International Money Transfers

8 April 2015. Filed under category Nomad.
Money Transfer Map

In my article ‘Nomadic Banking’, I mentioned that if you spend much time in a given country, it is a good idea to open a bank account there. You can then spend the money without expensive fees and currency conversions. But an empty bank account serves no purpose. How do you move money from the bank where you have funds (I’ll call this your ‘home’ bank/currency’.) to your foreign bank/currency?

That is the topic of this article, which takes the form of an experiment where I test and compare three ways of moving money internationally from Sweden to both the UK and the US.

Overview

I earn my salary in Swedish Crowns (SEK). I spend a fair bit of it in the UK and US, so I need to move the money there.

The most basic way of moving money is an international bank transfer. A newcomer in the money transfer business is CurrencyFair.com. And finally, there is another new way of doing it involving BitCoins.

So here are the transfers I’ll be attempting.

Amount Sent From To Using
2016 SEK Sweden United Kingdom Bank Transfer
2016 SEK Sweden United Kingdom Currency Fair
2051 SEK Sweden United States Bank Transfer
2051 SEK Sweden United States Currency Fair
2051 SEK Sweden United States BitCoins

Note: I did not find a way to sell BitCoins for Great British Pounds (GBP) that I was comfortable with, so I excluded that from the experiment. For an explanation to why the amounts sent to the UK and the US differ, see the Meta-Post Box ‘Why Different Amounts?’ at the end of the article.

My Swedish bank is Nordea, my UK bank is Santander and my US bank is Bank of America.

Edit 4 August 2015: After having tested a competitor to Currency Fair, I’ve added a new service called TransferWise. I’ve tried TransferWise to send money to both the UK and US, but with different dates and amounts than the (somewhat) uniform test for the other services.

Amount Sent From To Using
5000 SEK Sweden United Kingdom TransferWise
3500 SEK Sweden United States TransferWise

Bank Transfers

A direct international bank transfer is ‘the old way’ of moving money between bank accounts. There is no need for any preparations, just tell your home bank to send the money to your foreign bank.

Bank Transfer

You will need to know some information about your foreign bank account that may not be immediately obvious on your foreign bank’s website. If in doubt, search your bank name and ‘accept foreign bank transfer’ or email your bank and ask for the required information.

In my case, I needed to know the following information:

I also got to choose the speed of my service. I chose the standard speed, so as not to pay any extra fees.

You sometimes have the option of sending the money in your home or foreign currency. I sent my US transfer denoted in USD and my UK transfer denoted in SEK. We’ll come back to this in the analysis.

The following is the data recorded during the test:

To United Kingdom To United States
Money Sent Monday
Morning
2016 SEK Monday
Morning
232 USD
Fee 40 SEK
Money taken from home bank 2016 SEK 2051 SEK
Mystery pre-deposit fee Wednesday
Morning
Wednesday
Morning
15 USD
Foreign Bank Wire Fee 16 USD
Actual Deposit 153 GBP 201 USD

Currency Fair

Currency Fair (CF) is an online money transfer service. Their claim is that they can circumvent the wire transfer fees, get you a better foreign exchange (FX) rate and move your money quicker than the traditional bank transfer. Let’s find out if they are true to their words.

The Currency Fairy (yes, seriously)

The Currency Fairy (yes, seriously)

To use Currency Fair you must first open a user account and then link your home and foreign bank accounts to the Currency Fair user account. This was easy. You do need to provide evidence of your identity, such as your passport and driver’s licence, and the verification may take a few days.

Once set up, the process is as follows.

