Money Transfer Guide - What to Avoid

 

The market for Money Transfer services can be confusing - terminology, complex options, and issues like exchange rates and hidden fee's are abundant.  With banks, money transfer companies, and online online transfer agents all competing for your attention, its easy to get confused. 

 

Some common areas to be aware when considering your money transfer options include:

Transfer Money - Explained

 

"Beware companies with unclear policies or new startups"

There have been a lot of great new companies that have entered the market for providing money transfer service in the past several years.  There's also been a lot that have disappeared and left customers hanging.  Its not just the small companies - Citibank's C2IT service shut down abruptly after being unable to handle losses or meet revenue expecations and compete with PayPal.  A number of small companies might look viable, but carefully read their policies for how they'll handle your payment and how their processes work.  Fee's should be clearly stated before you commit to send money.

 

"Banks: Usually not the best option"

 

Banks have always been in the money transfer arena - particularly with true wire transfer services that were extremely fast but ultra expensive.  Banks have been very busy the past few years aggressively luring the immigrant market - which has traditionally been "unbanked" with no bank accounts.  Their costs are still rather high - although in some large national banks their costs for transfers in the higher principal amounts are competitive.  If your family has a bank account with a common bank or banking relationship to one where you reside, its worth considering -- but in most cases the true money transfer services are still your best option.

 

"Hidden foreign exchange rates"

Just about all of the major money transfer companies make extra money for themselves by making it hard for you to see the exchange rate they convert your US Dollars from into local currency.  Some set rates directly from the open market settings, while others set their own foreign exchange rates (always higher than the market rate).  Check the exchange rates they post during your transaction.  Compare those rates to true market rates -- including those listed on sites like XE.com

 

"Claims on number of locations are overstated and of little value"

It seems every money transfer company likes to push the number of locations they offer.  Western Union does it everywhere.  MoneyGram does it.  Even the smaller internet only companies do it by hyping the number of ATM locations.  Its really of little value other than Wall Street and analysts.  It doesn't matter much to you how many locations their are in South Africa if you're sending to the Philippines each month.  Stick to the facts - if your family picks up money at a physical agent make sure there's one in their area before you send.  The rest is marketing and hype and of little value.