The Cheapest Way to Send Money Abroad

Key takeaways:

• Digital currencies provide low-cost international money transfers
• Low fees and elimination of currency conversions bring costs down
• Cutting out intermediaries boosts transaction speeds

Using the services of a high street money transfer outlet – or remittance provider – is a commonly used way to send money abroad. People using these services include expatriates, migrant workers, freelancers and small business owners.

However, international money transfers can bring disadvantages such as high costs, hidden fees, and inefficiencies that can delay the successful transfer of funds. Instead, the use of digital currencies for transfers represents an innovative solution that can help overcome these problems, in some cases offering the cheapest way to send money abroad.

Why Traditional Methods Are Expensive

Traditional methods of sending money abroad can be expensive for a number of reasons. Banks and high street money-transfer providers often charge high flat fees or percentage-based fees which reduce the efficiency of sending funds across borders. These charges can include high exchange rate markups which eat away at the customer’s wealth every time they move money.

For example, the three largest UK banking providers typically change transaction fees of 2-3% for an international payment, excluding the transaction fee often charged by the recipient’s bank. Meanwhile, the major remittance providers impose a range of charges that vary significantly from one country to another and are typically in the range of 5-10%, although some can be much higher.

And the drawbacks of traditional money-transfer methods don’t stop at high costs. The slowness of transferring funds can be a further inconvenience. Execution times can take from one to five days, with the duration affected by factors such as currency conversions, time zone differences and compliance checks. In addition, some countries have stricter regulations that demand more thorough documentation checks, for example. Further factors such as weekends and public holidays can create additional delays to transfer times. On top of this, any mistakes made by the sender, such as entering incorrect recipient details, can increase the transaction time even more.

These elements can all create barriers for people wondering how to send money internationally.

With all these factors in mind, there is a clear need for a faster, cheaper and more efficient alternative to traditional money transfer services.

How Digital Currencies Reduce Costs

Digital currencies provide an opportunity to deliver low-cost cross-border payments, through a number of key advantages.

Instant Settlement Time

Digital currencies involve decentralised networks that enable real-time transfers that bypass intermediaries. This helps to speed up the time needed to complete a settlement.

Cross-Border Simplicity

Since digital currencies do not require currency conversions, the user does not need to pay any conversion fee. In addition, blockchain transactions are fully transparent, as the technology records all transactions on a decentralised, shared ledger. This means every participant in the network can access the transaction information in real time, and the data is recorded in a way that can be audited.

Peer-to-Peer Transfers

Peer-to-peer (person-to-person) money transactions cut out the middleman, effectively removing the need for financial intermediaries when sending money abroad. This not only speeds up the time needed for transactions but also does away with the need to pay fees for intermediaries, lowering the overall transaction cost.

Case Study: Kinesis

An example of a digital currency platform is Kinesis – a system that combines blockchain technology with precious metals. Kinesis allows users to buy and sell digital currencies that are backed by physical gold and silver. This underpinning of the currency with tangible assets creates greater stability compared with other digital currencies that are not supported in this way.

Kinesis offers P2P functionality for direct transactions, meaning there is no need for intermediaries. This enables instant cross-border transactions with an international reach.

Benefits of Digital Currencies

To recap, digital currencies offer a unique set of advantages over other types of international money transfer services. These include:

• Significant cost savings through lower fees and elimination of hidden costs
• Faster transaction times, allowing instant or near-instant transfers
• Enhanced transparency through blockchain (distributed ledger) technology
• Greater accessibility for users worldwide by removing traditional banking barriers

Digital currencies offer the fastest and cheapest way to send money abroad by cutting fees, expensive currency conversions and financial intermediaries.

Whether it’s for a multinational business making payments to an overseas supplier or for a parent making a transfer to their teenager travelling abroad, Kinesis is a cheaper, faster way to send money internationally.