How to Find a Money Transfer Company You Can Relate to
Friday, July 3, 2020, 6:00 AM | Leave Comment
What is a money transfer company?
Before we understand the value of money transfer companies, we need to look at the market and why they exist. As the decades approached the turn of the century, foreign holidays and retiring abroad became all the more common.
By the year 2000, international economies were interdependent, the EU had the free movement of labor, people were beginning to work remote abroad and flights became dirt cheap.
What couldn’t keep up though was currency exchange. We were still forced to find local currency stores, take out the fixed amount in cash for an average price, and hope this was enough to see us through. Highstreet debit cards become a bit more accessible abroad, but you’re essentially stuck with an awful minimum of ~3% margin.
This is where money transfer companies entered the scene around 2010, though their smartphone and e-wallet functionality didn’t flourish until the last couple of years.
Money Transfer Companies offered specialized FX services to ordinary people, something that FX brokers failed to do for so long. They leverage P2P and freemium models to offer currency for close to the real interbanking exchange rate, and zero or very small transparent fees.
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What companies are on the market
There’s no end to companies you can use, but there are only a handful of genuinely competitive companies that are highly credible. As we will see below, different companies and good for different situations.
Nevertheless, there’s some things that are prerequisites regardless of your situation. That is, predominantly, having a credible company with a good track record and a strong reputation.
Here’s a list of companies that are safe to consider, and for the most part, are highly competitive:
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World First
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Global Reach
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TransferWise
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Currencies Direct
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Moneycorp
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Currencyfair
Most of these companies have been around for a long enough time to be considered highly credible and market leaders. TransferWise is somewhat of an exception, because it only founded 10 years ago. However, despite its controversial marketing history, the company has gained incredible popularity which somewhat makes up for its shallow trading history.
Compare this to, say, Moneycorp, which was founded in 1962 and there’s no question around which has a better reputation within the industry.
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How to decide which company suits your needs
It’s very important to not pick what appears to be a popular and ‘good’ company in isolation. Questions like TransferWise Vs WorldFirst therefore need more inspection. Context is important, so it’s a good idea to start with writing down your needs.
Some questions you might want to ask yourself are:
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How frequently will I convert currency?
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Will I be transferring money online or using ATMs?
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What’s the minimum and maximum transfers I may want to complete?
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Do I prefer dealing on the phone, on the computer or on an App?
Fortunately, these questions are interdependent a little. If the answer to number 1 is: every day; then it’s likely that number 4’s answer is to use an app, as it’s faster than a phone call every day.
If this is the case, then the culturally mainstream companies such as Revolut and TransferWise will be good options, because of their functional app and decent rates. Likewise, assuming you’re transferring small amounts because the frequency is high, then these companies are suitable.
However, transferring large amounts may require more of a specialist, perhaps with a dedicated dealer. This means you might prefer to deal on the phone and an app is surplus to requirements. In this instance, companies such as World First and Global Reach are suitable, because they’re geared towards large transfers and hedging.
Question 2 is hugely important because often companies will throw a ton of functionality at you in their marketing, but they impose a $200 per day ATM limit.
Using an ATM abroad may be the sole reason for looking to sign up with a money transfer company, which is why it’s important to compare specifically the ATM rates, functionality (I.e. freeze a lost card, ban gambling spending etc.) and withdrawal limits.
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In conclusion, it’s important to marry together which companies are highly competitive and what your needs are. Each situation is unique, but most companies can be grouped loosely into the two categories above: for large, infrequent transfers and for smaller, frequent transfers.
Of course, regardless of preference, credibility is hugely important given that you’re dealing with potential life savings, salary or house deposits. There are also some companies which are versatile enough to fulfill both categories, such as Moneycorp.
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