Guest post by Daniel Tannenbaum
As the world becomes more globalised, there are more reasons for sending money abroad. Whether for business, a purchase, sale or even a Bar Mitzvah – there are a lot of options for sending overseas.
If the person has a UK bank account, it is straightforward, because you can simply transfer money to another UK account with ease – and the payment is often immediate.
But when sending money to a foreign account or a large sum of thousands or millions, you need to be a lot more calculated to ensure it arrives safely and does not incur significant fees or charges. Based on a guide from TechRound, we explain what you need to know when sending money abroad.
What are my options?
You can start by using your own bank or savings accountand this is usually very straightforward and ideal for sending small amounts. By going through a UK bank, your funds are protected and you can sometimes send the money through a mobile too.
The only downside is that a transfer can take four to six days and, if you are sending large amounts, you may be a premium in terms of currency. So if you are sending large amounts of £5,000 or more, you may wish to go through a FX broker.
An FX broker is better for sending vast sums. You can sometimes pay zero rates if sending less than £3,000 and they can often offer low prices on exchange rates too. The only downside is that setting up an account takes little bit of time, so it is great if you set up once and then do recurring payments. You are not protected if the firm goes bust or loses your money somehow.
Through a high street or money transfer company like Western Union, you can often just walk into a branch or post office and make an international transfer – sometimes without ID or paperwork. The recipient would also collect the funds at their local post office or western union branch. Again, the only issue is fees may vary (from £10 to £50) for the same amount from different companies and currency rates can fluctuate daily.
What information do you need?
As a starting point, you need the IBAN number of the recipient and these are the long bank details which are universally acknowledged. Depending on the transfer and size, you may need to show proof of ID and verify your account (a sum of money and code is sent to your bank account) prior to making a transaction.
Are transfers covered by the Financial Services Compensation Scheme?
Yes, if you make a transfer through your bank or a company that is authorised by the Financial Conduct Authority, your money is protected up to £75,000 to £85,000 depending on transaction.
If you send funds with a high street lender or FX broker that is not regulated, any potential losses are not covered.
Can I just use Paypal?
Yes, provided the recipient has a Paypal account – but note that Paypal will typically take a fee for any transactions.