The Western Union Business Solutions Learning Center is a blog provided for general informational purposes only and should not be construed as legal, financial, tax or accounting advice. Consult your own independent advisors regarding your particular needs and circumstances.
The benefit of using a trusted online foreign exchange service is securing real-time exchange rates and getting visibility into a foreign transaction's status.
But individuals need to be certain they are working with a firm that can deliver the value, support and transparency expected from a foreign transaction. "Not every foreign exchange provider offers the same quality of service," says David Kuenzi, founder of Thun Financial, a financial advisory firm in Madison, Wis. So before choosing a firm to manage these exchanges, get answers to the following questions.
"There's not a lot of advantage to a service that offers no fees but has a crummy exchange rate," Kuenzisays. Before completing any international bank transfer, find out all of the costs.
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Some online foreign exchange services can offer low markups, says Annie Wang, a strategy analyst at TravelNerd, the travel division of NerdWallet, a financial planning website based in San Francisco. "Do your research ahead of time to learn what your options are."
Consolidating smaller international payments into one foreign transaction may also help to achieve lower transaction costs. "If you can, you might want to potentially lump your payments into one payment because everything is based on rate," says Victor Hinojosa, director of North American partnerships, Western Union Business Solutions. "So the bigger the amount, the better rate you'll most likely get."
For example, if a Canadian expat is looking to send three payments of $2,500 U.S. dollars (USD), it may be more beneficial to send $7,500 USD after securing a one-time exchange rate of $1 Canadian dollar (CAD) = $0.992 USD, costing the expat $7,560 CAD. If sending multiple international payments, the exchange rate could fluctuate unfavorably over time, such as to $1 CAD = $0.975 USD and cost the individual an additional 17 cents on the dollar per payment.
"If you are making a large transaction, you don't want to put your money into an institution you don't trust," Wang says. She advises going with a familiar brand to ensure reliability.
If an individual needs to make foreign transactions from the road, mobile services are a great value-add, Wang says. She advises asking the online FX service if it supports transactions from laptops, tablets and smartphones to send money online.
Some services will offer email updates and tracking tools that inform customers about where their money is in the transfer process, Wang says. "It may be a good idea for an infrequent traveler or a traveler exchanging large amounts of money to use a service that utilized tracking tools -they may be less at risk of fraud."
Smaller companies may not have ready access to less common foreign currencies, which may result in longer transaction times or more delays for remote areas, Wang says. "If you are on safari in Africa, go with an internationally recognized firm."
If a question comes up on the sender or receiver's end, it's important to be able to access a live customer service representative. Individuals should look for online foreign exchange services that can offer 24-hour customer service to address any questions or issues that arise. That way anytime, day or night, help is just one call away.
By asking the right questions at the outset, individuals can save themselves time - and perhaps a bit of money - as they continue to use online foreign exchange services.
Example: 1USD = xx INR
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