There are many reasons why you might want to receive or transfer non-pound sterling funding from overseas into the UK. This could be because you are currently living overseas but want to return to the UK, because you are receiving funds from an overseas client or employer, or simply because a friend or family member wants to give you a cash injection. This is equally true for businesses and charities who operate in increasingly global arenas, and receive payments and donations from all over the world.
Receiving non-sterling funds in the UK used to be a huge undertaking, not only taking a considerable investment of time but also of money. However in recent years, thanks to money transfer companies and online innovations, transferring funds in multiple currencies, and from multiple locations, has become easier than ever. Here’s everything you need to know about why money transfer companies are the best way to receive non-pound sterling funding from overseas:
How Do Money Transfer Companies Work
The first money transfer businesses were established in the 1800s, when the use of telegrams began to be widespread. At this stage, money transfer was incredibly simple: a person who wanted to transfer funds to the other side of the country would go to a money transfer office with the amount they wanted to send, the money transferor would send a message on the telegram with the amount figures, and the person on the other side of the telegram would forward the amount to the receiver of the money. This completely revolutionised transferring funds, but it required both the sender and the receiver of the money to be both present at a telegram office.
As technology has developed, money transfer services have evolved. The advent of telephone, fax, email and the internet all helped to make sending money quicker and easier than ever. Today, although many people still refer to this as a ‘wire transfer’ the money is almost always sent online.
Nowadays, money transfer companies use the electronic funds transfer (EFT) to send money across. They don’t send any actual money, rather they send across data that represents money. Thanks to the speed with which data can now be sent over the internet, these transactions can take place in just a matter of minutes. The money is transferred on the internet safely with the help of highly secured layers of coding, keeping it safe from hackers, and the whole process is simple, easy and safe. Money transfer companies are as popular as ever, and it can be hard to know how to find the right one for you, but this comprehensive company list is a great place to start if you’re looking for the best popular and cost efficient options.
Wondering how money transfer companies make their money? It’s surprisingly simple: Firstly, and most importantly, the money transfer service provider will charge a transaction fee for each payment you send, and secondly, transfer companies will purchase currency in bulk and then take advantage of the foreign exchange spread.
Why Do Money Transfer Companies Offer Better Rates than Banks?
Money transfer services are incredibly popular, and the industry is an incredibly fast-growing market. One of the main reasons for this is because more people than ever are living global lives, and the demand for international money transfers is higher than ever, but traditional money transfer companies offer much better rates than banks for these services. There are two main reasons for this:
- Banks charge higher transfer fees, because the model they use usually charges a percentage of your exchanged amount. This model particularly penalises those who are wanting to transfer large sums, because you will pay a percentage of every single penny you send over. By contrast, the money transfer company model usually charges you a flat rate per transaction, and these rates are often lowered or dropped entirely for repeat or regular customers.
- Whilst exchange rates are in a constant state of change, money transfer companies typically offer better rates than banks. Whilst banks offer a wider range of services, money transfer companies solely focus on foreign transfers, meaning they are often better placed to buy whilst the rate is at is best, and buy in higher quantities. It’s important to look at both the exchange rate and the transfer fees as a whole when ascertaining which provider is the best option for you; these should both be taken into account to get the best rate, and give as little of your hard earned cash away as possible!
Why Are Many Charities Using Money Transfer Service Providers?
One of the main industries who have notably turned to money transfer service providers rather than traditional banks is the charity sector. Charitable establishments are an increasingly global endeavour, and international charities and NGOs are becoming increasingly savvy about innovative ways to save funds wherever possible, funneling it where it’s needed. Although they are based in the UK, these charities tend to receive substantial donations in foreign currencies, and money transfer service providers are appealing because they have the ability to offer local bank addresses in domestic currency through a multi-currency account: effectively, they save both time and money.
Money transfer companies also tend to offer speed and efficiency in their currency delivery, which is incredibly important when you are dealing with individuals who need support immediately. Banking for charities is often complicated, and fraught with legal obligations. Utilising a money transfer company to handle the non-sterling funding that is acquired from abroad, can help to remove some of these complexities. When people make donations to charities, they expect all of the fund to reach the charity: money transfer services are preferable to banks for handling these funds as they ensure your donations are never caught up with hidden fees. They offer fairness and transparency on international charity payments. At the end of the day, your donations should be maximised, reaching those who need it most and not consumed by greedy bank charges.
Could a Money Transfer Company Be the Right Choice for You?
Trying to decide if a money transfer company could be the right choice for you to transfer your funds globally? Much of this will depend on how much you are trying to transfer, the type of transfer that you are making, and the speed with which you want to make your transfer too.
If you’re in a rush, and are hoping to make a transfer as speedily as possible, then utilising a money transfer company will almost always be the best option: whilst you may have to wait up to a week for your bank to complete a transfer transaction, a money transfer company would have your funds in the hands of your payee by the end of the day. On the flip side, if you’re only sending small amounts then money transfer companies can be more expensive than traditional banks: it’s important to look at both the foreign exchange rates, sending fees, and receiving fees when deciding which option is right for you. Keep your mind, and your options, open and ensure that your money is safe every step of the way.
