Sending Money Abroad
When it comes to moving money around the world, cash or checks are no longer a realistic option. Using the public postal service system to send a bank check takes too much time, and in some case highly unreliable. B2B check use for major suppliers is in fast decline, going down from 81% in 2004 to less than 50% in 2013. Digital checks are replacing paper ones, but the trend is now clear. Opening and managing a bank account in order to learn and operate the online wire transfer system is now essential to every small business, corporation or working people who wish to transfer funds overseas. Sending large sums of money to a foreign country, from one financial institution to a different one, is now almost entirely based on the cashless, super-fast and regulated bank transfer system.
Can you imagine the scale of the wire transfer world? For example, in one month, a total of 13 million wire transfers are made in the Fedwire funds service alone, known in the past as the “Federal Reserve Wire Network”. Today, Fedwire stats report a staggering monthly amount of 70 billion US dollars worth of transfers originated. An average value per transfer is around 5.5 million US dollars. Every day, more than half a million transfers are made in Fedwire alone.
Typical users of overseas money senders are sending salaries, paying their suppliers and overseas contractors in diverse fields, such as:
- Legal services
- High-tech companies
- Tourism agencies
- eBay Merchants & Amazon Sellers
- Government agencies
- Designers and developers
- Immigrants sending their salaries to their families back home
We use the common term “wire transfer” or specific network names like CHAPS payments & BACS (in the UK), CHIPS (Clearing House Interbank Payments System) or ACH in the US, Direct Entry and BECS in Australia, Furikomi in Japan and the European SEPA network (short for “Single Euro Payments Area”) consisting of 35 member states, most of them inside the EU. Once you learn the logic behind the wire lingo and abbreviations, you’re all set to go. The world’s international money transfer system is still pretty concentrated: only 5% of all SWIFT payments account for 95% of total transfer value. The average SWIFT payment is around 400,000 euro, while the median payment is around 5,000 euro. But lately, more and more SMB players have entered this ecosystem, thanks for lower entry costs and shorter processing time of each payment, whether close-by or at the other side of the globe.
Money transfer companies have entered the news headlines lately. The political debate over disabling illegal immigrants (most of them Mexicans) from sending money outside the United States, continues. Some politicians intend to do this by including wire transfers in the definition of financial institutions accounts. All over the world, immigrants and ex-patriots depend on the wire transfer industry for sending their hard-earned paychecks back to their families and communities. Using advanced digital banking platforms to send money abroad has never been so accessible. Since the modern worker and businessman is chained to his PC and/or mobile phone, the only factors in play are the wire system’s UX (user experience), rate of transfer fee and each international wire service’s current exchange rate. When performing an overseas transfer, one must make sure to get the best exchange rate for every single transaction he wishes to complete.
Popular money transfer services like PayPal, Western Union and MoneyGram are well-known and easy to use, but charge their clients very high exchange rates for their service. Good news is, the age of the money sender monopoly is now effectively over. That’s why a serious, competitive business must compare each money transfer service in order to reduce financial costs, maximize profits and stay out of the “hidden fees” zone. Exchange rates conversion fees, using local banks, can go up as high as 5.5% or low as 2% if the client performs a full market research. When dealing with high-volume transactions, the difference in conversion fees becomes truly substantial. However, it usually takes a lot of time to compare conversion fees for each and every wire action. That is the reason why too many clients are giving up the fight, letting their city bank enjoy a considerable cut from their rightly-deserved profit margins.When sending money abroad, innovative solutions such as Covercy compete in the international money transfer market by offering low exchange rates using a hyper-smart global computing system, which finds the most economical deal for every wire transfer at any given moment. By joining the Covercy service network, a client can send money overseas and pay the lowest exchange rates, almost like paying for a domestic money transfer.