There are a lot many reasons why people communicate or travel internationally; They do so for business, for pleasure, for work, for education, etc. Likewise, there are many reasons why they may get in trouble as they want to make such communication, travel abroad or while they are staying in another country. one of the most common and most urgent of such troubles is, for sure, how to exchange or transfer money in the easiest, safest, fastest and cheapest ways possible.
In this article, we provide you with essential things you might need to know about money transfer and money exchange, including why they are important in today’s world, how they are usually done worldwide and what could be mentioned as the commonest problems and challenges that people doing money transfer and money exchange face with. Later, we explain peer to peer payment services that are easier, safer, faster and cheaper ways of doing money transfer and money exchange. Read this article to the end, we have good news for you!
With the rapid development of communication technology, the world has indeed turned into a global village where people can easily communicate with one another and use such communications to fulfill their needs much better today than yesterday. And in such an interconnected world, one vital thing that is very much required to maintain and extend communications is money.
Like it or not, money is the commonest means of payment for goods and services all around the world. It is a crucial factor without which modern complex economic organization is almost close to impossible. Therefore, exchanging and transferring money from one country to another have gained crucial importance during recent decades.
How are money transfer and money exchange usually done?
Money exchange and money transfer are done every day, every hour, every minute and every second for a variety of reasons among a variety of persons worldwide, be it real or legal. They exchange and transfer money for buying or selling overseas property, paying for overseas tuition fees, investing overseas, sending money to friends or family who live overseas, and many more other reasons.
Today’s digital banking is so well-developed that you can transfer and exchange money from wherever you are to wherever you want, all in a matter of minutes. There are even many online applications you can install in your mobile phone, by the use of which you can make international money transfers and exchange multiple currencies 24/7 without having to leave your home.
Four common online platforms for money transfer
For the purpose of saving time and money, and to avoid safety concerns, old methods of money transfer such as using cash, check, bank draft, or money order are getting less and less popular when there are easier, faster, more economical still safe electronic methods for transferring money between accounts, states, and even countries. If you ever send money abroad, you might have heard about one of the following cashless and online platforms:
1. Western Union
This American company of international money transfer services is an old one and was founded in 1851, but it is still very popular. The company offers person-to-person money transfer, money orders, business payments, and commercial services.
Western Union gives access to users through its website and it also has a mobile application that allows you to send money easily to more than 500,000 agent locations in over 200 countries and territories.
This platform, however, is not tax-free and will charge you fees, which will be determined based on the speed of the transfer you like, the location you want to send the money as well as the amount of money being sent. Based on the amount of money, for example, Western Union charges $5 for a money transfer of up to $50, and a transfer of $900 could cost a fee of $76. A slow delivery is another weak point for Western Union (usually four to five days).
There are also specific money transfer limits using Western Union which vary based on a number of factors, including your transfer history, your location, your receiver’s location, the service you choose, your payment method, agent location limits and country receive limits.
Back in October 2007, the Western Unioncompany announced a new plan which was to introduce a mobile money transfer service with the Global System for Mobile Communications Association (GSM). GSM is a global trade association that represents well over 700 mobile operators in 218 countries worldwide and is so extensive that it has more than two and a half billion subscribers [Wikipedia].
2. PayPal
PayPal is another online payment system that was founded in the United States back in 1998. It provides its users, individuals and businesses around the world, to receive or send money online.
Using the PayPal platform, it’s free to send money, however, the recipient has to pay tax and is charged a fee to cash the payment. For transfers up to $3,000, the charge is 2.9%, plus $0.30 per transaction.
What is interesting about PayPal is that there are no fees for sending money to friends or family members, but under the condition that the money is coming from a bank account linked to a PayPal account not a credit card. If you use a credit card for doing so, then you’ll have to pay whatever fees your issuer charges you. PayPal is very much mobile friendly.
It has a mobile application which is super easy to use. You can shop, withdraw and send money, anywhere at any time. PayPal’s algorithm, however, can sometimes detect suspicious behaviors in your account and then automatically freeze your account, without warning. In addition, some banks may charge you with transaction fees when you transfer money from your PayPal account to your bank account.
The platform requires one to four days of your time to do your money transaction depending on the amount of the money and the distance where you want to send or receive that amount.
As of 2020, PayPal is operating in 202 markets and has 305 million active, registered accounts. This platform provides its customers with services such as the possibility of holding, receiving or sending money in 25 different currencies worldwide.