  1. Tell Currency Fair that you want to deposit money in your home currency. You will be given the payment instructions for your home bank, including a specific code to include in the transfer to identify yourself.
  2. Instruct your home bank to send the money to Currency Fair. The fees for this transfer depend on your home bank. This is a national transfer however, so it should be cheaper, quicker and easier than an international bank transfer.
  3. Use the Currency Fair market to convert the currency to your required foreign currency.
  4. Withdraw the foreign currency to your foreign bank. This is another national transfer, with the same caveats on speed and fees as above.
To United Kingdom To United States
Money taken from home bank Monday Morning 2016 SEK Monday Morning 2051 SEK
Money arrives at Currency Fair Monday
Afternoon
2016 SEK Monday
Afternoon
2051 SEK
CF Money Conversions 156 GBP 237 USD
CF Withdrawal Fee 3 GBP 4 USD
Foreign Bank Wire Fee Monday
Evening
Monday
Night
15 USD
Actual Deposit 155 GBP 218 USD

Note that the 15 USD wire fee in the US is the fee Bank of America charges to accept wire transfers from other US banks. It is not the fee they charge for accepting international wire transfers, which is … 16 USD. Go figure.

BitCoins

BitCoin is the most famous of the new breed of crypto-currencies that have been created in the last few years. I will not go into depth about what it is, but in a nutshell, it is a new type of currency which is not backed by any (multi-)national bank or entity but instead rests on some very impressive crypto-mathematical technology. These ‘coins’ can be bought and sold like any other commodity, and the value of a coin in, say USD, is what someone is willing to pay for it in USD, just like any other free market.

Bitcoin Monkey

Since this is a virtual currency, there is nothing to ‘transport’ across the border, and thus the process for converting money using BitCoins as an intermediary is seemingly simple:

  1. Buy some BitCoins using your home currency.
  2. Sell the same BitCoins for foreign currency.
  3. Deposit the foreign currency in your foreign bank.

I said seemingly easy. The devil is in the details.

Buying BitCoins using Swedish Crowns was easy. You first create an account on BT.cx, a Swedish BitCoin exchange. You instruct them that you want to buy BitCoins using funds sent from your bank. You then get instructions for how to make the payment. This is a similar process to how you send funds to Currency Fair. Once BT.cx gets the money, they buy BitCoins (at their current rate) and send the BitCoins to whatever BitCoin Wallet you designate.

Buying BitCoins is easy. Selling them for ‘normal’ money is harder. I found plenty of potential services in the UK that could have worked, but they all looked a bit sketchy and convoluted, so I decided to abandon that idea.

The US has a company called ‘Circle’, which aims to be the first proper bank based on BitCoins. Their process for selling and withdrawing funds was straight forward. Like Currency Fair, you must first create a user account, verify your identity, link your US bank account to your Circle user account and then prove that it is your US bank account. This was outrageously complicated. It took me weeks of support calls and messing about with documents. It worked in the end, and perhaps I just had a bad experience, but this almost made me abandon the whole project.

Circle gives you a BitCoin Wallet, and so I instructed BT.cx to send my newly bought BitCoins to my Circle account, and then asked Circle to withdraw the money into my US account.

To United States
Money taken from home bank Monday Morning 2051 SEK
Money arrives at BT.cx where it
buys me BTC which is sent to Circle
Tuesday Afternoon 0.9094 BTC
Ask Circle to send money to US account Tuesday Night
Money deposited into US account Thursday Evening 225 USD

TransferWise

TransferWise (TW) is an online money transfer service, an almost identical competitor to Currency Fair. Like Currency Fair, they claim to circumvent wire fees, get better FX rates and move your money quicker than traditional bank transfer. Since the two services are so similar, I will here compare and contrast CurrencyFair with TransferWise.

TransferWise was not part of my original post. I am adding this part in August 2015 after having tried the service for myself. Because of this, the amounts sent, the dates and thus the global FX rate will differ.

TransferWise was easier to set up. There was no need to link target or source accounts to TransferWise like Currency Fair. Just put in the account details of where you are sending the money, how much you want to send and from which country. You then get instructions for how to send the money to TransferWise, just like with Currency Fair. (For Swedish users, TW allowed you to pay via BankGiro which CF did not.)

