Our Six Picks for Money Transfer

Years ago, when the Internet was still crawling and iPhones and iPads were not even a reality, transferring money internationally was more often than not a frustrating process. Those were the days when money transfers had to be planned in advance and made in person at a financial agency, with each transaction taking up to a month to complete.

Then the digital revolution gave birth to smartphones, tablets and fiber optics. Today, mobile computing is a trillion-dollar business – with more room to grow, according to the MIT Technology Review.

The growing mobile market is also changing the banking industry. The younger population, now more connected than ever, wants convenience and speed. Walking in a bank to pay bills or send money is already an old-fashioned habit.

So much so, that the Western Union Bill Payments Money Mindset Index points to increasingly tech-savvy consumers choosing to adopt mobile technologies to pay bills. “Consumers are increasingly looking for new ways to manage their bills, which points to the need for continued innovation by service providers across the payments industry,” David Shapiro, senior vice president of payments at Western Union, said in a statement.

It’s no surprise that the number of options in transferring money abroad via the Internet have grown exponentially as a result.

Western Union actually has seniority on money-transferring, having introduced the service in 1871. Back then, this was a walk-in processes only. But these days, customers can even send money to a mobile phone, if the receiver lives in a country where this service is offered.

Other banks such as Wells Fargo, have a range of options to send money to Mexico, Central and South America, and Asia, in account-to-account, account-to-cash, cash-to-account and cash-to-cash payments. Other options include popular online services such as PayPal, SafetyPay and Xoom.

All of these companies profit by charging their preset currency exchange rates, transfer fees, and by enforcing their own terms of service provided. The math is simple: the more ways and countries you can send to, the higher the fee and less advantageous exchange rate you’ll get. So the trick is to determine which institution will provide you with the best exchange rate and service fees.

Below is information on the most popular money-transfer services.

Western Union: With a valid photo ID, you can go to any of the 489,000 WU locations in more than 200 countries and an agent will help you. Transfer fees start at $5.

For transfers larger than $3,000, WU makes account-to-account transactions through the online foreign exchange service. The entire deal can be made online: Once registered to the website, customers can get a quote for the currencies they’d like to exchange through the Currency Converter tool, then send the payment, either via account debit or wire transfer. When the payment is sent out, the recipient will receive the rate quoted at the time of booking, regardless of any valuation fluctuations.

This service also covers home businesses that need to send money internationally, at less than $10,000 per payment and up to five times a year. This is great for very small companies or start-ups. WU has also a solution for small business owners who need to make more than six payments a year averaging more than $20,000 per payment.

PayPal:  The pioneer in online payment and money transfers, this eBay subsidiary has grown bigger and better. An account can be created in just a few clicks and it’s possible to make transfers to the recipient’s mobile phone. PayPal exchanges the U.S. dollar to 24 currencies – including the Brazilian real, the Mexican peso and the Canadian dollar – and sends money to more than 100 countries.

Depending on the destination, international transfers have a small fee of 0.5% to 2% when fully funded through a bank or PayPal balance. If the transfer is being made with a credit or debit card, the fee rises to between 3.4% and 3.9%. This means the final cost of the transaction will depend on the country of destination, whether the transfer was made through a bank account or credit card and the exchange rate. Money transfers within the U.S. are always free. For 2.9% of the total amount plus $0.30 per transaction, it’s possible to transfer money using a debit or credit card.

SafetyPay: This online platform has patented the first non-card-based network payment technology designed specifically for those who need make to purchases from merchants worldwide, directly from their bank account and in their local currency. “When checking out, consumers choose SafetyPay as their payment method, and choose their preferred currency. They are then redirected to their online banking page, where they approve payment,” the company’s website states.

Besides online payments, the company differentiates itself from the crowd for its specialized services: Call Center Payments – an entire payment process geared toward businesses that rely on call centers for sales. Customers don’t need to use credit cards to make payments; they can conclude the sale using a unique payment code they received during the call to get connected to their online banking platform. They can also pay at one of SafetyPay’s walk-in payment partners. There’s also Invoicing – an automatic system that doesn’t require businesses to build a shopping cart platform. The business provides the customer with a payment code and a link to SafetyPay Express – SafetyPay’s online checkout page. The customer then enters the payment code, selects the bank and currency, and is directed to their online banking page.

Xoom: This company is expert in online international transfers, sending money directly to 30 countries, many of which are located in Latin America. The company’s main appeal is its low-fees and good exchange rates. Senders can fund their money transfer with a credit card, debit card or bank account, and the money can be picked up in cash at a selected location or deposited quickly to bank accounts. Users can send a minimum of $25 and up to $2,999 each time. Transfer fees, which vary depending on form of payment, country of destination and amount of transaction, range from $4.99 to $30.

Just recently Xoom partnered with Walmart.com so customers can send money 24/7 via the retail’s Online Money Center.

MoneyGram: Like Xoom, this is also a cost-effective solution and a Walmart partner. Unlike Xoom, it sends up to $1,499.99 per transaction to more than 197 countries. There are two types of service: same-day funding via debit or credit card and economy service, in which funds arrive within three business days. This is done via a bank account.

With MoneyGram, transfer fees are based on the service option and transfer amount, but they can be as low as $5 to send money to Mexico, for example. In addition, the company makes money during foreign currency conversion, and the exchange rate is set by MoneyGram and its agents.

Viamericas: With a mission to “unite immigrant families globally,” this is one of the best-value companies for transferring larger sums of money, according to a Consumer Reports investigation. The company has a useful “effective exchange rate” comparison tool in its website. The tool compares the amount of origination currency and the amount of destination currency among Xoom, WU, MoneyGram and Viamericas to provide customers with insight to the best value for their transaction.

The registration process is a bit more complex, requiring a bank account validation step that can take up to two business day to clear. But once the bank account has been verified and Viamericas has been paid, the beneficiary receives the money immediately. Customers can send up to $8,000 to thousands of locations in Latin America, United States, the Caribbean, Spain, Indonesia and Africa.

As mentioned, Consumer Reports investigated a number of other money-transfer companies and compared them according to fees and exchange rates. Click here for a list of the findings.