Overseas Purchases for the Ordinary Man, er Person

[IBob]

Last year I bought an aircraft kit. This required me to send a large amount of $$$ offshore. At the time I used a Forex broker, and it worked out okay, though the money vanished for a week, which was exciting, and I was reduced to getting the recipient to check his account daily until it magically emerged again.

 

I was gleefully informed, when I bought the kit, that I would soon become a regular customer of various aviation parts suppliers, and that is exactly what is now happening. Which raises the question of how to transfer payment for the steady stream of interesting packages now making their way to my front door.

 

Please note, the following figures are all approximate, and at current rates from Australia.

 

If I send $1000:

 

1. By Credit card, I am charged the conversion at current bank rates, plus a 2.5% surcharge on the original amount.

 

The banks appear to be taking approx 4% at conversion, so:

 

$960 arrives, and I pay $1025 for that to happen.

 

2. By Telegraphic Transfer, I am charged the conversion at current bank rates, plus a transaction fee of $20. (I believe there is also a receiving fee if the recipient is a bank, eg $30 in the US, but ignore that for now).

 

This comes out at $960 arrives, and I pay $1020 for that to happen.

 

3. By PayPal. I don't have the numbers or rates for this. Anyone????

 

4. There is a relatively new web based service. I have no involvement with them, and this is not an advertisement, but i thought it may benefit others to know. It's growing like Topsy, and Richard Branson has a slice of it. Can someone tell me if I can name it here?

 

I just tested it by sending $1000.

 

First time off you have to supply a scan of your passport, or driver's license (just as you do for a Forex trade). For the transaction , you must supply the Swift code, account number, and physical address of recipient bank (again, as you do with a regular Forex trade).

 

The result was a conversion at the true market rate (approx 4% better than Autralian bank conversion rates) and a fee of $6.96.

 

Expressed as per the above examples $993.04 arrived, and I paid $1000 for that to happen.

 

But wait, there's more:

 

Total time for transaction, including once only ID check, 3 working days.

 

Emails received at each stage, effectively tracking the money and informing me of progress: for this trial (Oz to NZ) I received 3 advisory emails over the 3 days.

 

I'm pretty new to all this. But since I can see only $$$ flowing offshore in the coming years, I would welcome any comments or suggestions around the whole business of sourcing and paying.

 

Right now, I am working on purchasing some parts in the US. And right now there is a distinct pause while the company concerned figures out if it is prepared to consider a direct credit in this manner. I'll let you know.

 

Bob

 

 

[Nobody]

I am building too but in Australia so this may not be directly relevan. For large amounts I use ozforex. For small transactions I use a visa debit card from Citibank. The rate they charge is about 0.5% off the money market rate. Commonwealth and NAB are both about 3%. Citibank also do not charge a foreign ate fee so good for travel. Another option is to open a multi currency account with a bank like HSBC and use a forex broker to put USD intp that account.

 

 

[IBob]

Thank you, Nobody. As you noted, I am in NZ, so the details will differ, but the general principals are the same.

 

Since it seems okay to name names, the service I just used is TransferWise, which essentially operates like an online forex broker for the masses. I expect Australia is already aware of it; in NZ we don't have outward services, but are getting them this year.

 

I am interested in your suggestion re a multicurrency account, I could use TransferWise to get the USD in (from accounts I have in Australia).

 

It seems to me we tend to accept the various fees and percentages as an unavoidable cost, but it looks like better ways are emerging.

 

My latest 'oh REALLY???' moment was being told there is a bank charge for receiving money from overseas: here it is 'just' $15.

 

Sometimes it's not really about the money. It's about the charities: I like to choose mine, and fat pink bankers didn't make the list..

 

So I just found a way round that one too....

 

 

[Soleair]

I'm building and importing. I use OzForex, and AFAIK there are no charges at either end. Certainly not this end - they quote a rate when you do a deal & that is all & only what you pay. (Except for extortionate shipping costs, & downright preposterous 'handling' charges at Sydney airport, but that's a thread hijack. . .)

 

Bruce

 

 

[IBob]

I'm building and importing. I use OzForex, and AFAIK there are no charges at either end. Certainly not this end - they quote a rate when you do a deal & that is all & only what you pay. (Except for extortionate shipping costs, & downright preposterous 'handling' charges at Sydney airport, but that's a thread hijack. . .)Bruce

Thanks, Bruce. I just checked OzForex against TransferWise and the latter are marginally better, but there's very little in it.

 

I would say as IT based financial services grow, the traditional services will have to match their rates (if they have not already done so)?

