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As the global economy is becoming ever more interconnected, working in your home town in a physical office is becoming increasingly obsolete. It’s still fine for some, but current trends are allowing people to travel the world whilst working remotely, and even transferring internally to an abroad office is extremely easy. Essentially, there is more flexibility than ever, and employers are becoming more understanding of final product over hours in the office.
Digital Nomads, transferred employees and freelancers around the world are living a lifestyle that is heavily involved in foreign exchange (FX). The problem is though, many people in this situation are complacent on the digitalization of their bank. There are still people amazed at the idea of using their domestic debit card when on holiday, so clearly there is room for improvement. Clearly the issue here is that the bank is charging them a fee for every transaction – and if not an explicit fee, then you’re still assured to be paying a 3% to 5% spread (fee) on the dire exchange rate.
This is an issue for not just remote workers but retirees who are living abroad but are receiving their domestic pension income in their old, domestic currency. There is so much money currently being wasted on poor exchange rates because of an unjustified reliance and trust in traditional banks. Most banks even change flat fees on transactions abroad, which usually are around the $20 USD mark – this isn’t good enough. Rarely will living abroad be entirely frictionless, but it’s important to seek out options that will cost you the least in fees.
So, traditional banks are exploiting us – what about PayPal?
PayPal was one of the first internet ‘email’ payment systems – which Elon Musk was CEO of. They were cutting edge, born in this millennium and prided themselves on secure yet convenient transactions. That’s the most depressing bit, even PayPal is letting you down. There are fixed fees on every transaction abroad (usually around $0.30 USD for Americans, £0.99 to £3.99 for Brits and 30c AUD for Aussies). It’s not like you’re paying for speed either, as they couldn’t take any longer if they tried (around 3 to 5 days).
This doesn’t seem like the end of the world, but the currency conversion charge is 3% to 4% added to every transaction. 3% to 4% – which is on par or slightly better than traditional banks – is hundreds, likely thousands, of dollars per year on your salary. The reality of losing $200 per month because banks or PayPal haven’t made it clear to you on this very poor deal is exploitation, but it can be easily avoided.
First and foremost, Payoneer is quick. They usually take around 2 hours, which is better than most options. There is also a fixed fee of $3 per transfer, too, which isn’t ideal. Payoneer use the midpoint of MasterCard’s currency conversion rates. For transfers in USD and EUR, they charge $4 or 1%, but they do however cap their fees at $10. Payoneer are an improvement on the banks and PayPal and they’re ultra-versatile (almost guaranteed that they have a service in your country), but they’re not as competitive as the remaining options.
Here are some options that will save you on these fees
Before starting, the below options are prone to changing in fees. However, these options appear highly likely to continuously offer a better service than banks or PayPal going into the future. They key to your decision is to look for positive reviews, and pick the company based on that because fees-wise, all the below options are reasonable and money-saving.
They have as many offices worldwide as anyone, although they only support 39 currencies which isn’t great for those who want to deal. They transfer around £6.2 billion per year, which reflects in their efficiency and speed of transactions because they’re used to high volume. There are no fees with Currencies Direct and provide very competitive exchange rates. There are some negative reviews on their customer service, so keep this in mind.
Global Reach is a great choice for those looking to deal in high volumes, as this is their specialty (hence why they focus on corporate clients, too). The minimum transfer is £/$1,000 and incurs no fees. They have offices in the UK, South Africa and Cyprus and are fully regulated by the FCA.
OFX is a huge remittance company. Being an Australian company, customers this side of the world may look to OFX as they’re going to get a certain focus from OFX. There are no wire fees and have 10 offices around the world. Furthermore, being publicly traded, it is under the spotlight and can be 100% trusted with its track record.
The thing is, between these three, TransferWise and a few others, you can’t really go wrong. There may be a few euros difference from a big transfer, but generally you’re getting low or no fees and an exceptional exchange rate. If you do have a bank account, companies like currencies direct and other brokers who have positive reviews can help you save 80% of the associated costs from international transfers. It’s important to have the energy to browse in this kind of market. Market leaders (banks) are not there based on merit – not with international transfers anyway. The key is to never accept a fixed, flat fee like banks charge, because this will be highly detrimental to small transfers, and never an explicit currency spread.