Planning for a trip is about more than just knowing what time you are leaving or where you will be staying. Knowing where and how you will need to spend your money is just as important, especially when you are changing currencies.
Harry Scherzer, the CEO of Future Forex, says it is crucial to be aware of the potential risks that lead to costly delays, excessive fees and ultimately, lost money when transferring money internationally.
This can be for either business or personal reasons.
According to Scherzer, the importance of comparing different international money transfer providers cannot be overstated.
“A common trap we see people falling into is assuming that all providers offer similar rates, fees and services. When you don’t shop around, you can miss opportunities to save both time and money,” says Scherzer.
He adds that being aware and cautious of these mistakes and researching options can help avoid unnecessary expenses.
Scherzer explains four pitfalls
Buying at your bank is the best option: Don’t always assume that your bank is the safest and most cost-effective way to transfer money internationally as banks often lack transparency in their exchange rate margins and charge exorbitant fees, which many customers don’t realise. “They also tend to offer poor customer service, making the process more complex than it needs to be. Instead, choosing a specialist provider that prioritises customer experience and transparency can enhance your experience entirely.”
- Ignoring exchange rate fluctuations: Scherzer explains that “exchange rates change in real-time and even small fluctuations can impact the amount you receive, especially on large transactions.” Yet many individuals and businesses mistakenly believe that daily fluctuations are insignificant. Find a reliable foreign exchange provider that offers complementary tools like forward exchange cover (FEC). This can help you to lock in favourable rates while adding predictability to currency exchanges.
- Overlooking the fees: Hidden fees can significantly impact the total cost of your international money transfer. “For instance, let’s say you’re sending R1 million to the US and the spot rate to the US dollar is R18 to $1. The bank may charge R18.36 to $1, meaning you’re paying a ‘spread fee’ of R0.36c for every dollar purchased. While this may sound insignificant, this equates to 2% of the transaction value (an extra R20 000) and that’s before factoring in SWIFT charges of R500 to R1000, and potential ‘commissions’ and ‘communication fees’ that some banks may add on top of this.” Do your research before you decide.
- Using slow or inefficient transfer methods: Scherzer advises that you go with a foreign exchange provider that leverages technology to ensure your transactions are fully automated and processed as swiftly as possible. “This ensures your money arrives quickly and you get the best exchange rate,” he says.
Lastly, it remains crucial to understand that myths and misconceptions surrounding international money transfers can result in wasted time, higher costs and unnecessary stress. If you work with a trusted provider who leverages innovative tools, sending money abroad does not need to be a stressful task.
“Fintechs are an effective way to access benefits like seamless transactions, competitive exchange rates and a personalised service designed to make foreign currency transfers simple and cost-effective,” Scherzer concludes.
Compiled by Gypseenia Lion Source: of Future Forex CEO Harry Scherzer