TransferWise does not have a market. Instead, they add a small percentage, usually about 0.5%, to the current international FX rate. (It depends on the currencies involved.) So you never hold any money in TransferWise. As soon as they receive the money, they convert it and send it on to your target bank. This removes two steps from the Currency Fair methodology. I believe Currency Fair has implemented a similar system now as an alternative to their market place.

The process for TransferWise is as follows.

  1. Tell TransferWise that you want to send a certain amount of money from your home currency to your foreign bank. You enter the target bank account details on this first screen, or pick it from a list of previously used recipients. You will be given the payment instructions for your home bank, including a specific code to include in the transfer to identify yourself.
  2. Instruct your home bank to send the money to Currency Fair. The fees for this transfer depend on your home bank. This is a national transfer however, so it should be cheaper, quicker and easier than an international bank transfer.
  3. Wait. There isn’t anything more to do now with TransferWise. The conversion and deposit to your foreign bank happens automatically. This deposit is another national transfer, with the same caveats on speed and fees as above.
To United Kingdom To United States
Money taken from home bank Friday 26/6 5000 SEK Monday 22/6 3500 SEK
Money arrives at TransferWise Wednesday 5000 SEK Tuesday 3500 SEK
TW Converted Amount 383 GBP 421 USD
Foreign Bank Wire Fee Wednesday Wednesday
Actual Deposit 383 GBP 421 USD

Continuing the comparison with Currency Fair, the biggest differences is that Currency Fair is faster, but TransferWise somehow avoided the Bank of America transfer fee.

 Analysis

Let’s bring this all together in a single comparative table. I’ve also included the exchange rate for SEK/GBP and SEK/USD for the Monday when I began the experiment, found on XE.com. This should be seen as the absolute ceiling of how good the transfer could be. If you could beat that rate, you should be making millions working as an FX trader.

Having added TransferWise to the mix, I now have two tables. Since the TransferWise transfers were done on different dates, they have their own FX Rate rows.

Money Sent Pre-FX Fee FX Rate Post-FX Fee Money Received Time
UK Bank Transfer 2016 SEK 0.0758 153 GBP 2 days
UK Currency Fair 2016 SEK 0.0783 3 GBP 155 GBP Same day
US Bank Transfer 2051 SEK 40 SEK 0.1153 31 USD 201 USD 2 days
US Currency Fair 2051 SEK 0.1157 19 USD 218 USD Same Day
US BitCoin 2051 SEK 0.1094 225 USD 3 days
SEK/GBP FX Rate 2016 SEK 0.0786 158 GBP
SEK/USD FX Rate 2051 SEK 0.1163 238 USD
Money Sent Pre-FX Fee FX Rate Post-FX Fee Money Received Time
UK Transfer Wise 5000 SEK 0.0766 383 GBP 2 days
US Bank Transfer 3500 SEK 0.1203 421 USD 2 days
SEK/GBP FX Rate 5000 SEK 0.0767 383 GBP
SEK/USD FX Rate 3500 SEK 0.1212 424 USD

Security

Security

The bank transfer is as secure as you get. One bank speaks to another, no messing.

Currency Fair and TransferWise are decent seconds. The companies have been around for a while, are regulated and feel genuine with ads on the TV etc.

The BitCoin operation felt dodgy, but in the end, it worked as I had planned. My insecurities were around the time it took Circle to sell my BitCoins and settle my withdrawal request.

Winner: Bank Transfer

Simplicity

The bank transfer couldn’t be any easier, comprising nothing more than one simple operation from your home bank’s web site.

TransferWise snags the second place with their ‘set everything up initially then forget about it’ system. Also, making repeat payments is simple and it was the only service that allowed you to pay via BankGiro.

Currency Fair is a close third. The initial setup process was easy. After that, you have a two-step process every time you want to move money.

Moving money using BitCoins was down-right complicated for any other country than the US. For US transfers, it was no harder than Currency Fair.

Winner: Bank Transfers

Speed

This is a no-brainer. Currency Fair completed the entire transfer the same day. That is astounding. Then again, the bank transfers and TransferWise only took two days and BitCoins three. How fast do you need your money moved anyway?

Winner: Currency Fair

Transparency

Transparency

Will you know, before you start, how much you’ll be paying in fees and what exchange rate you will get?

Currency Fair has an open market where you can see exactly the exchange rate you’ll get, and their cut is already included in that rate so no surprises there. They also have a page where you can see the transfer fees for different countries, and that page will warn you when they suspect that the source or target bank may charge additional fees. This is excellent!

TransferWise stays close to the mid-market rate, which is as stable and transparent as it can ever be. The TransferWise fee is added on-top of that rate, and they have a page that details exactly what you can expect, as well as a pre-transfer estimate that was pretty accurate.

For bank transfers, you can normally find information on their wire fees. Normally, but not always. (Bank of America, I’m looking at you.) But the exact exchange rate you’ll get is usually hidden.

The BitCoin transfers were surprisingly transparent. Both BT.cx and Circle publicize their BTC rates, so you could calculate the rate. But with a 3-day turnaround, these will change.

Winner: Draw between Currency Fair and TransferWise

Extra Features

Currency Fair has two ways of doing the currency conversion. The way I did it was by using the Quick Trade, which gives me the best deal right now. However, if you are not in a rush, you can use the Market Place feature. There, you can specify how much of your source currency you wish to trade and the exchange rate you want to trade it for. Your order is then placed on the market place, waiting for the market to move. If at any point, your target exchange rate becomes the current rate, your order will be executed.  This way, you can hope for a spike in the exchange rate and take advantage of it.

BitCoins have the extra benefit of being cool. Fonz-level cool! And you’d be supporting the emergence of crypto-currencies, which I personally think are awesome.

Winner: Currency Fair

Value

Show Me The Money

How much money are you left with after the show is over?

Currency Fair beat bank transfers both by having a better exchange rate and lower fees. However, the difference isn’t enormous for the UK transfer. The US bank transfer stands out as suspiciously poor. This probably stems from me sending the money in USD instead of SEK.

The BitCoin transfer had the second-best value in the US. It was also the second mode of transfer that avoided the 15 USD wire transfer fee. However, the exchange rate was poor. The more money you send, the more the exchange rate will eat into the money saved on the wire fee.

On transfer volumes of 3016 SEK (330 USD) BitCoins and Currency Fair would be equally good, and beyond that, Currency Fair wins. That is not very much, and so I consider Currency Fair better value, even in the US.

But the clear winner in this category is TransferWise. It avoided all the bank transfer fees, had no fixed fees and even with their added-on percentage fee, they still managed to have amazingly competitive final FX rates.

Winner: TransferWise

Conclusion

Flying Money

BitCoins is, sadly, the loser in this test. Apart from very small transfers to the US, it doesn’t stand up to the competition, yet. But this is a very young currency, with many interesting properties beyond money transfer, and I sincerely hope that it grows in popularity. In fact, buying BitCoins was easy, and I would readily do so again if I found places where I could spend them. Indeed, this is happening right now with giants such as Microsoft and Dell accepting the currency.

The choice between standard bank transfers or a service like Currency Fair or TransferWise comes down to frequency of use. If you are only going to send a single one-off payment, I’d use a normal bank transfer, especially within Europe. If you are going to do this regularly, I’d go with TransferWise.

I’ve also learn that there are big differences in bank fees around the world. Europe has very low fees while the US is fee-crazy. Those Bank of America incoming wire-fees were low compared to their outgoing wire-fees, which go up to $50! If the US is your source-country, I’d definitely look into ways to avoid those fees at all costs. (Well, all costs below the fee itself, naturally.)

How to get 15 USD fee credit with TransferWise.

If you use this link to sign up with TransferWise, then you will get 15 USD in transfer credit. I will also get 15 USD in fee credits as a commission for referring you. Win/Win!

