International Money Transfers

8 April 2015. Filed under category Nomad.

In my article ‘Nomadic Banking’, I mentioned that if you spend much time in a given country, it is a good idea to open a bank account there. You can then spend the money without expensive fees and currency conversions. But an empty bank account serves no purpose. How do you move money from the bank where you have funds (I’ll call this your ‘home’ bank/currency’.) to your foreign bank/currency?

That is the topic of this article, which takes the form of an experiment where I test and compare three ways of moving money internationally from Sweden to both the UK and the US.

Further Reading

Updated 9 November 2023

Hi from the future! This section is added after the main article was written. I found a website that I think makes excellent further reading on this topic. It is called Money Transfer Comparison and they do exactly what it says on the tin, compare different ways to transfer money internationally. They compare many more services than I do here. I especially enjoyed their How to find the best currency exchange rate article, where they explain more in depth how the fee on international money transfers is broken down and how does the pricing works with each company. Definitely a worth-while read, and particularly applicable for larger or repeating transfers where better exchange rates can mean big savings.

OK, back to the original article!

Overview

I earn my salary in Swedish Crowns (SEK). I spend a fair bit of it in the UK and US, so I need to move the money there.

The most basic way of moving money is an international bank transfer. A newcomer in the money transfer business is CurrencyFair.com. And finally, there is another new way of doing it involving BitCoins.

So here are the transfers I’ll be attempting.

Amount Sent	From	To	Using
2016 SEK	Sweden	United Kingdom	Bank Transfer
2016 SEK	Sweden	United Kingdom	Currency Fair
2051 SEK	Sweden	United States	Bank Transfer
2051 SEK	Sweden	United States	Currency Fair
2051 SEK	Sweden	United States	BitCoins

Note: I did not find a way to sell BitCoins for Great British Pounds (GBP) that I was comfortable with, so I excluded that from the experiment. For an explanation to why the amounts sent to the UK and the US differ, see the Meta-Post Box ‘Why Different Amounts?’ at the end of the article.

My Swedish bank is Nordea, my UK bank is Santander and my US bank is Bank of America.

Edit 4 August 2015: After having tested a competitor to Currency Fair, I’ve added a new service called TransferWise. I’ve tried TransferWise to send money to both the UK and US, but with different dates and amounts than the (somewhat) uniform test for the other services.

Amount Sent	From	To	Using
5000 SEK	Sweden	United Kingdom	TransferWise
3500 SEK	Sweden	United States	TransferWise

Bank Transfers

A direct international bank transfer is ‘the old way’ of moving money between bank accounts. There is no need for any preparations, just tell your home bank to send the money to your foreign bank.

You will need to know some information about your foreign bank account that may not be immediately obvious on your foreign bank’s website. If in doubt, search your bank name and ‘accept foreign bank transfer’ or email your bank and ask for the required information.

In my case, I needed to know the following information:

• My home (Swedish) Name and Address
• My foreign (US/UK) Name and Address
• My foreign (US/UK) BIC (a.k.a. SWIFT)
• My foreign (US/UK) IBAN / Account Number

I also got to choose the speed of my service. I chose the standard speed, so as not to pay any extra fees.

You sometimes have the option of sending the money in your home or foreign currency. I sent my US transfer denoted in USD and my UK transfer denoted in SEK. We’ll come back to this in the analysis.

The following is the data recorded during the test:

	To United Kingdom		To United States
Money Sent	Monday Morning	2016 SEK	Monday Morning	232 USD
Fee				40 SEK
Money taken from home bank		2016 SEK		2051 SEK
Mystery pre-deposit fee	Wednesday Morning		Wednesday Morning	15 USD
Foreign Bank Wire Fee				16 USD
Actual Deposit		153 GBP		201 USD

Currency Fair

Currency Fair (CF) is an online money transfer service. Their claim is that they can circumvent the wire transfer fees, get you a better foreign exchange (FX) rate and move your money quicker than the traditional bank transfer. Let’s find out if they are true to their words.

To use Currency Fair you must first open a user account and then link your home and foreign bank accounts to the Currency Fair user account. This was easy. You do need to provide evidence of your identity, such as your passport and driver’s licence, and the verification may take a few days.

Once set up, the process is as follows.

