Whether you want to send money to a friend sitting next to you or a family member halfway around the world, you have options. There’s a wide selection of money transfer services from which you can choose. Not all are created equal, though, which can make it difficult to know which one is best for you.
In this guide, we’ll cover the different types of money transfer services and eight key factors to consider before choosing one.
The 5 types of money transfer services
The type of money transfer service you use will determine what options you have and how much you’ll pay for the service. Below are the five main categories.
Large traditional banks have robust money transfer services. However, they often charge high fees for international transfers and have a long transfer time.
Foreign exchange brokers are often used within the financial services industry, but also offer services for individuals. They tend to charge competitive fees on large transfers. However, they might not be worth it if you don’t need to send a lot of money.
3. Online services
With low rates and several transfer methods, online services have become more popular in recent years. However, some do not offer many international options.
4. Blockchain networks
These services rely on blockchain technology, which is fast, cheap, and secure. The downside is that you’ll have limited options and may need to use cryptocurrency, which is notoriously volatile.
5. Cash services
Many people prefer [cash money transfer services] because they do not require a bank account to send money to another country.”
You’ll drop cash off at a physical location for someone to then pick up on the other end.
“Many people prefer these companies because they do not require a bank account to send money to another country,” says Matt Oppenheimer, CEO of Remitly.
“The downside is that it comes at a steep cost due to additional fees.”
8 ways to compare money transfer services
The right money transfer service for you will depend on many things, including where you want to send the money, how much you’re willing to pay, and more.
As you compare money transfer services, keep these eight factors in mind.
1. Exchange rates
If you’re sending money internationally, the money transfer service you use will convert the transfer from your currency to the currency of the recipient.
Don’t take the rate offered at face value, though. Most money transfer services bake hidden fees into their currency exchange rate for processing the transaction.
The fees can vary based on the service you choose. So, it’s essential to compare the exchange rates for the specific currency you need to convert to.
2. Transfer fees
You may have to pay a fee just to transfer your money, regardless of whether it’s sent overseas.
However, most domestic money transfer services won’t charge you, unless you use a credit card or transfer money for goods and services.
But if you’re sending money internationally, you’ll find that many services charge a transfer fee. So it’s important to compare fees based on the value of the service you’re getting.
Note, however, that while some services can help you save money on fees, they might offer slower transfer times or poor customer service.
Sending money via cash or check can also cause serious delays before the money is officially transferred between parties”
3. Transfer time
Also called remittance float, this is the amount of time it takes for your money to go from your account to the recipient. Keep in mind that the recipient’s bank can add to the transfer time, but it shouldn’t affect your decision about which transfer service to use.
“Sending money via cash or check can also cause serious delays before the money is officially transferred between parties,” says Oppenheimer. So, if the recipient needs money in a hurry, consider a different route.
Keep in mind, though, that the fastest transfer service isn’t always the cheapest. So, you’ll need to consider trade-offs when comparing options.
4. Customer service
The money transfer process may not always go as smoothly as you’d like. So, it’s important to find a company with topnotch customer service.
If your funds disappear or you need help with a delay, for instance, it’s good to know beforehand that you’ll be well taken care of.
Specifically, you’ll want a service that offers 24/7 customer support across multiple platforms such as email, phone, and live chat. Also, look at reviews from current and past customers to see what type of experiences they’ve had with the service.
Don’t just look at general ratings, though. Instead, read a sampling of actual reviews. Some customers, for example, may leave negative reviews that won’t affect your decision.
So, take the time to read at least a handful of both positive and negative reviews. By doing so, you’ll have a better idea of what you’d be getting yourself into.
If you’re sending money abroad, it’s important to know which money transfer services have a footprint in the country you’re planning to send money. Countries where there are many transfers—including Mexico, India, and the Philippines—usually get a lot of coverage from money transfer services.
But if you need to send money to a small country or one that doesn’t get as much coverage, you may have fewer options.
If you’re having a hard time finding one, resist the urge to go with the first service you come across. Take the extra time to find a few, so that you can compare other factors before choosing one.
6. Cancellation options
What if something goes wrong with a transfer or you change your mind? It’s essential that you understand ahead of time what options you have to cancel the transaction.
You may have to dig into the fine print or call the customer service team to get your answer. But it’s worth looking into, because you don’t want to be out of luck if your plans change.
In other words, don’t choose a money transfer service until you know when and how you can cancel the transfer.
7. Security and reliability
Most of the money transfer services you find online will be legitimate, but there are some scams out there.
Here are three things you can do to check the security and reliability of a potential service:
- Check for reviews: If a service you’re considering is a scam or unreliable, chances are that other people have already discovered that. If you can’t find much about the service online, it may be best to move on just to be safe.
- Make sure the site is secure: When you’re on the service’s website, check the address bar. If it starts with HTTPS, the site is secure. If it just says HTTP, any personal information you enter on the website is at risk.
- Ask about how they handle security: Money transfer services usually have a page on their website dedicated to how they keep your information and money secure. Some might also share information about how to avoid scams. If you can’t find anything online, call the customer service team.
8. Promotions and discounts
Some money transfer services offer promotions or discounts to first-time users. Others will offer referral bonuses if you refer a friend to use the same service.
As you’re shopping around for a money transfer service, look for these types of deals. While they may not necessarily make up for some negative factors, it could help you decide between two companies that provide similar services and costs.
Banks and services that offer domestic wire transfers tend to be cheaper and faster because they can be completed through one payment system”
Don’t get stuck on just one money transfer service
No single money transfer service can do it all, so it’s possible that you might use more than one company for different needs. That’s especially the case if you do both domestic and international transfers.
“Banks and services that offer domestic wire transfers tend to be cheaper and faster because they can be completed through one payment system,” says Oppenheimer.
“But banks and services that offer international wire transfers can mark up the transfer fee and also give you a poor exchange rate, which will cause you to lose more of your hard-earned money.”
So, as you shop around for the right money transfer service, you may need to use more than one to achieve different goals.
To get started, use SuperMoney’s money transfer service review page to learn more about some of the best companies in the industry.
And don’t forget to read the fine print to make sure there aren’t any hidden fees or other terms that can come back and bite you.
Also, be sure to check the terms for each individual transfer you make. Since currency exchange rates constantly fluctuate, it’s important to know how your costs might change with each transfer you make.
Ben Luthi is a personal finance writer and a credit cards expert who loves helping consumers and business owners make better financial decisions. His work has been featured in Time, MarketWatch, Yahoo! Finance, U.S. News & World Report, CNBC, Success Magazine, USA Today, The Huffington Post and many more.