Money Transfer Companies

Thank you so much. Could you give me names of a couple legitimate money tranfer companies. Regards,

From the US to Madrid

Any Bank to Bank that is covered by a government compensation scheme, but know the limits of compensation and send amounts accordingly. They won?t always give you the best rate, but your money is safe.

Yes agreed banks are much saver. Everyone's talking about Wise or formally Transferwise . Recently I tried to use it. Slightly better rate than HSBC but HSBC is known for the worst rate. In the market. But online international transfer between your HSBC accounts in different countries are free and instinct. I just did a 2700£ transfer with Wise. It's 1£ cheaper than HSBC... I don't know why people are so raving about it. Oh if I transfer larger amounts with another bank, the rates are very good with 15£ of service charge regardless the amount of transfer, unlike Wise charges you a percentage without a cap. With large amounts Wise actually very expensive!

@JANELOVEIT makes an important point (and is absolutely correct) that there are many new "e-money" institutions and they are not covered by the usual "deposit protection schemes".

However, that's rather different from claiming they are not "reputable" or that your money is not "safe".

But, yes, arguably, using a non-bank carries extra risk, and you may feel that the savings don't justify it.

I would say that there are many interesting new companies offering alternatives to traditional banks (and international money transfer and stock brokers) and it would be a pity to rule them all out because their deposit protection is provided in another way.

The new generation of "digital" or "challenger" banks (such as Starling or Monzo) have banking licenses and hence the same deposit protection as the incumbents.

Companies like Wise and Revolut are e-money and provide "safeguarding" instead.

This also applies to some new brokerage firms like eToro who allow you to buy fractional (virtual) shares.

Some of these companies are large and very well-capitalized so the risk of bankruptcy is probably pretty small. Nevertheless, they keep money in separated safeguarding accounts and/or hold appropriate insurance policies.

If they follow the e-money safeguarding rules then you get your money back.

You should also note that, in a fairly typical case of buying a property overseas, you might be transferring very large (£100k plus) to fund the purchase. In which case, even sticking with traditional banks, there is potential for an unfortunately-timed bank failure (of sending or receiving bank or perhaps your lawyer's purchaser's escrow account) to leave you out of pocket as the purchase price exceeds the statutory protection limit.

Here's some official info (from Revolut but largely applies to other similar firms too) that might help clarify:

It's important to understand that, in the UK, Revolut is not a bank but an e-money institution, authorised under the UK Electronic Money Regulations. This means, in particular, that FSCS protection does not apply to the e-money or payment services we provide.

So, how is your e-money protected at Revolut?
?Safeguarding? is a set of laws that defines how an e-money institution must protect your money. These rules are designed to ensure that if the e-money institution fails, your money will have been kept in a safe place and be paid back to you. For safeguarding to protect you, the e-money institution must follow these rules. That?s why you should only use an e-money institution that you trust.

To explain in more detail: once an e-money institution receives your money, it must either place it in a dedicated "safeguarding account" with a bank, or invest it in low risk assets that have been approved by the regulator as an alternative to cash. Sometimes, less commonly, it may protect the money with an insurance policy instead. Your money must stay in these accounts or investments until you spend it.

The protection this provides means that if an e-money institution fails, there should be a pot of money (the safeguarding account) sufficient to pay all customers the money they are owed. These safeguarding accounts are protected by law from other creditors of a failed e-money institution making a claim against them. The only thing that can be paid from these safeguarding accounts, before the customers are paid back their e-money, is the cost of the receiver (the person who?s appointed to manage the closure of a failed company).

Why is safeguarding different from the FSCS protection given by banks?
When you keep money with an e-money institution, it's safeguarded instead of having FSCS protection (sometimes called ?deposit insurance?).

The main difference between FSCS protection and safeguarding is that FSCS protection is covered by an independent statutory organisation, while safeguarding protection is provided by the e-money institution itself. If a FSCS protected firm were to fail, this independent organisation is legally obliged to pay back their funds to eligible customers up to the maximum compensation amount (normally £85,000 for consumers). This will happen whether or not the FSCS protected firm actually has that money itself. This payout will normally happen within seven days.

If an e-money institution (like Revolut) fails, the customers? claims will be paid from the safeguarding account. This is because the e-money institution cannot lend the money it has received from one person to another, so it should have enough money in its safeguarding accounts to cover its debts to its customers. Only if the institution has breached its obligations, might there not be enough money in these accounts for customers to be repaid their funds.

So, provided that it is compliant with the safeguarding laws, if an e-money institution goes out of business, customers should get most, if not all, of their money back. (Although, as explained, in some instances certain costs may be taken by the receiver of the firm.) The payout could also take longer than it would with a bank.

To be clear, the safeguarding rules only apply to your e-money. They do not apply to money you put in your Revolut Savings Vault - that money is deposited with a third party bank which holds it on your behalf and is FSCS protected. The safeguarding rules also don't apply to cryptocurrency or commodities you purchase through the Revolut app or to any stocks you buy through our app.

From a cost perspective, these guys don't have much competitive advantage if the saving is only £1!

So I think if you do an actual comparison of the amount received the saving will be larger than this. The trick is that the banks quote a fee for an international transfer, but also take "some points on the spread" (the exchange rate, in this case).

But, sure, £3k is not a big transfer, so they can only save you a few quid. If you want to buy a villa in Spain, on the other hand, then it might be a useful saving.

As of today, for this amount, Wise transfer fee is about £10 while Lloyds now charges £0 for euro transfers and £9.50 for other currencies. So even with a worse exchange rate, on £3k, Lloyds might be the same/cheaper overall.

But, remember, this more generous bank exchange rate is not a result of sudden bank altruism, but has come about exactly because of the stiff competition from these very popular e-money guys! :-)

Are you talking about something like PayPal? Could you please explain it to me?

Very topical as Wise (formerly TransferWise) just went public in a "direct listing" in London, and the valuation is over £9 billion, already (more valuable than Rolls Royce, one of the FTSE 100).

I think the "challenger" / digital banks are Monzo, Starling, N26 and similar.

The best known e-money guys are Paypal, Wise, Revolut.

I'd say the service they offer can be pretty similar, but the digital banks actually have a banking license and follow banking rules. While e-money firms don't have a banking license, and are regulated separately.