Remittance cost calculator

Tips for sending money abroad

How do I send money abroad without spending a fortune?

It is not easy to choose the most cost-effective way of sending money abroad. The actual total cost changes depending on several factors, such as:

• the payment service provider (banks, postal service, money transfer)
• the amount of money to send
• the countries and the currencies involved
• how long the transfer takes

in addition, last but not least:

• how the payment is made and how the money is received (cash, credit card, debit card, pre-paid card, bank account transfer, mobile wallet)

The total cost for the same type of transaction with the same payment provider may also change over time!

But what is the total cost?

The total cost is the difference between the amount paid and the amount received. It is usually made up of these three different ‘prices' applied by the service providers:

1. the fee(s) and any taxes for sending the money
2. the exchange rate applied (when the transaction involves two different currencies)
3. any fee(s) and taxes for receiving the money

In particular, regarding the exchange rate applied by the service provider, the difference with the market exchange rate  -  the rate at which banks, professional investors and other market participants may exchange currencies - hides a fee. This difference is sometimes called the exchange rate "spread" or "margin".

If you want to get an idea about the different options, their costs and possible combination of providers and methods for sending money, you can start by visiting https://remittanceprices.worldbank.org/en and https://www.mandasoldiacasa.it/en.

It will very helpful, but it may not be enough. The list you will find does not include all possible options, the prices may be out-of-date or imprecise. Then, how to go on? The best strategy about this difficult task it is to compare first and then check. Let's see how.

Ground rule no. 1: compare first!

Look for many different offers, online or at the service providers' physical branches, and find out, for given amounts and payment methods, exactly how much the beneficiary will get in their pocket. The providers use different pricing strategies and it is difficult to add up all the prices of the service. Therefore, the actual amount the beneficiary will get is the most important piece of information you need. Keep track of the offers, compare them and choose the payment provider/payment method combination that will deliver the highest amount of money to the beneficiary. Moreover, because the prices offered by providers - in particular, the exchange rate applied - may change day by day, you should get all the offers the same day.

If the provider is unable to tell you the exact amount of money the beneficiary will receive, you can still try to get all necessary information: the sender's fees and taxes, the exchange rate applied, as well as the fees and taxes the beneficiary will be charged, if any. The latter is usually the missing piece of information, especially when the entity sending the money (e.g. Bank X, Country A) is different from the entity delivering the money (e.g. Bank Y, Country B). In such a case, you may ask Bank Y in Country B how much the beneficiary will be charged to receive the money. If you succeed in getting all the information above, use this calculator to know the exact amount the beneficiary will get.

If the provider directly tells you both the exact amount of money the beneficiary will get and all the prices applied, you may use the calculator to check if they add up.

If you also enter the market exchange rate, the calculator will provide not just the amount the beneficiary will get, but also the single cost components and the total cost of the transaction expressed in the two currencies eventually involved and, also, as a fraction of the amount paid.

Ground rule no. 2: check afterwards!

If you do not succeed in getting all the information on prices, you may choose to proceed with the payment anyway. However, do not forget this second rule and check the cost after you made the transaction. In fact, when the beneficiary get his money, you will probably be able to collect all the necessary information needed to compute the actual total cost. To this end, the calculator may be of great help.

In any case, comparing different offers each time you have to send money abroad can be very burdensome. Try to be not tempted to choose the method and the provider by comparing only few offers or consulting only some relatives or friends.

If this happens, never forget to check regularly the costs you are incurring. Keep track of the costs and compare them over time. Watch any increase in cost and see if other providers offer cheaper prices, and if so, change course!

Final (or opening?) tips: keep your eyes open

To conclude, some more tips you should consider before sending your money abroad.

The reliability of the service provider is important. Therefore, check the online reviews on Google, Trustpilot, etc., especially if the provider is not well known. Take note that a public authority must authorize and supervise all providers operating in Europe. Hence, ideally, you should check if the provider has an official license and what authority supervises it. You may find here a list of the payment service providers and the other financial intermediaries authorized and supervised by Banca d'Italia.

If you are going to transfer money abroad regularly, as is the case for remittances, you may consider opening an account online or at a physical branch. The cost may be worthwhile: you may have access to better prices for your remittances and get additional useful banking services (payment cards, investments, etc.). Online trading platforms and online banks may offer multi-currency accounts: you may be able to exchange currencies on your own at fairer exchange rates and transfer money abroad. Currently, due to the evolution of financial technology, many new players are entering the payment provider market, spurring competition and lowering prices. Sometimes these new providers offer special services for transferring money abroad tailored to migrants' needs. Keep your eyes open.

If your earnings allow you to save, you may consider keeping the bulk of your money in just one of the two countries. Typically, in the country where you work, you may benefit from the currency appreciation but your savings may earn a lower interest when deposited in a bank, whereas in your country of origin the local currency may depreciate but you may earn a higher interest rate. Moreover, sending larger amount of money few times can be more convenient that sending smaller amount many times.