Just to be clear, TransferWise did not ask me to write this article or influence it in any way. The referral link above is something that any TransferWise user can create. So, I figured I might was well throw in a link that gives you a free transfer and me some referral money.

How to get a free Currency Fair transfer.

If you use this link to sign up with Currency Fair, then you will get your first withdrawal transfer free of charge. I will also get a free transfer and a small commission for referring you. Win/Win!

Just to be clear, Currency Fair did not ask me to write this article or influence it in any way. The referral link above is something that any Currency Fair user can create. So, I figured I might was well throw in a link that gives you a free transfer and me some referral money.

Help expand this article

I would love to hear your tips and experiences in international money transfers. If you are going to move money, I would love for you to email me a blow-by-blow description of the service you used, the source and target countries/banks, the fees incurred, the dates and the amount of money sent and received. I’ll then add it here.

Further Reading

Updated 8 October 2016

I recently found a website that I think makes excellent further reading on this topic. It is called Money Transfer Comparison and they do exactly what it says on the tin, compare different ways to transfer money internationally. They compare many more services than I do here. I especially enjoyed their Peer to Peer Money Transfers Explained section, where they explain more in depth how Peer to Peer transfer companies like Transferwise work, and compared them to more traditional money-transfer companies. Definitely a worth-while read.

Why Different Amounts?

This bit is boring. Only read if you really want to know the fine print…

I first intended to send 2000 SEK. I began with the US Bank Transfer, and chose to send the money in USD. I checked google to see how much 2000 SEK was in USD. It said it was 232.82. I somehow rounded that down to 232 USD and told my Nordea, my Swedish bank, to send that amount.

Nordea told me the US transfer would take 2015.84 from my account. For consistency, I decided to send the same amount to my UK bank, this time denoted in SEK.

I signed both transfers, and only then realized that the earlier quote for my US transfer had been an estimate, and without the 40 SEK in a currency transfer fee on my end. The final amount of money taken from my account for the US transfer was 2051.39 SEK.

So these two amounts, 2015.84 for the UK and 2051.39 for the US, became the baseline for each country.

14

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  1. Anthony says:

    You could also use https://transferwise.com which is peer-to-peer network. They basically match you with people who want to do the opposite transation but all in all it works like CurrencyFair.

  2. Magnus says:

    Great, I am transferring large amounts on a monthly level so this was valuable! The sponsored link in the end however trigger suspicions, did you contact them after the conclusion and if so, did you consider other options than them?

    1. Hi Magnus. I wouldn’t consider that a sponsored link. It is referral link. A sponsored link is a link that someone pays me to put on my site, and they usually don’t contain any tracking info. I get about 2 requests a week to add those kind of links to my site and I ignore them all.

      The referral link I used is something that anyone can create and add to their site. So, I didn’t have to speak to Currency Fair at all to get it.

      I looked for a referral scheme at the very end of writing the article. And although I can see a theoretical risk of being biased in order to get people to click the link and earn a few bucks, I don’t think it influenced my writing. But that is the good thing about doing an experiment like this as well. I wrote down each step on the way, so you can look at the data and draw your own conclusions. 🙂 Gotta love science.

      Finally, there are competitors to Currency Fair that do similar things. Anthony mentioned Transfer Wise above and someone just emailed me about something called World Remit. I didn’t include them in the test since I didn’t know about them. But, as I said in my very last section, I’d love for others to send me their data on money transfers and I’ll include it all in a table at the end.

      1. Magnus says:

        Oh sorry, I see that it came out wrong, I would actually like if you had some more sponsored links or advertising for things that you discovered as beneficial during traveling! My question was more related to if that service was really the best of the ones offering a similar service or if you chose that one because it was sponsored.

        I asked because I frequently transfer money from Sweden to France.

        I’m still curious to see the post about really good things to consider if you travel much and if those things are sponsored – win-win! 🙂

        1. I throw in referral links pretty much every time I recommend a product, and it is always stuff that I actually use. Examples are my packing, audiobook, VPN and workout articles.

