Forex transfers play an essential part in the world economy. But alas, the options in this particular sphere are still quite limited. The problem here is that these financial transactions are expensive. Yet, the highest demand for them comes from migrant workers, small businesses, and private investors. For all these groups of people, the high costs of transfers are a challenge. And this challenge is so big that it prevents many of them from actually sending the money abroad.
Reducing the costs of forex transfers, therefore, is essential to not only benefit small groups of people or businesses. This can make a difference for the world economy as a whole.
Today, new money transfer businesses are starting to compete with banks. As they offer cheaper and more efficient transfers, these services redefine the financial industry as we know it.
Who Needs Cheap Forex Transfers the Most?
The main categories of people who require cheap and fast forex transfers today are:
- Migrant workers.
Over $550 billion is transferred in remittances in a year, but the costs of those remain prohibitively high. The average rate is still 7%, which is a lot as the majority of these transfers are three-digit numbers. Simply put, migrant workers are rather poor and their families, who rely on remittances, are even poorer. Losing 7% of a $300-500 transfer every month is a huge deal for them. It’s even more relevant for many workers from developing countries where transfer fees are 10% and even higher.
- Small businesses.
The globalization of today opens limitless opportunities before small businesses, which are the main force of any economy. However, to use these opportunities, small and medium companies need to go global. Sadly, the profit margin will be quite low when you do this, at least at first. As things stand, high forex transfer costs make it unviable for many businesses to start working internationally.
Thanks to the same globalization, today you don’t need to have a huge fortune to become an international investor. However, same as small businesses, small private investors might lose a big part of their profit due to the cost of transferring money abroad via banks. Foreign currency exchange margins are not only high, they are also extremely volatile for some markets. This makes international investing much riskier.
All these three groups of people and businesses have a tremendous impact on the economy, both local and global. But to realize their full potential they need a way to manage their forex transfers more efficiently. Today, banks are still the leading providers of international money transfer services. With their currency exchange margins sometimes reaching astronomical heights, they are definitely not the best option.
Various online money transfer services are offering a much-needed alternative to bank transfers. These companies are growing at a rapid pace and they might be exactly the tool that will allow the world economy to reach a new level.
What’s the Best Way to Manage Your Forex Transfers Today?
If you are in a business that wants to make use of global opportunities or need to transfer money to foreign countries for any other reason, you need to find a way to do this cheaply. The first thing you should do is to read the forex money transfer FAQ. This will allow you to understand why money transfer companies are able to keep their services cheap and their forex margins to a minimum. This will also answer any questions you have about the security of such transfers.
The affordability of international money transfers offered by such companies is a good reason to use their services. But you should know that this isn’t the only reason. You also need to keep in mind the fact that online money transfer platforms often offer hedging tools. And with the right forex hedging strategy, you would be able to make international transfers even cheaper. In fact, you might be able to make some money on this alone.
Forex transfers for remittances and even small businesses often aren’t that big. The majority of them don’t exceed 500,000 a year. Although, as the popularity of alternative money transfer services grows, bigger companies and investors start using them. Their transfers might exceed a million a year.
But no matter the amount of money you transfer annually, you need to be proactive if you want to get the best forex deals. Remember that the average margins for bank transfers are around 7%, less for developed countries. And that doesn’t even include the actual exchange rate at the time. This means that your losses, should the FX rate change rapidly, can be huge.
Being proactive and using appropriate hedging tools to “freeze” the forex rate at a good level for your business can make all the difference. Add to it the fact that with leading money transfer companies the margin can be as low as 0.1% and you’ll see what incredible opportunities your business might have.
Who Are the Best Forex Transfer Providers Today?
Money transfer companies act as a third party in a forex transfer. This means that you must research them thoroughly and choose the ones that can be trusted. The leaders of the market should be your first options as these companies have proven themselves reliable already.
Top names among those include TransferWise, which is currently the biggest business in the industry, valued at over $3.5 billion. This particular company managed to achieve this by revolutionizing the already revolutionary industry. TransferWise was the first company to not only make transfer rates transparent but also fixed. However, today World First might move it from the leading position as its fees are both fixed and lower.
Other leading forex transfer companies include Currencies Direct, TorFX, Moneycorp, Currency Solutions, Global Reach, Currencyfair, and OFX. Each of the companies offers a set of unique services and benefits, so you should study all the offers. In fact, it might be best to create an account with several of them.
Forex transfers are slowly becoming less expensive, due to the services offered by international money transfer companies. These companies do not only provide low fees and FX margins but also give you access to valuable hedging tools. To manage your forex most efficiently, you need to be active and use every tool you can to get the most out of every foreign transfer.