Transferring money internationally can be very frustrating and prohibitively expensive. It does not have to be though. In this article, I explain how to efficiently and cheaply transfer money between accounts / to third parties.
Large international banks usually allow their customers to transfer money between their accounts for free or at a discounted price. Citibank and HSBC are the best ones, especially if you qualify for Citigold or HSBC Premier.
My strategy here is simple, when I open a new bank account in a country I also open a local Citibank account and link that account to my Global View of Accounts (on the Citibank online banking). I can then transfer money from my existing Citibank accounts in any countries for free and instantly to my new account.
I will give you an example: I opened a DBS account in Singapore and a Standard Chartered account in Hong Kong. I also opened Citibank accounts in both Hong Kong and Singapore. When I want to transfer money from Hong Kong to Singapore I send a local transfer from my Standard Chartered account to my Citibank HK account. I then use the free Citi Global Transfer functionality to send money to my Citibank SG account. I then send a local transfer from my Citibank SG account to my DBS account. Total cost? 0$.
You can also use this method to pay third parties (suppliers, business partners…). In this case your setup would look like this: Your bank -> Citibank (your country) -> Citibank (Destination country) -> Third party’s bank.
Money transfer service
If you only need to transfer small amounts (<5000$US), using a money transfer service may be your best option. TransferWise is my favorite service, they are cheap and very reliable. They allow you to fund transfers via a credit or debit card and their rates are very competitive. WorldRemit is another good option, especially for micro-transfers. Many transfer services also allow you to transfer money to mobile phone accounts (useful for keeping your SIM cards active). If TransferWise or WorldRemit aren’t available in your country, Western Union may also be an option.
Interested in sending money to Australia? Have a look at sendmoneyaustralia.com for the best information and quotes. There are thankfully tons of services available unlike in less developed countries such as Nigeria.
Using Bitcoin can allow you to circumvent capital controls or geographical restrictions. You can find local sellers on LocalBitcoin.
Two useful potential setup:
1. Cash -> Bitcoin (via local seller) -> Spend bitcoins online
2. Cash -> Bitcoin (via local seller) -> BitPay/Coinbase (Bitcoin merchant account) -> Your bank account
I do not recommend using Bitcoin if you have other options available because of it’s high volatility and large spreads. If you do decide to use Bitcoin, I recommend reading this Wikipedia article first.
This is the most popular method used to transfer money internationally. In many cases it can be expensive and inconvenient, especially if you have to physically visit your bank to initiate a wire. SWIFT and SEPA transfers are monitored by the EU and the US for tax evasion so this method of transfer can also be risky depending on your setup. If you decide to rely on the SWIFT or SEPA system for your transfers, I recommend opening an account with a bank that offers free wires.
Use actual cash
Using actual cash may sound like a strange money transfer strategy but in some cases it can work pretty well. If you travel regularly between your business locations it can make sense to carry cash on you. Same thing if your business locations are close-by (Hong Kong and Shenzhen for example). In some cases (undeclared income for example), carrying cash may be your only safe option. Keep in mind that in most countries you will have to fill a tax declaration form if you are carrying more than 10000$US equivalent.
Using a merchant account as a mean to transfer money internationally is both unusual and expensive but can be very useful in some circumstances. For example, you have an undeclared corporate offshore bank account and you want to transfer funds into it. You obviously can’t send a wire transfer or use a money transfer service and moving actual cash around is too expensive (travel costs). In such a situation you could open a merchant account for your offshore corporation and link it to your offshore bank account. You could then invoice yourself the amount you wish to transfer and pay the invoice with a credit/debit/anonymous gift card. If your company is properly setup, such a transfer will leave no obvious traces. This is a last resort method though as such a transfer can be expensive (2-3%) and resource intensive (merchant account maintenance).
Using debit cards to move money around can work nicely if you or a trusted associate are physically present in the destination country. You or your associate can simply withdraw cash from an ATM using the card and deposit it locally. You could also provide a debit card to a third party to whom you frequently send money. You would then only have to reload the card and they would gain immediate access to the funds.
For example: if you bank in the United States but live in Malaysia, you could get a no ATM/FX fee bank account in the US and draw cash from that account using a debit card in Malaysia. You could then either spend the money or deposit it in a local Malaysian bank account.
Sign up for a TransferWise account today using my referral link and get your first transfer for free. TransferWise is the best way to move money between your bank accounts internationally.