If you read this article I guess you probably already did an international money transfer. Nowadays many people are in need to send money overseas: expatriates who are moving abroad for their work, migrants who are moving abroad to look for a better career or a better life in order to send money back to their families, students’ parents who send money to their children with no revenues abroad, people who decide to spend their retirement in a cheapest country than their home country and so in need to convert their retirement pension funds into the local currency, and simply as a tourist who travels around the world.
Banks still have the monopoly on International money transfers
International money transfers are an old industry that almost doesn’t evolve since years. It’s a shame because in a global economy we live in, it should have. Banks still have the monopoly in this industry and who says ‘monopoly’ says unfair competition. Indeed the first place many people go when they are in need to do an international money transfer is to their bank. But did you already ask yourself if there is no other options besides of your bank? Because there is a lot! After the financial crisis in 2011, people’s mistrust towards banks began to rise. And so at this moment several money transfer companies appeared. They‘re still not well-known except the old ones like Western Union and Moneygram.
The average cost of banks for an international money transfer is between 7% and 8% whereas the average cost of an international transfer with a MTO is between 2% and 3%. However banks still own 95% of the money transfer market!
You don’t know the cost of your transfer when sending money abroad
When you do a transfer, your bank announces you a transaction fee. It can be for example 4$ for a transfer of 1’000$ to a Euro account in france. And so you think you pay 4$ for your transfer. But it is untrue. Banks make their margin on the exchange rate. They use an exchange rate far below the real market rate; this is what we call the ‘hidden fees’. When transferring big amount of money, you lose a lot of money in fees !
Other options exist besides of your bank, that’s why it is important to look at all the solutions with a comparison service which will give you the best options.