when sending money overseas. This is particularly true when it comes to transferring large sums or receiving large sums, and in these instances, brokers can also beat Wise’s spot exchange rates on top of their other added values.

Similarly, while in some cases, cryptocurrency as a means of payment could be “cheap”, it is not usable due to its high volatility and premature infrastructure – both of which will prevent most people from using it, as cheap as it may be.

If your aim is to transfer money cost-effectively and safely, our recommendation is to look at those guides as a starting point rather than focusing solely on which is the cheapest way:

In this article we will try to break down what cheap or affordable means in the context of transferring money overseas, compare the cheapest ways to transfer money internationally, and provide a cost estimation for each method while breaking down the pros and cons.

What does “cheap money transfers” even mean?

To understand when a money transfer is cheap or expensive, you have to understand the different types of fees you are charged for sending money abroad. Depending on the amount you’re sending, some of these fees can have a much more significant impact than others. Through our MoneyTransferComparison analysis of international bank transfer fees, you can learn that there are two main costs which make sending money abroad more expensive than it should be.

1. Wire fees

The first type of fee applied by banks all over the world is the direct payment fee. It’s usually quite visible how much is charged here and the fee is usually fixed. It normally depends on where you’re sending money from and where you’re sending it to. SEPA transfers are known for being a cheap method of sending money within the EU, whilst SWIFT transfers to the rest-of-world generally attract a higher fixed payment fee. Looking at each country, wire fees can fall anywhere in the price range below:

Banks inSWIFT Bank Fees (Wire)
UK£0-£30
USA$0-$50
AustraliaA$0-A$30
Europe€0-€100
CanadaC$1.99-C$25
NZNZ$15-NZ$30

When it comes to smaller transfers, these fixed fees will make sure that using your bank you are likely to not be able to transfer money internationally for cheap. For example with an American bank, if you want to transfer $1,000 abroad, you’ll pay 5% of that upfront when your bank charges you $50 per transfer.

When it comes to smaller transfers, these fixed payment fees will make sure that using your bank means you are not going to be able to transfer money internationally for cheap. For example with an American bank, if you want to transfer $1,000 abroad, you’ll pay 5% of that upfront when your bank charges you $50 per transfer.

The cheapest ways to send money abroad will generally charge no fixed payment fees or a very low fixed payment fee. This can vary depending on the region and some regions, like the US, are known to be more expensive than others. . Very few companies offer money transfers in USA with a no fee policy, as many commercial money transfer providers do charge flat fees in the region, but we can still highlight some that don’t – see Currencies Direct or moneycorp.

2. Hidden fees in the form of exchange rates

What makes for a cheap international money transfer, to a much greater extent than fixed fees, is the cost embedded into the exchange rate. What this means is that banks are charging an invisible fee off of each transaction involving foreign currency (namely an fx transfer); for example if you transfer money from the UK in Pound Sterling to France in Europe, there is an added cost of exchanging GBP to EUR (for example when transferring from UK to Spain) which can amount to several percentage points of each transfer. Our analysis found banks are charging anywhere between:

Banks inExchange Rate Markup
UK1.62%-3.55%
USA2.65%-3.64%
Australia2.13%-4.58%
Europe0.67%-3.04%
Canada2.07%-3.3%
NZ1.64%-3.16%

We’ve all been at the airport and noticed how much worse the exchange rate is at a bureau de change compared to what we see on google. The same applies for bank-to-bank transfers; whilst it’s never possible to get the rate seen on google, it is possible to get a rate much closer to it. Such exchange rate markups are also charged by the majority of recommended ways to transfer money internationally for cheap but the markup is much lower.

Conclusion: you could end up paying 8% on a transfer

If you are transferring money from Australia, say A$1,000, and paying A$30 in fixed fees on top of a 4.58% margin, you end up paying more than 7.5% of the money you transferred in bank fees. That’s before we have factored in components like intermediary bank fees which can eat up to a few more percentages.

