International money transfers explained

An international money transfer is used when you wish to electronically send funds to another country. The transfer can be made in any currency but commonly it will be in the currency of the receiving country.

International money transfers can also be called overseas money transfers, currency transfers or even wire transfers. Companies that perform this service can also have other names including being called currency brokers. This is also a service offered by many high street banks.

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Moneyfacts.co.uk has chosen Xe to offer a Business International Money Transfer Service. Any legal or contractual relationship will be with Xe Money Transfer.

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.

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International money transfer guide

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 it can offer just that. First though, we'd like to answer any basic questions you may have about transferring money internationally.

At a glance

  • Sending money abroad is a very common service offered by several providers.
  • 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.

What is the best way to send money abroad?

The cheapest way to send money abroad is usually through a specialised service rather than your bank account. As transferring money overseas is their main job, they are much more likely to offer the best international money transfer deals.

There are many reasons why as a consumer you may need to transfer money abroad. These can include:

  • Assisting family members in another country when they are travelling, on holiday or in full-time education overseas.
  • Buying a holiday home abroad, including fees and charges.
  • Paying for accommodation overseas if you are travelling abroad.
  • Purchasing goods from overseas vendors – especially luxury or high-value items.
  • Sending money home to family if you are working in the UK.
  • Getting married abroad and paying for the service, reception, accommodation for guests, etc.
  • Pensions if you are retired but currently living outside of the UK.

Compare your high street bank’s rates for making international payments against those offered by our preferred currency broker Xe. Xe specialises in sending money abroad and offers 60 different currencies, so whether you are buying a property overseas or simply need to send money to family abroad, it has you covered.

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

What information do I need to transfer money internationally?

Here are the five things you need to know before making your international payment.

Name of the payee

The person or business that you are sending the funds to.

Payee’s bank account number or IBAN (international bank account number)

Just as if you were transferring funds to another bank account here in the UK, you’ll need the account number of whoever it is you are paying. A preferred way is to use the international bank account number (IBAN) of the payee – this is considered a more accurate way of identifying the account to be paid. This is in a standardised format composed of up to 34 characters. For example, the IBAN for a bank account held in the UK would be:

GB29 NWBK 6016 1331 9268 19
Where GB is the ISO country code
29 are the check digits
NWBK is the bank identifier
601613 is the branch identifier (normally the sort code)
…and 31926819 is the account number

Other common ISO country codes are PK 36 for Pakistan, PL 61 for Poland or IE 29 for Ireland (Eire). Some countries do not participate in this system, for example the US and India.

BIC (SWIFT code)
SWIFT codes are the standard format of business identifier codes (BIC). These are standardised, unique codes used to identify both financial and non-financial institutions. They are comprised of eight to 11 characters and identify a specific bank. These are used as a way to check that the money is being sent to the right place.

National clearing code
The national clearing code (NCC) is used in place of the IBAN. You need one or the other, not both. These are also sometimes called a routing code. As detailed above, not all countries use the IBAN and SWIFT/BIC codes system. These countries instead use the NCC as their preferred method of international bank transfer. Examples include the US, South Africa, New Zealand and Australia.

Payee’s bank name and address
Remember that you’ll also need the full name and address of the person or business you are paying.

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.

What to consider when choosing an international money transfer provider

There are a few elements to consider when choosing an international money transfer provider. Some are common sense and others require a little more research, but these are likely to be your top three:

Security
The most important element must be the security and reliability of the international money transfer provider you choose. Make sure you are confident that your money will be protected at all stages of the transfer. You might want to send a small transfer first to check the service and how they handle things before using them for larger amounts.

Speed
Depending on why you are sending money abroad, the speed of the transfer may be critical. For example, if you are transferring funds for a family member in an emergency or to meet a deadline on an important purchase, then speed is of the essence. Be sure that your provider can meet the timescales you need before proceeding with the transfer.

Cost
Be careful to check the cost of any international money transfer. Fees and the exchange rate you can expect vary considerably across the market, with high street banks typically charging more. Xe charges no fees whatsoever. It's free to open an account and there are no monthly charges. Xe doesn’t charge fees to receive money or apply transfer fees to foreign exchange transactions. Occasionally, some third-party banks might apply charges when transferring the funds to Xe Money Transfer or before the funds arrive in the recipient account.

How long does it take to send money overseas?

It can take between 24 hours to a full five working days to transfer money abroad. The time it takes for an international money transfer to reach the recipient’s bank account will vary depending on the bank or money transfer company you have chosen to use, the currency required and the banking agreements in place with other countries.

Xe can advise you beforehand on how long your money transfer will take to get to the payee’s account.

