The international payment transfer is the process of sending money from one country to another. There are many ways of transferring money internationally, but the most common is using the SWIFT code.
According to Wikipedia, the SWIFT system was established in 1973 for secure communication between international banks. Established as a cooperative society, it charges fees on every transaction made. It allows people or companies to transfer money directly through their computers or mobile phones without going through any financial institutes like banks.
However, this type of transfer has its drawbacks because it requires the receiver’s bank account number and swift code, easily misplaced or hacked into. To avoid this risk, other alternative options provide an easier way of receiving cash across the globe.
Cryptocurrency – An Alternative To SWIFT
One of the new alternatives that are growing in popularity is a cryptocurrency or digital currency. There are many forms of cryptocurrencies, but some popular ones are Bitcoin and Ethereum. Bitcoin is a digital currency that can buy things worldwide without going through any bank or payment processor like SWIFT.
Instead, only the person who wants to receive bitcoins needs to have an account with a service provider such as Coinbase. The process through which this virtual money is sent from one place to another is known as blockchain technology, and anybody can use it so long they have internet access and funds in their virtual wallet:
A blockchain does not require people or banks for transactions, validation of balances, or recording information. Instead, all these are managed collectively by the network of all participants in an ‘open’ shared database. Theoretically, anyone with a computer could download the entire blockchain onto their hard drive and become part of it” (What is Blockchain Technology).
Another alternative for people who are looking to transfer international money with less hassle is MoneyGram. This service provides cash pickup in your local currency through approved agents around the world in 200 countries and territories.
This method comes with many benefits, such as free transfers within 24 hours after funds have been deposited with Moneygram, whether you are sending or receiving money via money Gram’s website, mobile app, or agent location.
However, this option comes at a cost because every transaction needs verification through personal information, including name, date of birth, place of residence, and document type.
According to Investopedia, cryptocurrency is a digital or virtual currency that uses cryptography for security, making it difficult to counterfeit. Bitcoin became the first decentralized cryptocurrency in 2009. Since then, numerous cryptocurrencies have been created.
These are frequently called altcoins, as a blend of bitcoin alternatives. Bitcoin and its variants use decentralized control as opposed to centralized electronic money/centralized banking systems. The decentralized control is related to using bitcoin’s blockchain transaction database in the role of a distributed ledger.
There are three main ways to send cryptocurrency: Sending to a wallet address, scanning a QR code, and using NFC (Near field communication).
- Sending to a wallet address is used when we want to transfer money from one wallet to another. The sender enters the recipient’s public key, the number of coins, and presses send. This method requires no third party.
- Scanning a QR code works similarly to sending to a wallet address because both need the other person’s public key or account number to transfer the cryptocurrency.
- The last way of transferring cryptocurrencies is through Near Field Communication (NFC). This option is available only for Android users who have an NFC-enabled phone. To transfer, all the user has to do is open their cryptocurrency wallet app and press send on the NFC chip on their phone. This will generate a QR code that can be scanned by the recipient’s phone to receive their virtual currency.
Moneygram operates using more traditional methods of transacting and transferring money, such as: sending money through Moneygram’s website or mobile app, sending cash through an agent location, or receiving cash. They also provide some services like Western Union but only in some locations and not all over the world as Western Union does. Anyways, MoneyGram comes with many benefits such as:
- Guarantees your receiver gets it within minutes, or they give you a transfer for free if they don’t.
- Free transfers for money sent to or from a mobile phone number.
- You can send your cash as a MoneyGram eCheck, and if it gets cashed, Moneygram will pay you back up to $2,500.
- The service is available 24/7. The only downside is the fee, which ranges from $1.99 -$14 per transaction depending on the country where the transfer is going to and from. The fee for this service starts at 1% of each transfer with a minimum of $4 and goes up to 50% of the remittance with a minimum of $50.
Money Gram’s fees depend on “Conversion Service,” which basically means how much money you are sending. If the “Conversion Service” is less than $250, the fee will be 1% to 50%. This means that if you transfer $81.27, the fee for this service would be $1.82 (18 cents).
On the other hand, if your transfer is more than $250 but less than or equal to $2,000, then you can expect a percentage as high as 4% with a minimum of $15 and as low as 1% with a minimum of $8.
This is how it works:
If you send 10 000 yen through money Gram’s website or mobile app, 25$ will be deducted from your account as a fee for this service which, again, is called “Conversion Service.”
Once your receiver gets the money, he will be required to pay an extra 2% of the amount you sent plus a fixed fee of 20$ per transaction. So if you send 10 000 yen, your receiver will have to pay 2000 yen (2%) + 20$.
Western Union is one of the most popular and well-known money transfer services around the world. They can be used through their website or by visiting an agent’s location. Western Union offers banking services, but they also provide other activities such as Investments, Insurance, and prepaid debit cards. Furthermore, just like MoneyGram, they come with many benefits such as:
- You can send money online, through your mobile app, or in person.
- They promise to have your money in minutes, and if it doesn’t get there, you will receive a refund.
- You can send money to over 200 countries with their service.
The fee for this service starts at $4 and goes up depending on the country where the transfer is going to and from. For example, sending 20$ to Japan will cost you $9, 46% of your original amount (20×1.09=22). On the other hand, If you were to spend 100$, Western Union would charge 51 dollars for this exact transaction meaning that 5 dollars out of your 100 dollar transfer would be used as the fee for their service.
This means that your actual transfer amount will only be 95$.
Now, if you were to send the same amount of money again, this time to Canada, it would cost you 7 dollars, meaning that 20% of your money is being used as a fee for Western Union’s service.
- You can have your money sent as a Cash Advance or send it on a prepaid debit card, so you are paying more fees every time you use it.
- Your receiver can also choose between receiving his/her cash at an agent location or having it delivered to them in minutes through any one of over 250,000 locations around the world, just like MoneyGram.
The fee for this service starts at $5, and it goes up depending on the country where your receiver is located. For example, sending money to Japan will cost you 46% of your original amount (100$ x 1.09=110).
On the other hand, if you were to spend 100$, Western Union would charge you 51 dollars for this exact transaction meaning that 5 dollars out of your 100 dollar transfer would be used as the fee for their service, like in MoneyGram’s case.
International payment transfers can be very costly and should therefore be avoided if at all possible.
You might ask yourself: “Can I send money internationally for free?” Unfortunately, no international money transfer services, banks, or companies provide fee-free international payments for private individuals.
International payment transfers always cost something – often a lot!
You can save on these costs with a currency transfer because a currency transfer is free for private individuals.
Transfers in foreign currencies are not subject to any commissions or fees when the payment recipient receives the transferred sum in his account in the same currency. A currency conversion will only take place if necessary.
For example, You have € 1,000 in your account. You send US$ 1,000 to the USA. If your payment recipient only has € 1,000 in his American bank account, no currency conversion will occur after the transfer. A currency conversion occurs only if he wants to pay back € 1,000 or withdraw € 1,000 from his account.
Send money internationally for free: currency transfer
If you need to send money internationally, the currency transfer is the ideal solution. It not only has no fees or commissions but can also save you up to 8% in currency conversion costs and foreign bank charges if the recipient receives the transferred sum in his account in the same currency.
And that is basically all you need to know about international payment transfers.