📖 International Transfer Costs Are too High
When sending money internationally, there is one aspect that makes up all the difference when it comes to fees.
People oftentimes think the only cost of sending money from the U.S abroad is the fixed fees…
But in fact, the exchange rate spreads – or in other words the cost of exchanging – is a lot higher than the fixed fees.
Especially when transferring large sums.
A 3% spread on the EURUSD equals a customer paying 3% of the transaction in fees.
And 3% spreads are common amongst US banks.
Luckily, there’s a viable alternative out there for money transfers.
3rd party providers collectively known as “international money transfer services”.
They each differ in their value proposition, and that’s exactly what I’ll try to explain on this guide.
How Money Transfer Services Work?
It’s crucial to understand how money transfer work so you won’t be intimidated of the process.
Here’s the lowdown:
Is It Safe? 🏦
One of the most important considerations when it comes to transferring money internationally is the safety.
We all know that bank transfers are safe and that is probably one of the main reasons people stick to banks knowing they get sub-par service alongside higher costs, compared to Fintechs.
It can be said that money transfer companies are safe, but the level of safety obviously depends on the provider you have opted to use.
The first part to verify is that the service is appropriately regulated.
Regulation in the U.S is on a state-by-state basis.
Firstly, if you would like to operate a money transfer service in the USA, you have to be approved federally by FinCEN (and supervised by them).
Then, for each state, the provider must acquire a Money Transmitter status in the relevant state through the relevant regulatory agency.
It’s important to note that funds held with a specialist money transfer company are not directly covered by the Federal Deposit Insurance Corporation (FDIC).
The FDIC, however, does still recommend money transfer providers to send money overseas.
The best way to understand all those things without having to do your own research is use our elaborated reviews, as we have covered more than 90 providers globally.
Best International Money Transfer: Top 10
- Top-rated money transfer companies on MoneyTransferComparison for February 2024
- When we compare international money transfer services, our focus is on large international transfers.
- Traded publicly, very well known name in the currency business
- Great online platform and mobile app - easy to use, comprehend an sign up with
- Good rates even for small transfers, and no transfer fees
- Personal and close service, perfect for large international money transfers and businesses
- Competitive exchange rates and no transfer fees
- Many industry and business awards - operating since 1979
Can you send money from the U.S with any foreign exchange company?
All money transfer companies operating in the U.S will enable you to send money to a bank account abroad.
But, not all foreign exchange companies are necessarily money transfer companies.
Some foreign exchange companies focus exclusively on selling travel money (physical notes).
Others, deal only with businesses.
Lastly, not all companies support all routes and currencies.
You can view our more specific guides below with transfers inbound or outbound to USA:
International Money Transfers in USA vs UK: Less Selection
Despite the US population being over five times larger than the UK, there has traditionally been a much greater demand and selection available in the UK, the central hub of money transfers.
In fact, the UK is where the currency transfer industry was first formed and the first currency brokers came to be.
Moneycorp, established in 1979, was the first company to offer businesses cheaper foreign exchange and cheaper international money transfers.
These companies have naturally expanded to allow EU citizens, mostly British expats, to use their services, and then expanded to territories such as Australia where they had relatively small regulatory hurdles in on-boarding customers.
The U.S was always a sort of black hole for the international money transfer industry.
Customers aren’t familiar with the product, are naturally more conservative and there are less fintech aficionados when compared to the UK.
It’s not just consumer understanding though, regulation is a key factor too.
U.S regulation forces providers to be regulated in each and every state they want to onboard customers from. This means the costs of being a U.S regulated money transfer service are high and the return is lower.
Hence, there is less selection when it comes to non-bank international money transfer companies for U.S customers. If we look at some of the UK’s most popular FX transfer specialists, we can see their penetration in the US market is low.
- WorldFirst was a dominant money transfer service, but the company stopped serving US customers when it was bought out by AliPay (and then stopped serving private customers worldwide).
- Currencies Direct has only recently (2021) started accepting customers from all US states. Prior to that, many American customers could not register with this brilliant money transfer service.
- Moneycorp also served certain US states in the past but has been accepting US customers from all states for a while now
- OFX has served all US customers for a long time through their subsidiary company USForex which recently rebranded to OFX.
- XE Money Transfers is one of a few North American money transfer companies in the world and has served American clients for a long time now (it combined forces with UK specialist HiFX to operate under the XE brand).
- Wise is a hot fintech company and launched in the US several years after its inception (as other money transfer providers, it focused on UK and European customers first).
- Global Reach Group still can’t onboard American clients.
- Halo Financial still can’t onboard American clients.
- Currency Solutions still can’t onboard American clients.
A complete list of US money transfer services is available below (including remittance providers):
- Currencies Direct
- Wise (TransferWise)
- Xoom Money Transfer
- Ria Money Transfer
- World Remit
- Orbit Remit
- Western Union (WU)
- XE Money Transfer
- Afex (merged into Corpay)
We also cover money transfers outside the USA, as follows:
USA Banks are Expensive
The USA, in spite of its vast financial infrastructure and the fact its banks are some of the wealthiest and most powerful banks globally, is well behind many other countries when it comes to the costs of international payments.
Look at the indicative table below, based on our international bank transfer fees research:
|International Wire Fee
If you were transferring $10,000 from USA to EU, that would be worth €10,132 based on an exchange rate gathered November 2, 2022.
When you deduct the $30 payment fee and 3.6% spread applied by Wells Fargo, you’re left with €9,738.
Roughly 400 euros were lost in this international bank transfer without any reason.
Which Bank is Best for International Transfers From US?
Based on offering the lowest international transfer fees and the best exchange rates, Bank of America is the best US bank for international transfers.
They charge no fee when a currency conversion takes place and apply an FX markup of 2.6% – 2.8%, according to independent analysis on international bank transfer fees.
However, the best bank for international transfers is still considerably more expensive than dedicated currency companies (more on this below).
And unlike currency companies, you do not get access to a currency expert (just generic bank customer service staff) and you do not get any extras.
Live Example: US Bank vs Wise for International Transfers
The below screenshots taken at the same time demonstrate a difference of $75 in spreads plus $35 in wire fees so a total of $110 difference over a transaction of only 1,270 Euro from Dollar. More than 5% more if you pay via your bank as opposed to an international money transfer service.
Which countries and currencies are supported?
Large an respected providers have all the available routes.
These are the most popular country guides on our website inbound or outbound to USA:
Studies you might be interested in:
Surveying American perspectives on traditional banks versus fintech, this study examines perceptions of innovation and value in banking services. It provides insights into customer satisfaction with current banking offerings and the potential shift towards fintech solutions.
Delve into the future of international finances as this study explores American intentions towards money transfers in the coming year. It offers an analysis of potential shifts in overseas spending habits amidst changing economic conditions.