nigel woollsey

Nigel Woollsey

Online Writer
Published: 27/03/2019

At a glance

  • Sending money abroad is a very common service provided by several suppliers.
  • This service is offered by both high street banks and other specialist providers, however fees and costs may vary greatly.
  • Transferring money abroad is a secure way of paying for goods and services provided by overseas companies, but can be just as suitable for those looking to send money to family members or to overseas bank accounts.

Sending money abroad, for whatever reason, can be a costly affair. That's why it pays to do your homework and find the service that offers the most competitive rates and the lowest fees. We've selected Xe as our preferred broker for international money transfers, as we believe they can offer just that. First, though, we'd like to answer any basic questions you may have about transferring money internationally.

Pros and cons of transferring money abroad:

  • Makes it easy to pay foreign suppliers in their own currency
  • Electronic money transfers are a safe and trusted way to send money overseas
  • Volatility of exchange rates due to unforeseen events can see the value of different currencies rise or fall – making your pound go further or be worth less on the international money markets

Why transfer money abroad?

There are many different reasons why you might want or need to send money abroad, from assisting family members in another country or buying a holiday home to paying for bills or accommodation overseas. Given our increasingly interconnected global community, goods and services can be bought from anywhere in the world, which makes affordable currency exchange increasingly important. Indeed, there are so many reasons to send money abroad, either on a regular basis or as a one-off, it seems impossible to list them all. A better question might therefore be: why not transfer money overseas, and use the cheapest way to do so?

Sending money abroad

You may find yourself wondering how to send money abroad, now that you've found a reason worth doing so. Your first instinct may be to use your bank account, with even international bank transfers easy to complete nowadays using a provider's online banking platform. All you need is the recipient account's details – for many countries this means their International Bank Account Number (IBAN) and Bank Identifier Code (BIC), though note that not all countries take part in this system, including notably the US.

The main considerations when sending money abroad

Businesses are among the most likely to benefit from using a separate money transfer service, rather than their regular bank account, as they may need to send money oversees regularly. That said, whether personal or business, current accounts tend to charge substantial fees for people to send their money to someone else (or even their own bank account) situated in another country. Not only are there initial fees attached, but the exchange rates are often less than competitive.

We all know not to get money converted at the airport, as this will usually come with the highest fee and the least favourable currency exchange rate. The same can be said for online money transfers abroad. Make sure to look not only at the fee that the money transfer service is charging, but also at the exchange rate, because there can be stark differences in how these are calculated.

How is the exchange rate calculated?

While it will be up to you to discover how the exchange rate is calculated by other global money transfer services or your current account provider, we can tell you about Xe’s method.

The rate you are offered by Xe Money Transfer will be dependent on several factors, including:

  • The amount of money you are transferring.
  • The time-frames you are working to (i.e. whether you are looking to lock into an exchange rate for up to 12 months into the future).
  • The currencies you are buying and selling and the volatility of those currencies.
  • The exchange rate levels at the time of purchase.

In the end, though, it all boils down to asking a simple question before committing to a currency exchange service: “How many euros/dollars/Swiss francs etc. will I receive for my pounds, after all charges are taken into account?”

How safe is it to transfer funds abroad?

As with anything, you should never entrust your money to an organisation without first making sure they are legitimate. While international money transfer companies may not have the same Financial Services Compensation Scheme protection that banks have, there are some key things to look out for.

The main indication of a legitimate, trustworthy service, in any country, is customer reviews. If there are enough other people telling you that they have used it successfully and liked it, then you can be confident that you too can trust it (just watch out for paid-for reviews! If a review sounds too good or generic to be true, it might just be). In the UK, there is another key indicator, namely whether the transfer company is authorised by the Financial Conduct Authority (FCA).

The FCA is the UK's financial watchdog, and businesses offering payment services are required to be either authorised by or registered with the FCA. If a company is authorised, your cash is protected so that you should be able to get it back if the firm finds itself in difficulties. If it is registered instead, as smaller companies tend to be, your cash may not be safeguarded, as these companies can choose whether to comply with the safeguarding rules.

However, sending money abroad using an authorised service should be just as secure as sending it to another bank account within the UK.

How can foreign exchange rate volatility affect my international money transfer?

Exchange rates are never static – they change every day, and every hour, so the amount you get on one day could be completely different from the currency you get on another day. While small variations are hard to predict, there are certain societal events that could affect the strength of your exchange rate.

Elections and other important votes can have a drastic effect. What this means is that you may want to make sure your global money transfers are conducted before such a big event takes place, or you could take the risk and see if the exchange rate might improve afterwards.

However, you may not have to do all the hard work alone. Unlike many banks, currency specialists can offer additional services and tools that can help you manage your money transfers. Xe, for one, offers:

  • Forward contracts. A 'buy now, pay later' option. This enables you to buy foreign currency based on current market rates, for delivery at a predetermined date, which can be up to one year in the future. Should the exchange rate worsen in the meantime, you will not be affected.
  • Market order. This allows you to specify a 'target rate'. When the market reaches this rate, your currency is bought or sold automatically. You can cancel your order at any time.
  • Personalised rate alerts. This service allows you to set a target rate; Xe will alert you when this rate has been achieved.

Read more about the services and information from our partner Xe in the articles below:

  • Managing corporate foreign exchange and international payments. If you are running a business that could benefit from quick and cost-effective international money transfers, this article is for you! Learn about the benefits Xe can offer, including its Corporate FX service for big businesses.
  • Larger transfers. You can transfer up to £300,000 online and Xe offers access to a dedicated account manager, and more.
  • Smaller transfers. You can transfer any amount of money with Xe.
  • Regular transfers. If you need to send money overseas on a regular basis, for an international mortgage, pension transfers or your family back home perhaps, it’s easy to set up a regular payment with Xe.

Moneyfacts tip

Moneyfacts tip nigel woollsey

Using a specialist international money transfer service can give you peace of mind that your money is being handled as effectively and as safely as possible. Naturally, however, you should also check the account you are sending your money to, as there are plenty of online scams asking for money to be sent abroad under false pretences.

Please note: has chosen Xe to offer an International Money Transfer service. Any legal or contractual relationship will be with Xe. Xe Money Transfer is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017. Any customer money held by them will be in a safeguarded account. Money in that account is protected and cannot be used by Xe to pay off any debts in the event they become insolvent.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

euro bank notes

At a glance

  • Sending money abroad is a very common service provided by several suppliers.
  • This service is offered by both high street banks and other specialist providers, however fees and costs may vary greatly.
  • Transferring money abroad is a secure way of paying for goods and services provided by overseas companies, but can be just as suitable for those looking to send money to family members or to overseas bank accounts.

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