        2. Oh, and to answer your question there. I picked Currency Fair because I had used it before. Transfer Wise is something I just found out about, and it seems like a similar service. Oh, and to drive home the point of how easy it is to create referral links, that link to Transfer Wise is also a referral link which, if you use it to sign up, would earn me a commission. 🙂

  3. Rich says:

    If Currrency Fair is supposed to be a national transfer on each end, how did you still end up getting hit with a “Foreign Bank Wire Fee” on the end? Are Currency Fair not delivering the service they promise? Or is the bank charging you for a service you didn’t need?

    Have you tried using Paypal for this? I receive some payments into Paypal, so I have a balance in my account. But you could just as easily transfer money into it from any linked account. Then you can get a debit card from paypal that will spend from your balance first and then from a designated backup card once that is exhausted. The transactions are all done as local, in local currency, and paypal does the exchange. You can change the currency of held balances to take advantage of good rates too. I recommend trying to control your balances, rather than letting paypal do the transfer though, as their rates suck…

    1. Ah yes, maybe that wasn’t very clear. I’ll add a note to explain it. Bank of America charges $15 for accepting wire transfers from other US banks and $16 for accepting international wire transfers. I know, it is insane, but that’s the US for you. (source)

      How Circle managed to bypass this national wire fee, I don’t know. I suspect that they use Bank of America as their US bank…

      I did try to use PayPal. The problem was that your paypal account can only ever exist in one country, which you can’t then change. And you can only link bank accounts from that country. So there is no way for me to deposit money from my Swedish bank into my paypal account and then withdraw it into my US bank.

      I did try to open two paypal accounts and then send the paypal funds from my Swedish paypal account to my US account, but the transfer was refused with no reason given. I emailed paypal and asked why and only got unhelpful auto-generated replies telling me to look at their useless FAQ.

  4. Peter Brown says:

    Our latest transfer with Transferwise was Bank Holiday Monday 25/5/15
    They received my debit card payment at 07.54
    The transfer was sent to our bank abroad at 10.12
    The money was in our account abroad when I checked at 15.00,
    Great rate of 1.4055 Euro/£ even after the 0.5% commission
    About 7 hours from initiating to being in our bank abroad, Brilliant Service.
    http://transferwise.com/u/c466a for your first transfer FREE

  5. Brian B says:

    We just use our debit cards. Now we have them with chips as in Europe as well as the credit cards. Getting money there is as easy as here. We do have to tell both that we where we will be and when or they shut them off thinking it is fraud.

    1. You may want to check your statements. Some cards offer good rates for withdrawing foreign currency, but not many. Either there are fees, or they add on a percent or two on top of the international rate.

  6. Yvette says:

    Transferwise asks for a US Social Security number. While I use my personnumer widely in Sweden, I am used to protecting my Social Security number because of identity theft. How is their security?

    1. I don’t have an inside view of the company, so can’t comment on their security. I set up the account as a Swede, and gave them my Swedish personal ID number. Didn’t think twice about that. Not having a US Social Security number, I can’t comment on that either.

  7. Karen Henderson says:

    I have an account with transferwise and have used it over the last few years to transfer to Spain and Bulgaria but a week ago they refused the 250 pound transfer to Bulgaria with no explanations. I have send photo id in the form of a passport and driving licence which they confirm verifies my ID but are still refusing the transfer. The Bulgaria end set up an account that asked for no id and they did the transfer. However that was then bounced back with no information and their account suspended. They have since been told photo id would possibly be considered to reinstate the account. Based on my own experience I told them not to bother. We have no idea if the problem is the country, the bank or myself and my friend. The fact the company will not communicate with you leaves a bitter taste in your mouth. I would also like to point out there are lots of great reviews of Transferwise but they all carry referrals. Oh and by the way we are both getting great offers to make referals for them!!!!

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