The festive season usually is a peak time for money transfers – many people want to support their families by sending them money. But what is the best way to do so and what are the key points you should be aware of?

Today we have a great choice of applications to send money across the globe – most of them have the same functionality, similar UI/UX, and even fees in many cases are the same. So, what to consider and how to make the right choice? 

Key criteria are the following – transaction limit, delivery speed, foreign exchange rate, transaction fee, coverage, and recipient credentials. 

So, let`s start with transaction limit – it very much depends on the way you are using the app – if you went through the full KYC (Know Your Customer) procedure – you will have higher limits to send money compared to cases when you can just download the app and send funds without proper identification. Also, it depends on recipient credentials – if you are sending money to the bank account the limit will be higher if, for example, you are using a mobile wallet or credit card.

Delivery speed – time from pressing send button in your app to the moment when money will be credited to your recipient account. Usually, money travels within a day. It may vary from instant credit (within seconds) to a couple of hours. In some cases, when traditional bank rails (like SWIFT) are used – it may be one or two days. Why it is important? Because the speed of delivery could impact the fees – faster transfers may cost higher than its slower option. 

Foreign exchange rate or FX – this is the most important thing you have to pay attention to. Foreign exchange in money transfer transactions means the exchange rate that your service provider will apply to convert your home currency into recipient currency. The rate is applied to the amount in full and that’s why it is more important than the transaction fee.

Transaction fee is another metric that helps us to make the right choice of a service provider. I would suggest to go for a flat fee (fixed) per transfer rather than a percentage (variable) fee. Cost transparency is what really matters in cross-border money transfers. Also, don’t forget to make sure that the recipient will not be charged for incoming transfer.  Always good to be aware of the final cost of service before transfer rather than be surprised after it happened, right?

Coverage of the service – it is a simple metric – you would not be able to send money to a country where your service provider has no presence.  But also, on top of that – there is some geographical identity that most of the providers have. Meaning some of them are focused on EU corridors (like TransferGo and Wise), some – on North America (like Remitly), and others have better coverage in CIS countries like Paysend. That means that for key corridors this service provider might offer better conditions in terms of fees, FX and delivery speed.

Recipient credentials – last but not the least important point. And it’s all about convenience – you want to send money to a credit card that your recipient will be able to spend immediately or it will be a bank account that might require some additional steps like cash withdrawal etc. The Pandemic clearly defined a trend that physical branches are not relevant anymore and everything should happen online. 

In our next publications, we will review and compare the money transfer applications of key providers. Stay tuned with Finsmarta!