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What's the Cheapest Way to Transfer Money to/from Canada?
How can you get your money safely to your bank account in Canada or send money to your loved ones at your home country?
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Making an international money transfer can be quite an onerous process, as banks typically offer their own inflated exchange rates, and banks in both countries adding their own charges. We recommend taking a look at other money transfer service providers and taking the time to compare all your options before making a decision.
Let's see what are the options available to you if you are wishing to send money from your home country to your new bank account in Canada, or if you simply want to send money to your home country. |
Transferring your Money with Traditional Banks
There are a lot of cons to transferring money through your bank. This is why we do not recommend this route. Just to state a few:
There are other cheaper options available.
- Banks are usually more costly, with less competitive exchange rates. They will usually have fixed wire fees per transfer ($30-40) but to make a thorough comparison with competitors, you should compare how much currency you'll end up with, as their exchange rate is higher than competitors,
- The receiving bank may charge additional fees,
- Banks require more information,
- Bank transfers may take longer,
- Some banks will not transfer money to some foreign banks.
There are other cheaper options available.
Money Transfer Operators
Money Transfer Operators are specialized in the transfer of money between countries. There is usually no need, for using their services, to have an opened account with them. You can find them everywhere, from banks, supermarkets to pharmacies. You only have to provide an ID document and sign a few forms to be able to transfer money through their servies. Most of them provide money transfer services through mobile phone apps. The most known ones are Western Union and MoneyGram, etc. WorldRemit is also considered a Money Transfer Operator, but only operates online.
Peer-to-Peer Service Providers
Peer-to-peer money transfer providers are relatively new to the foreign exchange sector. In an "uberization" of foreign currency exchange, these platforms allow two people from different countries to negotiate the exchange rate by themselves. This results in cancelling out banking margins and fees, making currency exchange more affordable.
With these peer-to-peer platforms, as opposed to banks, you don’t pay any international receiving fees (the money you will receive in the other currency will come from a local bank). Besides, the total fees incurred for a transaction are around 0.3% to 1.0% above the mid-market exchange rate, where banks usually use 4% to 6%. This basically means that the more money you send abroad, the more you will save.
However, you will need to send the money you are expecting to exchange to the company's local bank. You may expect your bank to charge you fees to perform this transfer, but it will depend on your bank and the type of account you have with them (some accounts/banks do not charge fees for bank transfers).
With these peer-to-peer platforms, as opposed to banks, you don’t pay any international receiving fees (the money you will receive in the other currency will come from a local bank). Besides, the total fees incurred for a transaction are around 0.3% to 1.0% above the mid-market exchange rate, where banks usually use 4% to 6%. This basically means that the more money you send abroad, the more you will save.
However, you will need to send the money you are expecting to exchange to the company's local bank. You may expect your bank to charge you fees to perform this transfer, but it will depend on your bank and the type of account you have with them (some accounts/banks do not charge fees for bank transfers).
CurrencyFair vs. TransferWise Comparison
Two of the most known peer-to-peer money transfer companies are CurrencyFair and TransferWise. Below is a comparison of the main characteristics of the two online platforms:
Exchange rates: The average exchange rate offered for an immediate transfer is around 0.4% to 0.6% over the mid-market rate. If a transaction is conducted directly between two customers (peer-to-peer), the premium can go down to 0.25% over the exchange rate matched between the two "peers". Fees: Fixed 3 EUR (or equivalent in another currency). For Just For Canada customers, this fee is waived for your first 10 transfers. Speed of transfer: 1-2 days. Available currencies: Around 20, including INR (India), ZAR (South Africa), AED (United Arab Emirates), THB (Thailand). Regular overseas transfers: Supported Security: Top level SSL security certificates and two-factor authentification. If considering transferring money to Canada or to another country in the near future, you can get your first 10 transfers free if you sign up using this link. |
Exchange rates: The exchange rate offered for your transaction is equal to the mid-market rate. This rate can be checked in real-time on Google, XE and Yahoo Finance. Fees: TransferWise charges a percentage of the amount to be transferred, and ranges from 0.3% to more than 1%. This percentage depends on the currencies involved in the transaction, and decreases as the amount transferred increases. Speed of transfer: 1-2 days. Available currencies: More than 50 (you can only send money to and from around 20 currencies, and the rest is only for sending money). Regular overseas transfers: Partially supported Security: Top level SSL security certificates and two-factor authentification. If considering transferring money to Canada or to another country in the near future, you can sign up using this link. |
Which Type of Foreign Exchange Service Provider is the Best?
Out of the money transfer services cited, there is no definitive answer, it depends on your needs:
- Cheapest money transfer service with the lowest rate and fees: TransferWise and CurrencyFair offer very interesting rates and fees.
- Fastest money transfer service: WorldRemit, Western Union and MoneyGram can transfer funds overseas within minutes. TransferWise and CurrencyFair are still faster than banks.
- Cash-only transfer: WorldRemit, Western Union and MoneyGram can transfer money without needing a bank account.
- Available transfer destinations: WorldRemit, Western Union and Banks can send money pretty much anywhere in the world. TransferWise has more than 50 currencies available for transfers (you can only send money for around 30 of them, not receive it in those currencies). CurrencyFair is becoming a serious contender with 20+ supported countries, including India, South Africa, the UAE.
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