Article

Moving Money About

There are a wide range of reasons why you may want to move money about, fast or less urgent, in this country or internationally, and in small or large amounts. In this article we are going to look at a number of these methods, the costs and technicalities involved. We haven't included writing a cheque within Britain or pulling out cash on your credit card from a cash machine or from a bank. I also haven't covered Paypal and Nocheque here, as they are more like forms of credit card transactions and you would not use it to get cash to someone at a  location.

10 minute cash transfers, and prepaid cards

Lets start small and fast, the sort of movement in an emergency, one of your kids on a trip needs more cash or perhaps you have just filled your car up, and not realised that the bank your credit card was with has just failed, or you have booked into a B&B and now found out they don't take cards and you need some cash in a hurry, and no hole on the wall cash points are nearby, or perhaps you just don't like them. The same solutions can be applied to many other situations, like the airline you were booked with has failed or for some reason can't fly and you need some cash, or perhaps you just spotted a lens at a really good price. In these and many many other situations, what you need is to be able to get money, in the local currency just about anywhere very fast.

Moneygram is a company, that works with many well known organisations including the Post Office, IOM Post Office and Jersey Post Office as well Thomas Cook shops, go inside and you see the MoneyGram sign. You can send to a very long list of countries for a fixed price. (They also make a bit on the currency conversion rates, as everyone else do).

The process for the sender is:-

1. Find a MoneyGram agent using 'Find Us' On their website.

2. Visit your MoneyGram agent, taking some personal identification with you. (Details of what's required is on the website).

3. Complete a simple ‘send’ form and hand this to the MoneyGram agent along with the money you want to send and the required transfer fee. You may also include a free 10-word message on the form.

4. You will be given a reference number.

5. Contact the person to whom you’re sending the money, and give him or her the reference number. In just 10 minutes in most cases the money will be ready to collect.

At the receiving end:-

1. Ask the person who is sending you the money to give you the reference number – this will help speed up your collection.

2. Visit a MoneyGram Agent (locate one using 'Find Us' on their website), taking some identification, (see website for details) and your reference number with you.

3. Complete a simple ‘receive’ form and show your identification – you will then be given your money, usually in the local currency.

This is a quick and easy way, as long as one party at least has access to the internet.  I put in Cheltenham to their location finder and it showed me 19 local agents in my address area, and in each case also their address, postcode, phone number and opening times. Testing the cost I put in that I wanted to receive in Ghana, 150 Cedi's, and the cost was £34.09 including the fee of £4.70. To receive 2000 Cedi's the cost was £406.54 including a fee of £14.70. In each case the cash would be there in 10 minutes.

Western Union are probably the best known company involved in this business. They offer a number of different services, one of them very similar to the Moneygram service above, other than that you don't need the reference number to collect funds.

They also offer an online service, which charges against a credit card. You can also do this by phone (in UK 0800 833 833), if you don't have an internet connection. Without going to an agent I could not work out how much it would cost but I could cost the online service. Using the same requirements, within a few minutes as the above examples for comparison I found it would cost £32.39 including the £3 fee to get 150 cedi's to Ghana and 2000 cedis would cost £407.76 including £15.90 fee.

For those of you who want to use an agent rather than online services, you can key your postcode into their agent search facility and it will produce a map showing those nearest to you.

A comparison website for finding ways of moving money around the world via different internet providers can be found at My Currency Transfer. I haven't used this system but it's worth checking out.

Bank Account to Bank Account

This is more likely to be for an overseas purchase, or topping up an account you have in an overseas bank, its not fast or reliable enough for emergency funding, and will take days, not minutes. It however can be considerably cheaper.

There are three principle ways that larger sums can be transferred. Directly via one of the wire transfer methods offered by the banks, online through a banks online system and via a currency broker service which will usually work out far cheaper particularly with larger amounts.

With the bank based system you just contact your bank and they will take care of it for you, often needing you to pop into a branch but some can do it using a fax out form that is completed and faxed back. This system is not easy to use, a lot of bank staff don't understand it, so you may have a  problem getting it to work or find the transfer gets doubled up. This is largely because the local bank only passes it to a special unit in the bank, and with this and correspondence banks forming a chain its difficult once its gone into the system to chase it up or find out where its got to, all the banks can do is to send a search through the same system to chase it up.  It will take longer than they say, and once done you will be looking around for a better way to do this. Don't rely on a fast transfer even if you have paid for it, it can take a number of days, lost in the middle.

The online payment systems BACS in the UK, Swift and others internationally are easier to use than the banks wiring funds method. But you may not have all methods available to you and often you have to create a record that gets to become active at some point, you may even have to post in forms for this part, but once its set up moving funds through should then be simpler, but will still take at least 3 days.

Faster Payment System. Since May 2008 British Banks have signed up to a new service where the aim is funds sent via phone banking and internet banking is to be available to the recipient within 2 hours. It is an automatic service between those participating banks, however being a new system some banks are dragging their feet initially and only utilising it for some payments, so you need to check with your bank what is and is not currently being handled with this system. It is available 24 hours a day, 365 days a year, however some of the banks may have slightly different operating functions for example some are stating that payments sent after 11.45pm will not be sent until the next day.

With the wire transfer you don't know how much its cost you until its happened, and with the wired funds you may not get as much at the end as you expected as more fingers have been in the pie, taking extra commissions along the way.

Currency converters like XE, sit in the middle, and transactions are done at a deal rate. While at first sight you may have thought they would make it more complicated they don't in practice, because the first part at least you can set up to pay monies to them, and outgoing payments are also easier as they have in effect accounts in each country, allowing you often to pay out through the local automated banking system. This takes time depending on which methods you have chosen to have it paid at each end and costs are determined by which method you have chosen. For example paying to them via Faster Payment System can be the same day or the next and them then paying to the recipient can be from a day up to 7 days depending on the payment method used the other end.

Swapping

Not probably practical for most people but some companies can do deals where they can swap currencies with other companies, cutting out the currency conversion charges.

Cutting costs

Costs are made up of several parts and No fees, doesn't mean exactly what it says, they have got a spread in what they buy and sell currencies at. Banks and companies like XE show you their rates both ways, so you can see the hidden charges. In some cases there are other changes on top, and don't forget others charges, for example if you pay for something on a card, is the card also charging you, and will all of the money end up where its supposed to go or will others have a finger in the pie as with the banking wire systems.

Banks also love sticking on extra fees after, and when challenged take them off. Presumably a lot of people either don't challenge these.

Conclusions

A system like XE is cheaper and more efficient for the movements internationally of larger sums securely. Bank transfer systems like FastPay are efficient for routine payments within your own country.

Moneygram and Western Union both have sizable networks, and offer fast ways to get money to people you know and trust fast. They are not really payment systems and there will be a limit to what a local agent will have available, and limits within their systems. Choosing one over the other could be on cost, but may also depend on where the agents are, if in an unfamiliar country. They are a great tool for those involved in dodgy dealing or scams, the person getting the money may not be in the country you think they are, once the cash is gone there is no real trace. So confidentiality of your dealings are paramount. Another person knowing the details could perhaps take the money, although they will need some form of identity.

Other Ways of getting money to others in other parts of the world include using credit cards which may give you some protection if goods do not arrive but can only be used with traders. Or you can use payment systems such as Paypal a safer way to use your credit card and get some protection or something like Nochex.