1. Tell Currency Fair that you want to deposit money in your home currency. You will be given the payment instructions for your home bank, including a specific code to include in the transfer to identify yourself.
2. Instruct your home bank to send the money to Currency Fair. The fees for this transfer depend on your home bank. This is a national transfer however, so it should be cheaper, quicker and easier than an international bank transfer.
3. Use the Currency Fair market to convert the currency to your required foreign currency.
4. Withdraw the foreign currency to your foreign bank. This is another national transfer, with the same caveats on speed and fees as above.

	To United Kingdom		To United States
Money taken from home bank	Monday Morning	2016 SEK	Monday Morning	2051 SEK
Money arrives at Currency Fair	Monday Afternoon	2016 SEK	Monday Afternoon	2051 SEK
CF Money Conversions		156 GBP		237 USD
CF Withdrawal Fee		3 GBP		4 USD
Foreign Bank Wire Fee	Monday Evening		Monday Night	15 USD
Actual Deposit		155 GBP		218 USD

Note that the 15 USD wire fee in the US is the fee Bank of America charges to accept wire transfers from other US banks. It is not the fee they charge for accepting international wire transfers, which is … 16 USD. Go figure.

BitCoins

BitCoin is the most famous of the new breed of crypto-currencies that have been created in the last few years. I will not go into depth about what it is, but in a nutshell, it is a new type of currency which is not backed by any (multi-)national bank or entity but instead rests on some very impressive crypto-mathematical technology. These ‘coins’ can be bought and sold like any other commodity, and the value of a coin in, say USD, is what someone is willing to pay for it in USD, just like any other free market.

Since this is a virtual currency, there is nothing to ‘transport’ across the border, and thus the process for converting money using BitCoins as an intermediary is seemingly simple:

1. Buy some BitCoins using your home currency.
2. Sell the same BitCoins for foreign currency.
3. Deposit the foreign currency in your foreign bank.

I said seemingly easy. The devil is in the details.

Buying BitCoins using Swedish Crowns was easy. You first create an account on BT.cx, a Swedish BitCoin exchange. You instruct them that you want to buy BitCoins using funds sent from your bank. You then get instructions for how to make the payment. This is a similar process to how you send funds to Currency Fair. Once BT.cx gets the money, they buy BitCoins (at their current rate) and send the BitCoins to whatever BitCoin Wallet you designate.

Buying BitCoins is easy. Selling them for ‘normal’ money is harder. I found plenty of potential services in the UK that could have worked, but they all looked a bit sketchy and convoluted, so I decided to abandon that idea.

The US has a company called ‘Circle’, which aims to be the first proper bank based on BitCoins. Their process for selling and withdrawing funds was straight forward. Like Currency Fair, you must first create a user account, verify your identity, link your US bank account to your Circle user account and then prove that it is your US bank account. This was outrageously complicated. It took me weeks of support calls and messing about with documents. It worked in the end, and perhaps I just had a bad experience, but this almost made me abandon the whole project.

Circle gives you a BitCoin Wallet, and so I instructed BT.cx to send my newly bought BitCoins to my Circle account, and then asked Circle to withdraw the money into my US account.

	To United States
Money taken from home bank	Monday Morning	2051 SEK
Money arrives at BT.cx where it buys me BTC which is sent to Circle	Tuesday Afternoon	0.9094 BTC
Ask Circle to send money to US account	Tuesday Night
Money deposited into US account	Thursday Evening	225 USD

TransferWise

TransferWise (TW) is an online money transfer service, an almost identical competitor to Currency Fair. Like Currency Fair, they claim to circumvent wire fees, get better FX rates and move your money quicker than traditional bank transfer. Since the two services are so similar, I will here compare and contrast CurrencyFair with TransferWise.

TransferWise was not part of my original post. I am adding this part in August 2015 after having tried the service for myself. Because of this, the amounts sent, the dates and thus the global FX rate will differ.

TransferWise was easier to set up. There was no need to link target or source accounts to TransferWise like Currency Fair. Just put in the account details of where you are sending the money, how much you want to send and from which country. You then get instructions for how to send the money to TransferWise, just like with Currency Fair. (For Swedish users, TW allowed you to pay via BankGiro which CF did not.)

