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International money transfers explained

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Markets and services for international money transfers are quickly expanding due both to the need for making international payments and for expats needing to repatriate funds.

For an expat starting out in South Africa it’s important to have a clear grasp of the available money transfer options and how these work. This article makes a brief overview of the available options.

Using a bank for making transfers

When making traditional bank transfers for internet or mobile banking, you will need to have a bank account with the relevant service options. These transfers are monitored for security reasons and to prevent fraudulent transactions.

These services are linked to exchange rate fees as well as to service fees charged for each transaction, except in the cases of Namibia, Lesotho and Eswatini, where exchange rate fees don’t apply.

Online transfer services

International money transfers from South Africa can also be made by using online services. These transfers don’t go via the banks and don’t use the banking SWIFT system.

Transfers are made between various account holders who are linked by their own communications systems, obviating the need for bank fees and checks.

These systems usually result in more rapid transactions that can take as little as 1-2 days for completion.

Typically, these transfer services are easier and cheaper to use due to lower exchange rate margins and more modest service fees. They are simpler methods for making secure and inexpensive transfers.

There are several well-known and reputable international service providers that do international money transfers in South Africa. These include:

  • Sikhona
  • WorldRemit

While these provide a similar service, but it’s useful to check the exchange rate and service fees levied by each to compare pricing and level of service quality.

Making online international money transfers

The process for making international money transfers from South Africa is quite simple when using online methods. You will need a bank account as a prerequisite step.

Using you bank account as a link, you will have to create a digital wallet account with the service provider you have selected. Then, when needed, you can pay funds into the created wallet for onward international transfer.

When receiving funds by online money transfer, you can pay these into your linked bank account, after which the bank will convert the foreign currency into rands.

Making international transfers by traditional banking methods

Making traditional bank transfers is generally considered a securer option because no third parties are involved in the transaction. The transfer is made by the SWIFT method to the destination banks abroad.

Though these traditional banking transfers are also simple to make, they usually involve higher fees, that can reach up to 10-25% of the amount you are transferring. These transactions take around 2-3 days to complete.

In addition, when receiving incoming transfers, the purpose for the money received will have to be verified by the bank for security reasons.

Generally speaking, and depending on the size and nature of your international transfer, using third-party online services is the better option.

READ: Transferring Large Amounts of Money