 

 

[IBob]

I'm building and importing. I use OzForex, and AFAIK there are no charges at either end. Certainly not this end - they quote a rate when you do a deal & that is all & only what you pay. (Except for extortionate shipping costs, & downright preposterous 'handling' charges at Sydney airport, but that's a thread hijack. . .)Bruce

Correction: you're not charged that $15 fee at TW for transactions under $1000. Also the rate is marginally better (if sampling online at this time gives the true picture), so for say $800 you'd be approx. $20 ahead with TW, by the looks of it.

 

Nice to go with the locals, though. I'd have preferred if my own 'local' had moved the money faster, and let me know what was happening as he did...

 

Nuts, now I really am sounding like a salesman...(

 

 

[Yenn]

I have used Ozforex, but they have closed down. It was good in that you invested money with them at the current rate of exchange and in reality had that money in the foreign currency until it was used. great if the exchange rate went down. I don't know if there are any other foreign exchange cards available.

 

 

[Kiwi303]

I tend to use WorldRemit sending money to friends. But then it's only for amounts of $10 or so to the Philippines, where they can then pick it up from a company there. They have bank transfers et al, but my friends I made while there don't have bank accounts, it's easier sending cash, and a few dollars goes a long way at their level.

 

They charge a flat fee of $3.99 NZD for the transfer service, some of which would be passed on as the money transfer pickup point companies fee too, plus a not the greatest exchange conversion, but still a better conversion rate than the bank uses!

 

 

[IBob]

I have used Ozforex, but they have closed down. It was good in that you invested money with them at the current rate of exchange and in reality had that money in the foreign currency until it was used. great if the exchange rate went down. I don't know if there are any other foreign exchange cards available.

Thank you, Yenn. OzFrorex still seem to have an online presence, though maybe their services changed? Not of use to me in NZ, but quite possibly to others here.

 

 

[IBob]

I tend to use WorldRemit sending money to friends. But then it's only for amounts of $10 or so to the Philippines, where they can then pick it up from a company there. They have bank transfers et al, but my friends I made while there don't have bank accounts, it's easier sending cash, and a few dollars goes a long way at their level.They charge a flat fee of $3.99 NZD for the transfer service, some of which would be passed on as the money transfer pickup point companies fee too, plus a not the greatest exchange conversion, but still a better conversion rate than the bank uses!

Thank you Kiwi303. I hadn't heard of WorldRemit, but shall certainly be having a look. It does sound like an interesting system, and at whatever level, we're trying to get as much of the $ we pay in to emerge at the other end! Real nice also that you're sending a few $$$ to friends...and that certainly needs to arrive where it's intended.

 

 

[Pearo]

Not relevant to NZ (or might be, would have to check), but in Australia the 2 best methods are GE 28 Degrees Mastercard, there is no transaction fees for currency conversion, and Citibank Plus Visa Debit that also has no fees for currency conversion.

 

I use both when travelling abroad. Master Card for credit transactions, and Visa Debit for cash transactions.

 

 

[IBob]

Thank you Kiwi303. I hadn't heard of WorldRemit, but shall certainly be having a look. It does sound like an interesting system, and at whatever level, we're trying to get as much of the $ we pay in to emerge at the other end! Real nice also that you're sending a few $$$ to friends...and that certainly needs to arrive where it's intended.

Actually, Kiwi, the WorldRemit conversion rates look pretty good, from my admittedly limited point of view.

 

 

[IBob]

Not relevant to NZ (or might be, would have to check), but in Australia the 2 best methods are GE 28 Degrees Mastercard, there is no transaction fees for currency conversion, and Citibank Plus Visa Debit that also has no fees for currency conversion.I use both when travelling abroad. Master Card for credit transactions, and Visa Debit for cash transactions.

Thank you, Pearo. Good that there are no transaction fees as such, I guess the question then is what sort of conversion rates they are using?

 

For instance, even if Australian bank W were to abolish all foreign exchange transaction fees, you would still be paying them approx 4% of the money you transferred, since that is how much they skew the conversion rate.

 

 

[Kyle Communications]

I use Fourex all the time...for years actually...I bring in CNC milling machines as another thing I do. You get a super exchange rate and its a no brainer..it always works and your money is safe. But I believe the lower limit is 3000 dollars anything under that is usually do CC as when doing international transfers through the banks you get skinned and also you usually have to cop a charge at the recieving banks end as well

 

 

[Kiwi303]

I had a quick look at the Worldremit site and plugged in the US instead of the Philippines.

 

They only have a Bank Deposit option for the US, but using them:

 

I set it to Receive $1000. The number you used in the OP.