TransferWise does not have a market. Instead, they add a small percentage, usually about 0.5%, to the current international FX rate. (It depends on the currencies involved.) So you never hold any money in TransferWise. As soon as they receive the money, they convert it and send it on to your target bank. This removes two steps from the Currency Fair methodology. I believe Currency Fair has implemented a similar system now as an alternative to their market place.

The process for TransferWise is as follows.

1. Tell TransferWise that you want to send a certain amount of money from your home currency to your foreign bank. You enter the target bank account details on this first screen, or pick it from a list of previously used recipients. You will be given the payment instructions for your home bank, including a specific code to include in the transfer to identify yourself.
2. Instruct your home bank to send the money to Currency Fair. The fees for this transfer depend on your home bank. This is a national transfer however, so it should be cheaper, quicker and easier than an international bank transfer.
3. Wait. There isn’t anything more to do now with TransferWise. The conversion and deposit to your foreign bank happens automatically. This deposit is another national transfer, with the same caveats on speed and fees as above.

	To United Kingdom		To United States
Money taken from home bank	Friday 26/6	5000 SEK	Monday 22/6	3500 SEK
Money arrives at TransferWise	Wednesday	5000 SEK	Tuesday	3500 SEK
TW Converted Amount		383 GBP		421 USD
Foreign Bank Wire Fee	Wednesday		Wednesday
Actual Deposit		383 GBP		421 USD

Continuing the comparison with Currency Fair, the biggest differences is that Currency Fair is faster, but TransferWise somehow avoided the Bank of America transfer fee.

 Analysis

Let’s bring this all together in a single comparative table. I’ve also included the exchange rate for SEK/GBP and SEK/USD for the Monday when I began the experiment, found on XE.com. This should be seen as the absolute ceiling of how good the transfer could be. If you could beat that rate, you should be making millions working as an FX trader.

Having added TransferWise to the mix, I now have two tables. Since the TransferWise transfers were done on different dates, they have their own FX Rate rows.

	Money Sent	Pre-FX Fee	FX Rate	Post-FX Fee	Money Received	Time
UK Bank Transfer	2016 SEK		0.0758		153 GBP	2 days
UK Currency Fair	2016 SEK		0.0783	3 GBP	155 GBP	Same day
US Bank Transfer	2051 SEK	40 SEK	0.1153	31 USD	201 USD	2 days
US Currency Fair	2051 SEK		0.1157	19 USD	218 USD	Same Day
US BitCoin	2051 SEK		0.1094		225 USD	3 days
SEK/GBP FX Rate	2016 SEK		0.0786		158 GBP
SEK/USD FX Rate	2051 SEK		0.1163		238 USD

	Money Sent	Pre-FX Fee	FX Rate	Post-FX Fee	Money Received	Time
UK Transfer Wise	5000 SEK		0.0766		383 GBP	2 days
US Bank Transfer	3500 SEK		0.1203		421 USD	2 days
SEK/GBP FX Rate	5000 SEK		0.0767		383 GBP
SEK/USD FX Rate	3500 SEK		0.1212		424 USD

Security

The bank transfer is as secure as you get. One bank speaks to another, no messing.

Currency Fair and TransferWise are decent seconds. The companies have been around for a while, are regulated and feel genuine with ads on the TV etc.

The BitCoin operation felt dodgy, but in the end, it worked as I had planned. My insecurities were around the time it took Circle to sell my BitCoins and settle my withdrawal request.

Winner: Bank Transfer

Simplicity

The bank transfer couldn’t be any easier, comprising nothing more than one simple operation from your home bank’s web site.

TransferWise snags the second place with their ‘set everything up initially then forget about it’ system. Also, making repeat payments is simple and it was the only service that allowed you to pay via BankGiro.

Currency Fair is a close third. The initial setup process was easy. After that, you have a two-step process every time you want to move money.

Moving money using BitCoins was down-right complicated for any other country than the US. For US transfers, it was no harder than Currency Fair.

Winner: Bank Transfers

Speed

This is a no-brainer. Currency Fair completed the entire transfer the same day. That is astounding. Then again, the bank transfers and TransferWise only took two days and BitCoins three. How fast do you need your money moved anyway?

Winner: Currency Fair

Transparency

Will you know, before you start, how much you’ll be paying in fees and what exchange rate you will get?

Currency Fair has an open market where you can see exactly the exchange rate you’ll get, and their cut is already included in that rate so no surprises there. They also have a page where you can see the transfer fees for different countries, and that page will warn you when they suspect that the source or target bank may charge additional fees. This is excellent!