Other Known Fees Which Impact Cheap Money Transfers

One other type of fee to consider is intermediary bank fees. These apply when the payment is sent via SWIFT and the cheapest ways to send money internationally will often have their own internal payment network when you send money from one user on the platform to another. Intermediary SWIFT fees are usually anywhere from $10-$30, so they will not impact how cheap a transfer is as much as payment fees and the fx markup but in the case of the Australian example above, it would actually push the total cost of the transfer to over 8%.

Free international money transfers?

There is no such thing as a free international money transfer. Like anything in the world, there are costs to provide the service and there are costs to use the service. One of the best ways to understand how much we should be paying for an international money transfer is to understand how international money transfer providers and banks make money – this way we can easily snuff out those companies exploiting us and those offering a fair price.

Background: How do Banks and Money Transfer Firms Make Money?

When banks trade FX with each other they do so at the interbank foreign exchange rate. This is the true exchange rate that you’ll find when you google a particular currency pair. Most people wonder if banks can trade at the interbank exchange rate with each other then why am I not eligible for this rate? The truth is it’s a bit like everything. To provide FX as a service is costly – technology, compliance and staff are just a few of the costs involved. It’s impossible for money transfer firms to offer the interbank exchange rate whilst encountering these costs. If they did, they would soon go out of business. For this reason, customers should expect to encounter some sort of FX spread in their transaction. That being said, it doesn’t need to be an extortionate spread that is so often applied by banks and some money transfer brokerages.

In case you’re wondering why banks are able to trade at the interbank exchange rate with each other – all banks incur similar costs to provide foreign exchange so they are happy to waive these costs when trading with each other. Commonly, at the close of play on each business day, you will find banks trading currencies with each other depending on their customer deposits and the currencies they are long and short in.

You can easily calculate the spread you are being charged, as follows:

(Rate Offered – Interbank Rate / Interbank Rate) x 100 = FX Spread

Read more here: how international money transfer companies make money.

Misleading Financial Promotions

Financial promotions and adverts are normally the most regular contact consumers have with the products offered by financial services companies. The adverts can be across any medium, whether offline like billboards and direct mail or online like websites, social media posts and mobile apps. These ads can provide valuable insight into a firm’s culture and conduct. The FCA regulates advertising for most financial services and this includes products like money transfers and e-money. This is why you will find many payment companies offering “fee-free international transfers” but never “free international transfers” – the latter would technically be misleading. If you are concerned a payment provider has a misleading ad, you can contact the FCA here. The Advertising Standards Authority (ASA) may also get involved, depending on the nature of the complaint.

Realistic expectations on what’s “cheap” in overseas transfers

For us, a cheap international money transfer means a method that will enable prospective customers to send money to and from Europe, UK, USA, Australia and Canada cheaply – as in a significantly lesser cost than those offered by banks or competing methods. That doesn’t mean a free international money transfer with absolutely no costs, because such ways simply don’t exist.

Realistically, the concept of a cheap way to send money overseas heavily depends on two factors – the currencies involved and the volume. For business customers who are using a business foreign exchange service to move millions each month, a cheap transfer may mean no fees and a markup of ~0.2% of each transfer (x10 cheaper than the average bank markup). For private customers transferring money to exotic currencies at a small volume in a one off transaction, a total cost of 1% may be the cheapest money transfer they could achieve which still represents potential savings of 60% or 70% compared to banks.

Below we will drill down the most popular ways of sending money abroad, and we shall indicate which is ultimately the cheapest way to transfer money internationally.

1. Transferring money directly with your bank internationally

Our international bank transfer costs research has demonstrated that while sending money internationally with a bank might be the most popular, or even perhaps the most convenient way to transfer money overseas (because almost everyone had a bank account readily available and they don’t have to sign up with an external service to facilitate the transfer), it is most certainly not the cheapest way.