What impacts the time it takes to transfer money abroad?

There are several factors that can affect how quickly your funds will be transferred to the beneficiary’s bank account. These include:

  • The service provider
  • Which country you are sending funds to
  • Whether or not the sending bank and receiving bank are both part of the same banking group
  • The popularity of the currency
  • When the transfer is made (for example, late in the day or on a public holiday)
  • The payment method used
  • Special requests (urgent transfers might be faster, but they will likely carry extra charges and possibly a worse exchange rate).

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 will be dependent on several factors, including:

  • The amount of money you are transferring.
  • The timeframes 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 comes 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 much money can I save using a currency broker rather than my bank?

Currency brokers are often (but not always) a cheaper option than a bank when you want to transfer money abroad. This is because banks often only update their exchange rates once or twice during the day – currency brokers on the other hand use ‘live’ rates, which means you get the best possible deal in real time.

A currency specialist may also have cheaper fees than a bank – however, it pays to be careful here as some banks will provide a free service if you are transferring money to another one of their branches abroad.

The golden rule – if you are looking to save as much money as possible regarding fees and exchange rates – is to take the time to shop around and do your homework. A little investigation can make a real difference to how much you’ll be paying in fees or obtaining a favourable exchange rate.

Should I use different methods to transfer small or large amounts abroad?

Small payments of £1 to around £5,000
For relatively small amounts of cash being sent abroad, you will find that there are several online firms that can offer you an attractive rate and lower fees. However, it always pays to check with your bank to be sure they are not cheaper. Some banks offer no-fee transfers if the receiving bank in another country part of their brand or banking group.
Examples of smaller transfers might be sending money to a relative who is overseas, payment for overseas goods that you have bought online or transferring money to your own overseas bank account if you have dual residency in the UK and another country.

Larger payments (£5,000 and above)
In the case of larger transactions (say £5,000 or so upwards), you’ll often find it is the larger companies that will offer the best conversion rates and fees. However, once again, it pays to shop around to find the best deals available – this can lead to quite a saving in terms of the fees and/or conversion rates. As with the advice on smaller amounts, be sure to check your own bank’s rates and fees – especially if you are transferring money to another one of their branches overseas.

How safe is it to transfer funds abroad?

As with anything, you should never entrust your money to an organisation without first making sure it is legitimate. While international money transfer companies may not have the same Financial Services Compensation Scheme (FSCS) 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).

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

The FCA is the UK's financial watchdog, and businesses offering payment services are required to be either authorised by FCA as an authorised payment institution or registered with the FCA as a small payment institution. 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, but they do have to be clear about how they will safeguard customers’ funds.

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

Exchange rates are never static – they change every day, every hour, even minute to minute, 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.

 

How can I avoid foreign transaction fees?

Xe offers great exchange rates as well as absolutely no transfer fees – meaning that you can avoid the foreign transfer fees that other providers may charge.

Occasionally, charges and additional fees may be applied by a third-party bank before the funds arrive in the recipient’s account.

Xe FAQs

Is it safe to transfer money through Xe?

Xe takes the security of all overseas transfers and transactions seriously, utilising the world-respected Norton security systems to protect your personal details and funds.

Xe is authorised by the FCA under the Payment Service Regulations 2017 for the provision of payment services. Companies authorised by the FCA must meet strict capital adequacy and business practice rules, as well as complying with Payment Services Regulation and the FCA’s Conduct of Business requirements.

In addition, Xe holds all client monies in segregated client account trust accounts – meaning that they are held separately from the company funds and therefore are safe in the event of any problems. For extra security, Xe also holds professional indemnity insurance.

How do I send money through Xe?

Whether you're new to foreign exchange and just want cost-effective simple, international payments or you're looking to plan a more complex strategy, Xe can help.

Step 1
Sign up – Set up your account online or over the phone. It’s quick, free and easy.

Step 2
Quote – Simply tell Xe how much you're transferring, which currency and who to send it to.

Step 3
Send – Once you've agreed on a transaction, either online or over the phone, simply send Xe the money and it will do the rest.

Step 4
Track – Keep up to date with the progress of your transaction online 24 hours a day, seven days a week. Xe also sends notifications via email and SMS, so you know exactly where your money is.

What is the maximum amount of money I can transfer?

For Xe, the maximum that can be transferred online is $500,000 US Dollars (or the currency equivalent). There is no maximum limit to what you can transfer with Xe using other methods.

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 transfersYou 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.

 

Please note

Moneyfacts.co.uk has chosen Xe to offer an international money transfer service. Any legal or contractual relationship will be with Xe. Xe is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017. Any customer money held by the company 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.

 

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