 

Send amount = 1562.94 NZD

 

Fee = 3.99 NZD

 

Total to Pay = 1566.93 NZD

 

Your recipient gets = 1000 USD

 

Exchange rate used: 1NZD = 0.63982USD

 

Taking the NZD 1566.93 and putting that into xe.com which is the online calculator I use most that tracks the live market rates gives USD 1,016.55

 

It costs you 16.55 USD to send 1000 USD. or 1.655%

 

 

[IBob]

I use Fourex all the time...for years actually...I bring in CNC milling machines as another thing I do. You get a super exchange rate and its a no brainer..it always works and your money is safe. But I believe the lower limit is 3000 dollars anything under that is usually do CC as when doing international transfers through the banks you get skinned and also you usually have to cop a charge at the recieving banks end as well

Thank you, Mark. I guess it's horses for courses, and if you're doing ongoing business over a certain volume (as you evidently are) then I'm sure you have your systems well worked out.

 

Having said that, and if i have read you correctly, if you are Credit Carding amounts below $3000, then you may well be paying 4% on the conversion itself (going on current Australian bank rates), plus some CCs then add a further transaction charge (2.5% here). It can add up.

 

Which may or may not be an issue, depending on how many small transactions one is doing, the general state of the (household) nation, and just who is keeping an eye on the finances!

 

 

[Downunder]

Checkout "Currencyfair"

 

Bit involved to get an account and made for business transactions it seems but fantastic exchange rate and transfer cost of $4.00.

 

You transfer money into their local bank acc. (The longest part of the transaction is waiting for that to happen unless you already have money there).

 

Then do your conversion into whatever currency and deposit into the foreign bank acc.

 

They have bank acc's in most countries so it is an internal transfer and does not cost the "international" rates....

 

I received an overseas PI at 8.00 pm, made the transfer into their bank via currencyfair.

 

Received an "amazed" email from the sales girl 8.00 am the next morning saying they have received the money.

 

And that was the 'Standard" transfer, not the priority.

 

 

[IBob]

I had a quick look at the Worldremit site and plugged in the US instead of the Philippines.They only have a Bank Deposit option for the US, but using them:

 

I set it to Receive $1000. The number you used in the OP.

 

Send amount = 1562.94 NZD

 

Fee = 3.99 NZD

 

Total to Pay = 1566.93 NZD

 

Your recipient gets = 1000 USD

 

Exchange rate used: 1NZD = 0.63982USD

 

Taking the NZD 1566.93 and putting that into xe.com which is the online calculator I use most that tracks the live market rates gives USD 1,016.55

 

It costs you 16.55 USD to send 1000 USD. or 1.655%

Okay, Kiwi.

 

FYI, I plugged your NZ$1567 into TW and it yielded US$1009, which is a bit of an improvement?

 

I should say, however, that I've only done one transaction so far, and I have no idea how flexible the system may be. Certainly it's fast and effective and seems to be rated 5 star.

 

 

[Kiwi303]

FYI, I plugged your NZ$1567 into TW and it yielded US$1009, which is a bit of an improvement?

Is this including the $6.96 fee you mentioned in the first post? if so it's a good site and worth using. If not then adding the fee would bring them pretty much to parity, in which case since you're already signed up with your one it's worth just keeping it anyway, no point in changing.

 

Either way works fine. I like how Worldremit charges my debit card in NZD locally avoiding an overseas transaction fee (usually a few cents when buying things online) or a bank conversion rate while making the pay out in the Philippines in Pesos.

 

 

[IBob]

Checkout "Currencyfair"Bit involved to get an account and made for business transactions it seems but fantastic exchange rate and transfer cost of $4.00.

You transfer money into their local bank acc. (The longest part of the transaction is waiting for that to happen unless you already have money there).

 

Then do your conversion into whatever currency and deposit into the foreign bank acc.

 

They have bank acc's in most countries so it is an internal transfer and does not cost the "international" rates....

 

I received an overseas PI at 8.00 pm, made the transfer into their bank via currencyfair.

 

Received an "amazed" email from the sales girl 8.00 am the next morning saying they have received the money.

 

And that was the 'Standard" transfer, not the priority.

Thank you, Downunder. I just ran a simple A$1000 to NZ$ conversion on the Currencyfair calculator, and they look pretty much on a par with TW.

 

I'm deliberately not reporting down to cents here, as i doubt it's possible to compare to that level of accuracy, online, on the weekend, as an ordinary punter using generic online calculators. If anyone is interested, I'm still with TW, but we are certainly throwing up some good alternatives.

 

 

[IBob]

Is this including the $6.96 fee you mentioned in the first post? if so it's a good site and worth using. If not then adding the fee would bring them pretty much to parity, in which case since you're already signed up with your one it's worth just keeping it anyway, no point in changing.Either way works fine. I like how Worldremit charges my debit card in NZD locally avoiding an overseas transaction fee (usually a few cents when buying things online) or a bank conversion rate while making the pay out in the Philippines in Pesos.