Even the bank offering the cheapest international money transfers in UK (Nationwide with the lowest FX spread, Barclays not charging fixed fees) is going to cost you in excess of 2% of your total transfer. The cheapest big American bank is Bank of America which charges in excess of 2.5% on average per transfer, quite the opposite of cheap. European banks are slightly better, and Australian banks are even more expensive than their global counterparts, but the bottom line is that using a bank to make a transfer abroad isn’t cheap if there is a currency exchange involved in the process.

2. Transferring with your bank using a same-currency transfer

Transferring money using your bank to a recipient abroad and paying in the same currency that your account is in, eliminating the need to exchange to a different currency and circumventing the high FX spread costs, is probably the cheapest way to transfer money between banks internationally. The only costs you will bear for your transfer is the wire fees which is £15 on average in the UK or $20 on average in the U.S (and equivalent in other countries), not a whole lot!

The downside of this is that the recipient must agree to receive funds in a foreign currency, which could prove unlikely. If you need to make a payment to someone overseas, their main consideration is their own needs and requirements and not finding a cheap payment solution for you. If they then need to convert funds to their domestic currency, a high cost burden would be on them for conducting the currency exchange.

3. Paying using a credit card (if B2B or C2B payment)

One way to transfer money abroad easily is to make a debit or credit card payment. That’s of course only relevant if you are making an FX payment to a business that is able to accept card payments.

If you do have the option of paying via your card, it will depend whether the business is able to process funds in your domestic currency (some larger retailers offer customers to pay in their own currency) or that you will need to make a currency exchange through your card provider.

If the former, then paying with a debit or credit card could be a very cost effective way. Debit cards would normally charge 0.2% in total in the UK, and $0.21+0.05% in the USA, when paying in the local currency.

If the latter, and you would have to make a foreign currency exchange through your card, then it is definitely not a cheap way of making an international payment, as card issuers charge anywhere between 2.5% and 4% for that.

4. Transferring money abroad with crypto

Crypto is not a way of making cheap wire transfers because crypto-to-bank payments are not yet something that is in existence, but they are definitely a very hyped method of transferring money between borders, and as such, worth mentioning.

The thing about crypto is that in order to transfer money to another individual you don’t need to exchange currencies and avoid being hit with currency exchange fees. Similar to method 2 discussed earlier (sending same-currency transfers being the cheapest way to transfer money internationally), the idea is that the only costs you would have for transferring crypto-to-crypto payments (for example BTC to BTC) is what the broker or platform is charging you. However, Coinbase charges up to 4.5% on such transfers and Crypto.com charges up to 3% so that’s not a cheap way of transferring money to begin with… but on top of that, you don’t always find recipients willing to receive crypto payments. Cryptocurrencies are too volatile to be a significant means of payment currently, and the assets that were supposed to offset the volatility (stablecoins) have failed to prove their stability (with the second largest stablecoin, Terra, suspected of fraud and collapsing mid 2022).

5. Online money transfer services and p2p

A very cheap way of transferring money internationally is to use a designated service provider whose sole focus is to cut the costs of money transfers for its customers. If these types of businesses aren’t able to beat traditional methods of sending money, they simply wouldn’t have any business, and would be forced to close down. Luckily, what’s happening currently is contrary to that – businesses like Wise, Remitly, and OFX are experiencing tremendous success which is measurable, as they are all publicly traded companies. Wise’s fees are around 0.5% on average, OFX’s 0.8% on average, and Remitly’s “under 2%” as per their CEO’s declaration.

For transfers under £20,000 these firms are likely going to provide the cheapest international money transfers.

The two additional online money transfer companies are

Currency Fair, an Ireland-based company that works with a P2P model and tries to match each transfer with a correlating transfer of another user on the other end, can reach FX margins as low as 0.2% on such matched trades (and winning the “potentially cheapest way of transferring money abroad” award).

