Are you sending money to your family, friends or relatives who live overseas? Then you know that international money transfers can be quite expensive. Especially, if you transfer relatively small amounts regularly then the fees add up fairly quickly.

There seem to be many services that offer sending your money internationally, each having some advantages and disadvantages as well and it’s quite hard to find one company that combines just the good things.

In this article I would like to briefly cover the most usual ways and then at the end will share with you my latest discovery that beats them all!

If you are impatient, you can skip to the end to point #4, but I recommend reading the whole stuff to better understand how things are.

Traditional option #1: Western Union

Most well-known company dealing with international money transfers is Western Union. Almost everyone knows them.

They are probably the biggest and most widespread company around the word for small amounts international money transfers. The unique advantage of Western Union is that you can send money instantly almost anywhere in the world and the receiver can have the money in just minutes.

The money is sent directly to a person who can collect it in any of the thousands Western Union Agent locations. The receiver does not need to have a bank account, which sometimes is another huge benefit.

However, there is one big setback – the cost. To send money to your loved ones with Western Union usually cost you a minimum of $28 and if you are sending amounts above roughly $250 then the fee is approximately 11%. So for example sending $500 will cost you extra $54. Quite a bit, indeed!

Traditional Option #2: Traditional Bank

The other way to send money overseas is using traditional bank. They offer usually a good foreign exchange rates and the transaction is in most cases done within 1-3 business days.

So, if you send money today, it will be credited to foreign bank account the next business day. Banks use system called SWIFT which is the international standard for transfers between banks.

The disadvantage of this method is also cost and limited convenience. To send money overseas most banks charge international transfer fee of about $25.

Some banks, like ASB offer cheaper fee if you use their internet banking. Actually, until recently the ASB and ANZ were the only banks who offered this service over the internet banking. However, ANZ system was a bit limited, offering only certain countries, not all.

Recently National Bank introduced this service, but you need to activate it first, it’s not automatic.

All other major banks you need to visit in person (if I don’t count sending emails via internet banking that are prone to human errors as some other banks suggested), fill out forms and they processed it manually. Not very convenient if you work full time during the day and don’t have time going to the bank.

Another big downside of bank transfers is that usually there is another fee charged by overseas bank receiving the funds. So you pay the fee twice – for sending money as well as for receiving it.

The receiving fee is usually anywhere between $20 and $50, depending on foreign bank own prices. To send $500 through bank will cost you anything between $40 and $70. Sometimes cheaper than Western Union, sometime more expensive, it’s different on case by case basis.

Traditional Option #3: Money Transfer Companies

If you consider both previous options too costly then there are many companies who offer similar services.

For sending money overseas they usually charge a little less than the banks, and their exchange rates may vary too. Some are better than banks, some are worse, so it pays off to do your calculations and comparing them first, before you sign up with any.

Using these kinds of companies you can save some money, mostly through cheaper transfer fee and better exchange rates; however the disadvantage of receiving banks fee still remains.

That’s because almost all of these companies are using their banks to send the money overseas (having more favorable rates than you do).

I used some of these companies in the past, but not any more for 2 reasons. First reason is that they often require you to provide too much of documents, IDs, etc.

It means you have to scan and email (or fax) them your driver’s license, bank account statement and utility bills. I have a bit issue giving other businesses so much of my personal data. I am not suggesting they can misuse it; just simply I don’t like it.

Second reason I don’t like them is the length of time needed for international transfer to be processed.

These companies usually require 1 business day more than banks – that’s because you need to transfer money to them first which takes 1 business day. As you can see, you can save few dollars here, but endure much more hassles and it generally takes longer.

Well, if you made your reading up to this point then congratulations! I am going to reveal my latest favorite (and no, I have no association with this company, I am not their affiliate and I am not receiving any commission for this recommendation):

My favourite Option #4: New Product from Western Union

Well, you heard right, but hold on, it’s not the same option as described in point #1. I don’t know exactly from when (but it must be fairly recently), Western Union introduced new product to send money internationally directly to receiver’s overseas bank account.

The best part is – there are ZERO fees for this service! (Update November 2013: After initial introductory zero fees now they charge $10 per transfer).

The true is that their exchange rate is slightly less favorable than what you can get from the bank, but for most small to medium range amounts it will still be much cheaper. To send $500 it will be about $16 cheaper than with bank, assuming bank charges $20 for international money transfer.

If you wanted to send higher amounts (more than $2000-$2500) then the bank would probably be cheaper option, but most people are sending amounts between $100 and $1500 and for that price range the new Western Union product definitely [still] rocks!

Now you can be sending even really small amounts like $50 with no extra fees! And that’s really unbeatable! I hope that Western Union will continue this service free of charge and that it’s not just introductory special offer.

How it works?

Western Union is a big company having branches in almost every country in the world.

So, when you send your money, they will not send it internationally through conventional banking system, instead they will use their local branch in your receiver’s country and send it as local bank transfer, thus avoiding even receiver’s bank fees!

There can still be some fee, depending on the receiver’s bank and if they charge fees even for local deposits. Even if so, it will be incomparable smaller than standard deposit fee which normally applies to international money transfers.

This product is indeed ingenious, because you won’t pay sending (now $10) or receiving fee. Western Union is making money only on the exchange rate conversion, but it’s very modest and I am happy to pay extra $4 if it saves me $60!

What’s the process?

If you decide to give it a try, here is the process to send money overseas with Western Union:

1. Go to their website www.westernunion.co.nz

2. Register and create your User account

3. After logging go to Send Money

4. Select country of the receiver and choose service “Direct to bank account” (Please note: for some countries this option is not available – find out if it does apply for your receiver country)

5. Proceed through the screens. You need your New Zealand issued Visa or MasterCard. It can be either a credit card or a debit card. If it’s debit card, it must have Visa or MasterCard logo on it. To avoid credit card “cash advance fees” and subsequent interest, it’s better to use your debit card.

6. Once you submit the Payment and it’s your first payment, you will get a message saying that you need to call Western Union at 0800 number and verify your identity.

7. Call Western Union, answer few security questions and give them your New Zealand issued driver’s license number. No scanning and emailing, no bank account statements or utility bills. That’s all, after the initial verification you will be get “verified” status. This verification process you do only once with your first payment.

8. Your payment is released and usually received the next business day – equally fast as regular international money transfer with your bank.

9. Bonus – in some cases the money is received even the same business day. Western union will send your money the same day. Depending on banking system in the receiver’s country, some places process local bank transfers the same day.

Usually it will be the case when your receiver’s bank account and Western Union’s bank account are in the same overseas bank. So, there is a chance to have your money in your receiver’s bank account even on the same day! And this speed beats even New Zealand domestic transfers… How good is that?!

We hope that this informational article will be beneficial to you. Happy international money transferring!