The company introduced a new service on October 21, 2020 that allows customers to use cryptocurrencies for shopping at 26 million merchants on the network, which will be available for PayPal users in 2021 [Wikipedia].
3. OFX
OFX, previously known as OzForex is a world class international money transfer service which was founded in 1998 and is based in Australian, but now has offices around the world.
This online foreign exchange and payments company offers its services online, in its mobile app or over the phone. Because OFX bases the rate they charge on how often you use the money transfer services, it is an economical option for those who make frequent transfers.
Using OFX, you don’t have to be worried about transferring huge amounts of money as there are no maximum transfer limits, on the other hand, there is a minimum transfer limit in OFX, which means you can’t use this platform if you want to send less than $150.
OFX has a straight forward fee model. The fee is within the exchange rate offered and can vary according to what currency you are transferring between 0.5% and 0.8% of the transfer amount.
There is also an additional fee of $15 when you want to send under CA $10,000 or AUD $10,000 by this platform.
For most major currencies, transfers may take 1-2 days (from the time OFX receives your funds). With most exotic currencies, however, this process may take anywhere from 3-5 days.
OFX was previously working under the name of “OzForex”, which was started by Matthew Gilmour back in 1998. At that time, Gilmour was working at Bankers Trust as the head of foreign exchange.
Before changing into OFX in 2015, the OzForex brand itself used to operate a number of different territory specific brands including NZForex, USForex, UKForex, CanadianForex, as well as ClearFX and Tranzfers [Wikipedia].
4. TransferWise
Founded in 2011, TransferWise is an online platform for sending money that offers money transfers internationally. This London-based company helps its users from around the world to receive and send money using actual and fairly up-to-date exchange rates.
TransferWise is quite easy to use online and you can also use the mobile app on your smartphone to transfer money.
Using TransferWise, you can count on more than 750 currency routes worldwide, among the most popular of which are GBP, USD, EUR, AUD and CAD. This online platform also provides multi-currency accounts.
TransferWise could gain a net profit of $8 million in the year 2018. The company provides services for over 4 million customers around the world with monthly transfer of around $4 billion [Wikipedia].
Using this online platform, the money transfer is not for free, however, and you need to pay tax, an extra charge for the transfer. The TransferWise fee is worked out as a percentage of the amount you’re sending, which means that The more money you send, the more your transfer costs.
If you want to convert a currency using your card, for example, a fee of 0.35%-3% will await you, and for an ATM withdrawal of more than $250 per month you need to pay 2% of the actual amount of money you want to get. In addition, it will take one to four days for your money after you transfer it to go directly to the target person’s bank account.
You also need to take into account using such a money transfer service that there are limits for how much you can send with TransferWise. They depend on which currencies you send to and from, and how you pay.
For example, for US dollar (USD) transfers there are limits as follow:
- 1,000,000 USD per transfer on personal and business accounts
- 15,000 USD per day using bank debit (ACH) — the limit resets at 11:59 pm (UTC)
- 2,000 USD per 24 hours and 8,000 USD per 7 days using debit or credit cards
Five common ways of money exchange
There are various ways except for banks to get access to a foreign currency both before and after you depart your country to another. To exchange money, the following ways are usually and commonly used.
1. Exchange in a local bank
In every country worldwide, there are banks that sell foreign currency usually at the good updated exchange rate. But the problem is that not every bank provides currency exchange and it may take you a lot of time to find a bank that offers such service. In addition, many of such banks have only very popular currencies like dollar and euro and they may not be much of a help if you are in need of rarely exchanged currencies.
It is also highly probable that banks, especially in small cities may not have the currency on hand sometimes. Bear in mind that most banks will charge you some fee for exchanging currency. The same is true, and even worse in some cases, for the banks of your destination country.
2. Go to an ATM
The automatic teller machine, or ATM is a good way to get to your required currency 24/7, without having to wait in long teller lines of banks or being in a rush to get to a bank before it closes.
You can also enjoy fairly favorable exchange rates when using an ATM to exchange money. But using an ATM may have risks of safety, especially if the ATM is located in empty parking lots, poorly lighted places or behind bank buildings. To compound the puzzle, many ATMs now only accept chip/EMV cards, that is, you can’t use most ATMs in the world if you do not have a chip card.
Remember that you will also be charged fees for using ATMs that are not within your bank’s network.
