10 Cost-Saving Tips for Sending Money via International Remittance

Introduction

International remittance, the process of transferring money across borders, is a vital service for millions of people around the world. Many individuals, particularly expatriates and migrant workers, rely on remittance services to send funds home to support their families. According to the World Bank, global remittances to low- and middle-income countries amounted to over $540 billion in 2020, highlighting the significance of these transfers.

While international remittances offer a lifeline to many families, the costs associated with these transfers—such as transaction fees, unfavorable exchange rates, and hidden charges—can significantly reduce the amount of money that reaches recipients. For individuals who send money frequently, these costs can add up. However, by using the right strategies, it’s possible to reduce expenses and make the most of every dollar sent. In this article, we will explore 10 cost-saving tips for sending money via international remittance.

1. Compare Providers for the Best Rates

One of the simplest ways to save money on international remittances is by comparing different service providers. Not all remittance services charge the same fees or offer the same exchange rates, and small differences can result in substantial savings over time.

Look for online comparison tools like Monito or Remitly that allow you to see the total cost of a transfer, including fees and the exchange rate markup. It’s important to compare both aspects since some providers may offer lower fees but poorer exchange rates, making the transfer more expensive overall.

For example, in a comparison between Wise (formerly TransferWise) and Western Union, Wise often offers significantly lower fees due to transparent exchange rates, while Western Union might have a lower upfront fee but a larger markup on the exchange rate.

2. Use Online or Mobile Services Instead of Traditional Banks

Traditional banks are known for charging high fees for international money transfers. In contrast, fintech companies and online remittance platforms like PayXborder, Wise, and Revolut typically offer much lower costs due to more efficient infrastructure and transparent pricing.

Using mobile apps or online platforms not only reduces fees but also allows you to track transfers in real-time, providing convenience and peace of mind. Many digital services also offer features like rate locks and low flat fees, which can further help you save.

In fact, a World Bank study found that sending money via online platforms is, on average, 5% cheaper than using traditional banks.

3. Send Larger, Less Frequent Transfers

A common mistake people make is sending small amounts frequently. Each transfer incurs fees, so sending larger sums less often can reduce the total cost of your remittances. For instance, if you send $100 ten times a month, each transfer might cost you $5, leading to $50 in total fees. However, if you send $1,000 once a month with the same fee structure, the total cost might only be $10, saving you significantly.

By planning your transfers in advance, you can send money in larger, less frequent amounts and cut down on repeated transaction costs.

4. Pay Attention to Exchange Rates

Exchange rates are a critical factor in international remittance because they determine how much money your recipient will ultimately receive in their local currency. Many remittance providers offer lower-than-market exchange rates to cover costs and make a profit.

To avoid this, look for providers that offer the mid-market rate (the true exchange rate) or at least a minimal markup. Wise is known for providing the mid-market rate with a transparent fee structure, while others, like PayXborder, also aim to offer competitive rates that benefit the sender.

Monitoring currency fluctuations can also help. Sending money when the exchange rate is in your favor can increase the value of your transfer.

5. Choose the Right Transfer Speed

Some remittance services offer different speed options. While faster transfers are convenient, they usually come with higher fees. If your recipient doesn’t need the funds urgently, opting for a slower transfer can reduce costs. Many services offer cheaper rates for transfers that take a few days compared to instant transfers.

For instance, Wise and Revolut allow users to choose between standard transfers, which take 1-3 days but come with lower fees, and express transfers, which cost more but arrive within hours.

6. Avoid Using Credit Cards

Using a credit card to fund your international remittance is one of the most expensive options. Credit card transactions often come with high fees, including cash advance charges and interest rates. Instead, consider funding your transfers with a bank account or debit card, which typically incurs lower fees.

For example, a $1,000 transfer using a credit card through some providers can incur fees of $30 or more, while using a debit card may reduce that cost to under $5.

7. Leverage Promotions and Discounts

Many remittance providers run promotions or offer discount codes, especially for first-time users. Taking advantage of these offers can reduce fees or improve exchange rates. Keep an eye on promotions from companies like PayXborder, PayPal, and WorldRemit, particularly during festive seasons when many people send money home.

Some platforms also offer loyalty programs or referral bonuses that can further reduce your costs.

8. Time Your Transfers Strategically

Currency exchange rates fluctuate throughout the day due to market conditions, and this volatility can impact how much your recipient receives. Timing your transfers to coincide with favorable exchange rates can make a significant difference.

Some services, like Revolut, even offer tools that allow you to monitor exchange rates and lock in the best rates when they hit a desired level. This ensures you don’t lose out due to sudden unfavorable shifts in currency rates.

9. Consider Using Local Agents for Cash Pickups

If your recipient does not have access to a bank account, using a local agent for cash pickups can be a cost-effective alternative. Services like Western Union and MoneyGram have vast networks of local agents where recipients can pick up cash directly.

However, cash pickups often come with higher fees compared to direct bank transfers. In such cases, it’s still worth comparing different agents or services that offer competitive rates for cash pickups.

10. Look for Fee-Free Transfer Options

Some remittance providers offer fee-free transfer options under certain conditions, such as first-time users or sending large amounts. Additionally, some banks or fintech platforms have partnerships that allow for free or low-cost transfers between specific countries.

For example, PayXborder offers competitive fee structures for transfers between certain countries, and digital banks like Revolut provide fee-free transfers within their own network.

When sending smaller amounts frequently, looking for these fee-free options can help keep costs down in the long term.

Conclusion

International remittance is a vital service for millions around the world, but the associated costs can add up quickly. By taking the time to compare providers, choosing the right transfer methods, and paying attention to factors like exchange rates and fees, you can significantly reduce the cost of sending money abroad.

As the fintech industry continues to evolve, competition among remittance providers is expected to drive down costs even further, with emerging technologies like blockchain and cryptocurrency offering the potential for faster, more affordable transfers. For now, applying these ten cost-saving tips will ensure that more of your hard-earned money reaches its destination, benefiting both you and your loved ones.