One off overseas payment
For many people, needing to send money overseas isn’t an everyday or even an every year kind of thing, so when you are in the situation when you do need to send money to someone or a business overseas in a one off situation, transferring money across borders can seem kind of daunting.
Firstly there’s foreign exchange rates and jargon to get your head around, then there’s the question of how to get your funds there safely and securely, whether you should go through a bank or one of the many online foreign exchange providers.
This guide will run you through your options to help you make an informed choice. Just because you are only going to be making one transfer, it doesn’t mean that you should go with the most convenient choice for your transfer (ie. the bank branch or post office down the road). You could save a lot of money by shopping around and you’ll be surprised at how easy it really is to add foreign exchange trader to your list of skills.
Who does one off payments?
You’ll be able to make a one off international payment using a bank, online provider like paypal or an international money transfer specialist. Some providers will have minimum and maximum transfer limits so depending on how big (or small) your one off payment is you will need to review this prior to confirming your payment.
No matter which option you choose, in order to complete an international money transfer you’ll need to set up an account before you can transfer funds. This is because banks and FX providers need to comply with the Anti-Money Laundering and Counter-Terrorism Financing Act but fear not, signing up for an account is relatively straightforward and in most instances can be done online.
But it is a good idea to do this well ahead of the date you need to make your transfer, so you can nab that great exchange rate on the spot.
Options for making overseas payments
Just like many other banking products, when making a foreign exchange transaction there is your basic service, often called a spot transfer, through to premium services like forward contracts and limit orders.
If you only need to make a one off payment, what you choose will depend on the amount of money you need to transfer and the deadline that you need to make the payment by. Here is an explanation of each option:
Spot rate transfer. This is the most common service for personal transfers and this service will be offered by most banks and international money transfer providers. A spot rate is the on the spot rate, the exchange rate for a currency at that particular day and time. Say you want to transfer $10,000 AUD to the US today. The best spot rate according to our comparison tool is 0.7483 USD, so if you transfer your funds on this day you will get USD $7,483.00.
Forward contract. The thing about foreign exchange is that exchange rates never remain the same for long, so today you might get 0.7483 USD for every AUD but tomorrow you might get 0.7035 or 0.8026 depending on what is happening in the market. While this can work in your favour, sometimes when making a one off transfer you want to make sure that you have all of your expenses covered because a negative change in exchange rate could make a big difference to your final cost. Some specialist FX providers have a product called a forward contract. This allows you to lock in an exchange rate at today’s rate but you get to make the transfer at a time in the future nominated by you.
Limit order. A limit order is another option which is basically when you agree to exchange your funds at a point in time when the currency reaches your desired exchange rate. For instance, if today’s rate is 0.6795 Euros but you want to wait for it to reach 0.7000 Euro then you can place a limit order and when the Euro reaches this it will be transferred to the nominated account.
Why shop around?
You might think that just because you are making a one off transfer it doesn’t really matter that much who you choose to transfer your funds, exchange rates all look pretty similar.
But it really is important and obviously the more funds you are transferring the bigger the difference will be to you.
One additional thing that is important to understand with FX is that some providers are stronger with certain currencies. So you might find that one provider has better rates for USD and another one has a better exchange for Pounds. That’s why we’ve developed our IMT exchange rate calculator tool to give you a quick snapshot of every provider's rates in one quick summarised table.
Take a look at these scenarios using our comparison tool at the time of writing
|Amount transferred:||Best rate on Mozo||Worst big bank rate||Difference|
|100,000 AUD||$74,944 USD (Compass Global Markets)||$70,934 USD (CBA)||$4,010 USD|
|50,000 AUD||£28,625 (TorFx)||£26,939 (Westpac)||£1686|
|25,000 EUR||€17,004 (TorFx)||€16,017 (Westpac)||€987|
In addition to the exchange rate, you should also factor in fees that you will be required to pay for a transfer. Many international money transfer providers charge a flat fee for transferring funds but there are some that don’t charge fees if you are transferring over $10,000.
If you do the transfer yourself online generally this will cost less than if you do a transfer in person at a bank or branch.
Online security when making an overseas transfer
The IMT providers listed on our site all have secure websites, encrypted with the latest security technology so that you can be sure that your funds will be sent safely to the recipient of your funds in a timely manner.
While the IMT provider can provide a secure platform for you to transfer the funds to a foreign bank account, what they cannot secure you against is if you provide a wrong account number or bank details. Always be certain that you have the correct account number, bank details prior to transferring any funds. You should receive notice from the IMT provider advising you when the transfer was made or be able to see this for yourself via the online trading platform.