My wife is going to the UK to attend a sports training course. The provider there requires advance payment. The cost is in British pounds. I need to transfer money over to cover it.
When I did an international money transfer from the U.S. to Canada a few years ago, CurrencyFair gave the best exchange rate. Since then, CurrencyFair pulled out of the U.S. due to regulatory requirements (they can still send into the U.S. but not out of the U.S.). OFX, previously known as USForex, came second at that time. I heard ads from a service called TransferWise in some podcasts. I also saw ads from a service called Zenbanx in the Bloomberg financial news app. I decided to check them out and see which one can do the transfer at the lowest fee this time.
The fee for an international money transfer comes in two flavors. It can be an explicit service fee, and it can be a less-favorable exchange rate. You have to consider both the explicit service fee and the implicit markup on the exchange rate to get the total cost, especially when you are transferring a large amount.
TransferWise is based in the UK. OFX is based in Australia. Both have subsidiaries and proper licenses in the U.S. Zenbanx operates through a bank in the U.S.
For this round of tests, I tried scenarios where I wanted the other end to receive 2,000 Canadian dollars, 2,000 Euros, 2,000 British pounds, and 120,000 Indian Rupees. Whichever service can do it at the lowest all-in US dollar value wins. I got quotes from these services on the same day, within minutes of each other.
US Dollars To Canadian Dollars
|1 USD = ? CAD||1.3301||1.3342||1.3544|
TransferWise adds an explicit fee to the exchange rate. OFX and Zenbanx include part of their fee in the exchange rate. The effective fee is calculated as the difference between their all-in cost and the cost given by TransferWise before its fee.
TransferWise won this test. Zenbanx and OFX were very close to each other.
US Dollars to British Pounds
|1 USD = ? GBP||0.8014||0.7905||0.81437|
TransferWise won again. Zenbanx was not competitive in this currency pair.
US Dollars to Euros
|1 USD = ? EUR||0.9405||0.9426||0.95715|
TransferWise also won. Zenbanx and OFX were again very close to each other.
US Dollars to Indian Rupees
|1 USD = ? INR||66.4831||67.3032||67.85495|
TransferWise and Zenbanx were very close to each other. OFX would cost more.
* OFX was waiving its explicit fee this month when I did the test. Otherwise the fee would be $5 for transfers under $5,000.
When I tested transfers from US dollars to Canadian dollars, British pounds, Euros, and Indian Rupees, TransferWise had the lowest all-in cost. Its effective fee was nearly half of other providers. Consider using TransferWise when you need to do international money transfers. Because the fee is largely proportional to the amount you send, the more you send, the more you save when you use a lower cost provider. Here’s a calculator from TransferWise you can play with to see the current rate and fee for your currency pair: