International money transfer services help you to transfer money from one country to another. The alternative is to do this via your bank account. However, there can be several benefits of using a specialist international money transfer service rather than using a bank.
The benefits of using an international money transfer service
The main benefits of using a specialist international money transfer service instead of a bank are the potential to get a better exchange rate, as well as lower (or no) transaction transfer fees.
Banks and other international money transfer services make money by the profit margin they make on the exchange rate they quote, or the transaction fees they charge (or both). These two components can quickly add up when transferring money through a service provider that charges high fees, so it’s important to compare a range of providers to find the best value for money.
The impact of a better exchange rate
Let’s look at the exchange rate first. Even a small difference in the exchange rate between the currencies you want to convert can make a big difference. This is best demonstrated with an example.
Suppose you wish to transfer NZD 10,000 to Australia. The table below provides examples of the impact of different NZD/AUD exchange rates on the final transfer amount.
|
Transfer Amount (NZD) |
Exchange Rate (NZD/AUD) |
Transfer Amount (AUD) |
|
$10,000 |
$1/0.91 |
$9,100 |
|
$10,000 |
$1/0.90 |
$9,000 |
|
$10,000 |
$1/0.89 |
$8,900 |
Just a one-cent difference in the exchange rate equates to a $100 difference in the final transfer amount.
The more you transfer, the bigger the impact of a different exchange rate, as the table below shows for a transfer of NZD 100,000 to Australia.
|
Transfer Amount (NZD) |
Exchange Rate (NZD/AUD) |
Transfer Amount (AUD) |
|
$100,000 |
$1/0.91 |
$91,000 |
|
$100,000 |
$1/0.90 |
$90,000 |
|
$100,000 |
$1/0.89 |
$89,000 |
Some international money transfer services have minimum and maximum transfer amounts, while others don’t.
Lower (or no) transaction fees
Some international money transfer services will charge higher fees than others. Some will charge a flat fee regardless of the amount, while others will charge a percentage of the amount being transferred. Some also use a combination of flat fees and transfer amount percentages, while others charge no fees at all.
It’s important to weigh up a provider’s international money transfer service fees in relation to the exchange rate being offered for your transaction. It’s likely to work out cheaper to go with a provider who charges fees but gives you a better exchange rate than a provider who charges no fees but provides you with a worse exchange rate.
Popular international money transfer services
Popular specialist services for transferring funds to and from New Zealand (and virtually anywhere in the world) include:
- OFX
- SendFX
- TorFX
- XE
- Wise (formerly TransferWise)
- Currency Fair
- WorldFirst
All of these services provide fast and secure international money transfers, but they all have slightly different terms and conditions that you should understand before making a decision about which provider to use. The most appropriate provider will depend on your specific situation and needs.
It’s important to shop around and find the best deal when you want to transfer money internationally, especially large amounts. You can compare the popular international money transfer services listed above to help you find the best money transfer service for you.