3. Get a traveler’s checks
Using a traveler’s check is another way of exchanging currency, though not as updated and popular as the above-mentioned methods of money exchange.
Issued by banks, traveler’s checks are pre-printed, fixed-amount checks that are used for payments abroad, which means you can buy one with your country’s currency in your country and use it in another country for your payments.
If you lose traveler’s checks or someone steals them from you, that’s just fine because they can be easily canceled by one-time visiting and reporting to the issuing bank. However, one of the main advantages traveler’s checks provide is the very replacement if lost or stolen, because you can get a new one only from the same bank which first issued the check for you.
To buy a traveler’s check, you’ll also have to pay a small fee, and the fee you’re required to pay may be higher if you don’t have an account in the bank from which the check was issued. In addition, not every business accepts these checks, which inevitably means you need to find a bank once you get to your destination that accepts to cash the check for you.
4. Go to a currency exchange bureau
Although as mentioned above, there are various centers that offer currency exchange services, some travelers are still interested in visiting currency exchanges not in banks, at airports or in hotels but local currency exchanges in city centers.
Exchanging currency on a currency exchange center is a fairly available option where you can enjoy up-to-date exchange rates usually displayed on a screen right in front of your eyes. Also, in such places for exchanging currency, you can do what you need to do right away with no delay whatsoever.
However, you must be vigilant not to give real cash and receive fake bills in return, a common problem for those who refer to such centers for exchanging their currency. In addition, you should be careful to avoid delivering damaged, folded and torn money.
Note that exchanging currency requires special knowledge and expertise. Before converting currency in local exchange offices, you should be familiar with the banknotes of the destination country and receive the daily price of the currency on non-holidays through the Internet.
Though at currency exchange centers you can see the live exchange rates, they always demand high commissions for the service they provide for you which very well make up for the seemingly fair and up-to-date exchange rates.
5. Do it at the airport or hotel
In addition to all the above-mentioned ways of exchanging money, you can also go to airport currency exchange services or you may want to do it in the hotel where you are staying. But it is usually true that airports and hotels abroad are the most expensive places to exchange currency, which means terrible exchange rates and huge fees.
Therefore, the wise thing is to always avoid choosing airports and hotels for exchanging currency, or at least consider it as your last option, although currency exchange counters in cities might be a better choice for availability of rare currencies.
All in all, challenges such as the delay in the process of exchanging the money, the expensive fees that come with the currency exchanging, the unavailability of the places where one can exchange currencies all the days and all the 24 hours, the safety risks that these methods of exchanging and transferring money may have, the unavailability of some rare currencies, the out-datedness of the currency exchange rates, etc.
have led the customers of these services to look for safer, cheaper, faster and easier ways of money transfer and money exchange.
Peer to Peer (P2P), a better way to transfer and exchange money
Here, we introduce you to one very new, easy, fast, safe and almost free way of transferring and exchanging your money at any time and any place you want. That way is Peer-to-peer (P2P) payment services.
Peer-to-peer or person-to-person currency transfer and exchange supports fast transfers and provides substantial savings over banks. The very phrase ‘Peer to Peer’ signifies that the financial services are without the participation of various financial intermediaries, that is, without the intervention of third parties, and this means a cheap financial conduct.
During a peer to peer transaction, no physical cash has to change hands and the money is received or sent safely and securely directly to and from dealers’ bank accounts. As a result, transfer times are extremely fast with many transfers being completed in just a few minutes. For more information about peer to peer payment services, read P2P money exchange.
Why is Trustply even better?
P2P exchange platforms are growing at a fast pace by offering a lower-cost alternative to individuals and small businesses.
Trustply is, in many ways, one of such platforms but different in many other ways. Trustply is like other P2P platforms in that you can use it to exchange and transfer currency worldwide and 24/7, but it is different in that Trustply charges you literally nothing for providing you with such services.
This means that Trustply users can exchange and transfer different currencies 100% for free. Unlike any other so-called peer to peer platforms, it is only in Trustply that you can see the real peer-to-peer model of currency exchange without the intervention of any intermediary at all. And that’s because we in Trustply focus all on the value of being totally social. Using Trustply, that covers ALL the currencies and ALL the countries worldwide, you can also exchange currency with the average buy and sell price (market price). This is in fact, the best rate ever you can obtain. No one can claim a better price!
To know more about other amazing fractures that this tax-free P2P platform offers its users, visit Trustply.com.