TransferWise stays close to the mid-market rate, which is as stable and transparent as it can ever be. The TransferWise fee is added on-top of that rate, and they have a page that details exactly what you can expect, as well as a pre-transfer estimate that was pretty accurate.

For bank transfers, you can normally find information on their wire fees. Normally, but not always. (Bank of America, I’m looking at you.) But the exact exchange rate you’ll get is usually hidden.

The BitCoin transfers were surprisingly transparent. Both BT.cx and Circle publicize their BTC rates, so you could calculate the rate. But with a 3-day turnaround, these will change.

Winner: Draw between Currency Fair and TransferWise

Extra Features

Currency Fair has two ways of doing the currency conversion. The way I did it was by using the Quick Trade, which gives me the best deal right now. However, if you are not in a rush, you can use the Market Place feature. There, you can specify how much of your source currency you wish to trade and the exchange rate you want to trade it for. Your order is then placed on the market place, waiting for the market to move. If at any point, your target exchange rate becomes the current rate, your order will be executed.  This way, you can hope for a spike in the exchange rate and take advantage of it.

BitCoins have the extra benefit of being cool. Fonz-level cool! And you’d be supporting the emergence of crypto-currencies, which I personally think are awesome.

Winner: Currency Fair

Value

How much money are you left with after the show is over?

Currency Fair beat bank transfers both by having a better exchange rate and lower fees. However, the difference isn’t enormous for the UK transfer. The US bank transfer stands out as suspiciously poor. This probably stems from me sending the money in USD instead of SEK.

The BitCoin transfer had the second-best value in the US. It was also the second mode of transfer that avoided the 15 USD wire transfer fee. However, the exchange rate was poor. The more money you send, the more the exchange rate will eat into the money saved on the wire fee.

On transfer volumes of 3016 SEK (330 USD) BitCoins and Currency Fair would be equally good, and beyond that, Currency Fair wins. That is not very much, and so I consider Currency Fair better value, even in the US.

But the clear winner in this category is TransferWise. It avoided all the bank transfer fees, had no fixed fees and even with their added-on percentage fee, they still managed to have amazingly competitive final FX rates.

Winner: TransferWise

Conclusion

BitCoins is, sadly, the loser in this test. Apart from very small transfers to the US, it doesn’t stand up to the competition, yet. But this is a very young currency, with many interesting properties beyond money transfer, and I sincerely hope that it grows in popularity. In fact, buying BitCoins was easy, and I would readily do so again if I found places where I could spend them. Indeed, this is happening right now with giants such as Microsoft and Dell accepting the currency.

The choice between standard bank transfers or a service like Currency Fair or TransferWise comes down to frequency of use. If you are only going to send a single one-off payment, I’d use a normal bank transfer, especially within Europe. If you are going to do this regularly, I’d go with TransferWise.

I’ve also learn that there are big differences in bank fees around the world. Europe has very low fees while the US is fee-crazy. Those Bank of America incoming wire-fees were low compared to their outgoing wire-fees, which go up to $50! If the US is your source-country, I’d definitely look into ways to avoid those fees at all costs. (Well, all costs below the fee itself, naturally.)

How to get 15 USD fee credit with TransferWise.

If you use this link to sign up with TransferWise, then you will get 15 USD in transfer credit. I will also get 15 USD in fee credits as a commission for referring you. Win/Win!

Just to be clear, TransferWise did not ask me to write this article or influence it in any way. The referral link above is something that any TransferWise user can create. So, I figured I might was well throw in a link that gives you a free transfer and me some referral money.

How to get a free Currency Fair transfer.

If you use this link to sign up with Currency Fair, then you will get your first withdrawal transfer free of charge. I will also get a free transfer and a small commission for referring you. Win/Win!

Just to be clear, Currency Fair did not ask me to write this article or influence it in any way. The referral link above is something that any Currency Fair user can create. So, I figured I might was well throw in a link that gives you a free transfer and me some referral money.

Help expand this article

I would love to hear your tips and experiences in international money transfers. If you are going to move money, I would love for you to email me a blow-by-blow description of the service you used, the source and target countries/banks, the fees incurred, the dates and the amount of money sent and received. I’ll then add it here.