I buttoned in $1567 on their online calculator, and it told me a few cents short of US$1009 would pop out the other end. So, that is what will arrive. The trick then is avoiding those receiving agents who whack some fat standard transaction fee on it!

 

Yes, it looks like there are a few good options. It's also horses for courses:

 

For small transactions, the set transaction fees are the major cost. For large transactions, the conversion rate is obviously increasingly relevant.

 

Then there's flexibility, ease of use, speed, transparency, reliability.

 

Certainly Worldremit sounds to be a great fit for the transactions that you mention...)

 

 

[Kiwi303]

Yep, Worldremit suits me, I tried several ways before, Xoom is the only one I can remember, apart from the obvious Western Union, WU has that big ass user fee on it, something like 35 bucks a time! too much, Xoom was around $15 to send to the Philippines, I would only send something once every quarter or so for special occasions, a birthday, pay the school fees for one of the girls, etc.

 

they both have cash pickup options, but not as many offices for them as Worldremit.

 

WR is partnered with M L Huellier, a Quata Padala (sp) provider, filipino for money transfer. So a working filipino on some island resort could walk into a ML Huellier office near the resort and send money to his parents in the poor quarter of a big city. There are a LOT of ML Huellier offices around the Philippines, which makes it a very convenient way. Plus at only $4 a pop instead of $15 or $35, I send more often as well.

 

I don't donate to the likes of the Childrens Fund or other sponsor-a-child-for-$1-a-day charities. This way I have the same effect, and I know who the money is helping directly.

 

 

[IBob]

Yep, Worldremit suits me, I tried several ways before, Xoom is the only one I can remember, apart from the obvious Western Union, WU has that big ass user fee on it, something like 35 bucks a time! too much, Xoom was around $15 to send to the Philippines, I would only send something once every quarter or so for special occasions, a birthday, pay the school fees for one of the girls, etc.they both have cash pickup options, but not as many offices for them as Worldremit.

WR is partnered with M L Huellier, a Quata Padala (sp) provider, filipino for money transfer. So a working filipino on some island resort could walk into a ML Huellier office near the resort and send money to his parents in the poor quarter of a big city. There are a LOT of ML Huellier offices around the Philippines, which makes it a very convenient way. Plus at only $4 a pop instead of $15 or $35, I send more often as well.

 

I don't donate to the likes of the Childrens Fund or other sponsor-a-child-for-$1-a-day charities. This way I have the same effect, and I know who the money is helping directly.

I just looked at Xoom as well. I'm intrigued. I had no idea these types of services were available. I thank you for pointing them out...)

 

 

[Kiwi303]

Most of the so called "Third World" have them, the "First World" or "Western" nations supplanted them with banks and cheques and electronic transfers, Back in the 1800's they still used Letters of Credit between money lenders and Telegraph Transfers. Even as late as WW2. With the rise of banks and rapid ever-present inter-bank communication that sort of money-in-money-out transfer became irrelevant.

 

In less developed cash economies where bank accounts are a luxury for the rich, cash transfer is a necessity for delivering money to your relatives or creditors.

 

Most of the "Second World" or ex-soviet-sphere countries have a blended system, cash transfer but done through the banks, which fits with their central soviet control system where the state had it;s nose in everything. Walk into your bank, pay the fee and pay in the cash to be sent, then the recipient can walk into one of the bank branches near them with ID and walk out with the cash. Sorta like a cheque without the cheque itself.

 

In the Philippines even pharmacies can do it for drugs. Son with a job walks into a pharmacy in Manila, orders and pays, Aged Father in Davao hobbles into a branch of the same nationwide chain and provides ID and hobbles out with his drugs.

 

 

[eightyknots]

Yep, Worldremit suits me, I tried several ways before, Xoom is the only one I can remember, apart from the obvious Western Union, WU has that big ass user fee on it, something like 35 bucks a time! too much, Xoom was around $15 to send to the Philippines, I would only send something once every quarter or so for special occasions, a birthday, pay the school fees for one of the girls, etc.they both have cash pickup options, but not as many offices for them as Worldremit.

WR is partnered with M L Huellier, a Quata Padala (sp) provider, filipino for money transfer. So a working filipino on some island resort could walk into a ML Huellier office near the resort and send money to his parents in the poor quarter of a big city. There are a LOT of ML Huellier offices around the Philippines, which makes it a very convenient way. Plus at only $4 a pop instead of $15 or $35, I send more often as well.

 

I don't donate to the likes of the Childrens Fund or other sponsor-a-child-for-$1-a-day charities. This way I have the same effect, and I know who the money is helping directly.

It may seem strange but the banking system is not so accessible for poorer people in Pacific Island nations such as Tonga. When I want to send money, I get some Pa'anga from a currency trader (e.g. Wellington International Airport) and simply mail the cash to the recipient there. It has worked 100% so far.