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| Monday, September 21st, 2015

WHAT ARE THE DIFFERENT TYPES OF MONEY TRANSFER?

There are a number of ways to transfer money overseas and with today's latest technology, new means to do this are constantly evolving. Whereas years ago, banks were the only reliable method to carry out international money transfers, now there are many other cheaper and faster options available such as online providers, MTOs, prepaid cards and even by SMS. Below is a summary of the different types of money transfer providers, various options to transfer money and a brief description of how they work.

Foreign Exchange Providers (FX Brokers or Money Transfer Providers)

FX brokers are companies who specialise in international money transfer. These are the core group of companies that are listed on FXcompared. When it comes to transferring large amounts of money for purchasing a property, starting up a business, or sending regular payments abroad for example, these brokers specialise in individual service and tailored solutions. In most cases, you will have to open an account with the company you intend to use and you will need to fund the account using a bank account or sometimes for smaller amounts a credit card. The benefits of using such companies means you can make specific arrangements for your individual needs such as fixed exchange rates for a set period.

Money Transfer Operators (MTOs)

MTOs are companies that only offer money transfer services, usually through agents, and only send money between countries. They do not generally require you to open an account and are usually easy to find in high streets, where they can be located in various locations from post offices to hairdressers. You will need to fill in forms and provide identification to send your money. Some offer online money transfer services and are also developing mobile phone transfers. Examples - Western Union, MoneyGram, Chequepoint, Coinstar.

High Street Banks/Building Societies/Credit Unions/Community Banks

The majority of banks offer money transfer services, however in most cases you must either apply for or hold an account with the bank you wish to use. It is usually necessary for the person receiving the money to have a bank account also. Banks tend to be more expensive and take longer to transfer your money, however they do offer additional security and this can open doors for access to various other financial products such as loans, mortgages and savings accounts. Some institutions are unable to make foreign transfers directly, such as certain Community Banks in the US meaning you will require an alternative provider for your international money transfer needs.

Online Money Transfer Services/Internet Money Transfers

Money can be sent over the internet through secure online services, often for a very small fee, but you will need to have a bank account or credit card and access to the internet, or at least an e-mail address, to transfer the money; you will also have to register your details online. The person you are sending the money to may also need a bank account and access to the internet (or an e-mail address), but this is not always the case.

Prepaid Money Cards

Prepaid cards have evolved and are now starting to become recognised as a convenient alternative to the traditional methods when a small amount of foreign currency is required . A prepaid card operates in the same way as a credit card or debit card and tends to have many benefits. The cardholder would have to load funds onto the card before using it and can only spend what you have on the card. Prepaid cards are available in selected shops, or can be ordered through the companies online. Not only are they useful for sending money overseas, they can also be used instead of travel money when travelling and for online purchases. They are also accepted at ATM's globally (or wherever either Visa or Mastercard are accepted, depending on your type of card) for withdrawing funds.

Peer-to-Peer Money Transfer Providers

Peer to peer has added a new type of company to the world of foreign currency exchange by allowing senders and receivers of different currencies to set their own rates and trade directly with each other, cutting out the banks’ fees and exchange rate margins in the process. Both CurrencyFair and Transferwise are examples of peer-to-peer money transfer providers and can be found on FXcompared comparison listings.

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