6 mistakes to avoid when sending money abroad

Sending money abroad may not be the most difficult financial transaction to do. But it can still be a tricky one if due attention is not paid to the little details around it.

Here are a few pointers at the mistakes that could happen in a foreign currency money transfer.

#1 - Not doing a comprehensive comparison of possible service providers

It is not just your neighbourhood bank or your long-time banker who is authorised to send your money abroad. Sure, they are always the first and trusted point to head for, especially when your money is right there. T

he big, established names like NAB, Commonwealth Bank, ANZ, and Westpac, have been around for a long time.

Just as dependable as the banks is an entity like Australia Post. There are the larger international chains like Western Union and MoneyGram with a sizeable network both in Australia and abroad.

Then there are authorised, peer to peer companies who specialise in foreign currency transactions, including sending money abroad. Names like World First, CurrencyFair, TransferWise, Moneycorp, Torfx, OFX, HiFX and PayPal are some of the larger ones to consider.

#2 - Thinking exchange rates are mostly uniform across options

Exchange rates keep fluctuating and the rates themselves can vary across providers. Without taking your bank or any other for granted, shop around to understand the band in which the best exchange rates are being offered.

Of course, do check with your banker first to understand the day’s rates. For instance, if you are a commonwealth bank customer, the cba exchange rates offered to you could be competitive when compared to what the other banks offer.

Rates also vary between what the bank sells and buys. Besides, there are variable rates for cash, wire transfer and cheques.

As mentioned in the first point, there are entities besides banks you can use to send money abroad. Make sure you check the rates published by your own bank and the competition, besides the other available options.

#3 - Failing to understand the complete fee structure

It is not just the variations in the exchange rates offered that should be the basis of deciding who to go with.

Make sure you ask for the fee structure of the provider and compare it with what others charge. Typically, banks have fees that are on the higher side, given the personalised service they provide to customers.

These could eat into the amount you are transferring, thereby reducing what reaches your beneficiary.

This is where an online transfer company could look more attractive. These, usually, are low on transfer charges and that could well be a savings worth considering. Some providers even have attractive offers that could even include a first time free or even a lifetime free feature.

Do look out for the threshold clauses. Some providers do offer low or no charges at various transaction levels.

#4 - Not understanding the actual turnaround time of the transaction

To ensure that your urgent transaction happens on time, do read the terms and conditions and check for the turnaround time for the money transfer. While most transfers do get credited to the target account between one to two days, if not instantly, it is best to be sure.

Online transactions, typically, are faster. But check for any clauses or conditions on the rates or minimum amount considerations.

#5 - Not verifying the money transfer details

Now that due diligence on the various options and the exchange rates and the fees has been taken care of, what else could go wrong?

Don’t forget to review the basic information on the form being filled up. Mistakes like mentioning the wrong account number, getting the bank details incorrect or an error in the amount can result in problems ahead.

If funds get credited to a wrong account, it can be a big task chasing the unintended beneficiary to return the amount. And if it is pending credit at the overseas bank, it still means time and effort lost in follow-ups to retrieve your money. Wrong BIC/Swift codes or IBAN numbers can also delay the whole process.

#6 - Not considering foreign currency regulations

Transacting in foreign currency is a sensitive area and comes for scrutiny. When sending money overseas, not being aware of the laws and the required process can be a big mistake.

Transfers over $10,000 are monitored by AUSTRAC and you may need to provide supporting information if called for. The tax implications, too, need to be considered when sending or receiving large or frequent foreign currency transactions.

It is best not to transact on behalf of a third party, whether individual or company. At the same time, be aware and on your guard if you are transacting with an unknown beneficiary. Also, attempting to send money to a country on a sanction list could have serious consequences.

It is possible to see your money transfer through without any of the above hitches. Sending money abroad needs some groundwork and attention but mistakes can be avoided here too.

For detailed information on best exchange rates and more tips on money transfer, click here.