Sokin money transfer offers a new revolutionary model that enables transfers at just a fraction off the actual mid-rate (i.e. no FX markup) in return for a fixed cost of membership. In theory you could transfer a million dollars abroad for as cheap as a £10 monthly subscription fee and just a minimal FX markup. It’s an almost unbeatable pricing scheme, but the business model appears like it’s already had to change and it’s not quite clear what the FX markup is.

Another worthwhile way of transferring money internationally for cheap would without doubt be Revolut. Revolut is one of the UK’s most successful and highly sought-after startups with millions of customers using the Revolut system to transfer money abroad as well as use its multi-currency card function to spend overseas with ease and without almost any FX costs. In addition to Revolut, another Neobank startup in the UK offering a cheap money sending alternative is Monese. While its introductory markup is 2.5% (as high as UK banks), its premium package costing just £14.95/m enables customers to make currency transfers for free.

6. Currency brokers: our #1 choice for cheaper transfers

Currency brokers are services that are essentially designated to enable large money transfers for cheap while providing added value that is most likely to be of benefit to those sending payments of this volume. Similar to online money transfer providers, they have an online system in which you could book a trade, a money transfer app with all the bells and whistles and they too, offer wholesale currency rates. They are also more likely not to charge fixed international wire fees.

The biggest added value that brokerages have in comparison to plain-vanilla online money transfer companies is that they offer a dedicated currency dealer to handle each client. That means that, simply put, there is an expert who understands the ins and outs of the foreign exchange industry and is able to provide guidance that goes beyond the realm of simply offering a cheap international money transfer. They do provide cheap transfers by offering competitive rates and will often beat online money transfer competitors on larger trades, but they can also recommend the best timing to make a transfer and/or suggest tools like Forward Contracts which can help get the best rate possible.

For example, if the current GBPEUR rate is 1.12 but your currency dealer recommends that you wait on your transfer for 2 weeks and the rate improves to 1.14, you have actually earned 2% above what was the interbank rate when you wanted to make the transfer. Similarly, if your dealer recommends using a Forward Contract to fix the current rate for 2 years now on your mortgage payments and have saved you from a downward slide of 10% in the GBP to USD rate, he managed to help you save 10% which you would have been losing regardless of the fees and margins applied to your transfer with any other bank or provider.

Currency brokers are usually the cheapest for international money transfers over £20,000.

Top 3 Cheapest & Recommended Brokers

Currencies Direct
  • Min Transfer: £/€/$ 100
  • Currencies Supported: 39
  • Offices : UK, EU, USA, India, South Africa.
  • Our Rating : 97.8%
  • Most Global Offices and Reach

    No Fees from Anywhere and Competitive Rates

    96% Client Satisfaction
TorFX
  • Min Transfer: £/€ 100
  • Currencies Supported: 40
  • Offices : UK, EU, Singapore, and Australia.
  • Our Rating : 93.4%
  • High Quality Bespoke Service

    MoneyFact's Best Provider Award

    Over 100 Years of FX Experience Across Its Trading Desk
moneycorp
  • Min Transfer: £/€/$ 50
  • Currencies Supported: 120
  • Offices : UK, EU, USA, HK, and UAE.
  • Our Rating : 92.8%
  • Business Oriented, Many High Profile Business Customers

    Industry Veteran since 1979

    Diverse Hedging Options and Excellent Guidance

Concluding words – the cheapest ways to send money internationally

Based on our overview above, you will see that the cheapest ways to transfer money internationally are:

  1. Making same currency payments through your bank (if your recipient agrees)
  2. Currency brokers (for high value transfers)
  3. Online money transfer specialists offering low fees or premium subscription models that make international money transfers almost free (for lower value transfers)

Each of those methods will save you anywhere between 60% and 95% of your transfer costs as compared to the most expensive ways being

  1. Using your bank to make a transfer abroad that includes a currency exchange (2-4%)
  2. Using an online eWallet function like PayPal (up to 5%)
  3. Transferring crypto overseas (up to 4.5%)