Introduction

Every day thousands of people transfer money abroad for a variety of reasons. These could include buying property, buying items over the internet, sending money to friends or family or paying for holiday accommodation.

There are a variety of methods for making payments abroad, from using cash to making an electronic transfer between bank accounts. There are also some more specialist services such as online currency brokers. In this guide we will focus on the main methods available, how much they cost, timescales and how safe your money is.

Basic security advice

Although easy, sending cash abroad in the post is generally not a good idea and is actually prohibited in some countries. Although you can buy insurance and pay for guaranteed delivery, it’s not a safe way of transferring money overseas.

If you send money abroad by using a third party other than your bank, you should check the company is either authorised or registered with the Financial Services Authority as a “payment institution”. This will affect how safe your money is while it’s being transferred.

Reputable companies will supply you with details of charges up front, for example, the exchange rate and how long the payment will take to reach the recipient. They should also tell you how to get incorrect transactions corrected, the level of protection your money gets and your rights to cancel or terminate the transaction.

If you’re using your bank account to make a transfer to an overseas bank account, it’s very important to get any bank details correct. These include the recipient’s bank account number and sort code. As well as the basic sort code and account number that we use in the UK, there are additional details needed when transferring money overseas, known as the International Bank Account Number (IBAN) – the recipient you’re sending money to will know this and be able to provide it to you in advance. It’s always worth double checking the data once you’ve entered it – if the money is transferred to the wrong account it could be very difficult to get it back.

Finally, although various ways of transferring money abroad may be safe, it’s a good idea to be sure the recipient is legitimate. For example, if you’re paying for holiday accommodation, make sure you arrange it through an established travel agent rather than an online advert – otherwise you might arrive to find your accommodation doesn’t exist. The same goes for overseas retailers; make sure they are legitimate and legal, so that they will keep your payment details safe and secure.

Exchange rate fluctuations

When you make a payment abroad the amount of money the overseas recipient will receive will depend on exchange rates as well as the fees charged.

Foreign exchange rates can vary considerably due to demand for the currency, as well as wider economic conditions. When you make an overseas payment the organisation you use should be able to tell you the exchange rate it will use and whether it’s fixed at that point in time or whether it could be subject to future currency fluctuations.

This could vary from bank to bank and other organisations. Many banks show current exchange rates on their websites and will give you an indicative rate ahead of making the payment. The exact rate used will be shown to you after the transaction, probably on your statement.

Ways to make international payments

Cash

Although simple, sending cash overseas isn’t recommended. Some countries prohibit sending cash in the post and these are listed on the Royal Mail website. Secondly, there are no security measures in place and as well as the recipient not being able to be 100% sure the cash is not counterfeit, it can also be lost or stolen. However, senders can insure cash before sending or pay for a guaranteed delivery with signature on receipt.

Foreign currency cheques and drafts

These types of payments are provided by banks, for a charge. If you want to send a foreign currency cheque you’ll probably need a foreign currency account so isn’t really practical for one-off payments. Alternatively if you send a foreign currency draft there will be a charge from your bank and the recipient may also be charged for paying in a draft or cheque sent from the UK.

Foreign currency cheques and drafts aren’t very secure as they could get lost or stolen on the way and they take longer to clear than normal cheques once they have arrived. There are usually better options for sending money abroad.

Electronic transfer

These are payments made directly from your bank account to another individual or business account abroad. There are different rules and charges for electronic transfers depending on whether you are sending money inside the European Economic Area (EEA) or not. Quicker transfers usually cost more and if you are sending money outside the EEA, you should expect to pay £20 or more per transfer.

Electronic transfers are a secure option but you will only be able to do it with a bank if you hold an account with them. You must also make sure you get the details of the person receiving the money right. These include the Bank Identification Code (BIC) and International Bank Account Number (IBAN) as well as the recipient’s name. Some banks will also need the recipient’s bank address and home address. If the money is sent to the wrong account it may be hard to recover.

Speak to your bank or building society to find out the exact amount you will be charged for using this service. If it’s something you do a lot, it might be worth shopping around different providers for the best deal.

Credit and debit cards

If you’re paying an overseas business, hotel or retailer you can use a credit or debit card.
Funds will be reserved on your account as soon as the payment is authorised although it can take a few days for the money to leave your account and show on your statement. You’ll probably need your PIN if you pay for goods in person although some countries, like the USA, don’t use chip and PIN and will require your signature instead. If you’re making a payment online you’ll need to provide the three-digit security number on the back of your card, when prompted.

Credit card purchases benefit from additional protection under Section 75 of the Consumer Credit Act if anything goes wrong.

Prepaid cards

Prepaid cards can be purchased and loaded with several different currencies. If you wanted to pay someone abroad you could load up an anonymous prepaid card and send it to them. To prevent money laundering, prepaid cards have restrictions on the amount you can load onto them or spend per year and you will have to prove your identity when applying for a card. Check with your card company if you need more details on exactly how the regulations apply to you.

If your card is lost or stolen you should contact the provider to cancel the card – most prepaid card providers will also transfer any funds you had on the card to a new one. You need to take the same precautions that you would with debit and credit cards – never tell anyone your PIN.

Wire transfers

Wire transfers are provided by companies such as American Express, Western Union and MoneyGram and are sometimes called international money remittances. Costs vary, depending on how much you want to transfer, where you are sending it and how quickly you need it to arrive (they can be processed on the same day). The wire transfer company may require both the sender and receiver to provide certain details or documentation to verify their identity. Wire transfers are sometimes used by criminals so only send money to someone you know this way and don’t tell anyone your receipt or transaction number.

	Cash	Foreign currency cheques & drafts	Electronic transfers	Credit & debit cards	Prepaid cards	Wire transfers
Is it safe?	No.	No – cheques can get lost or stolen.	Yes. But you must get the account details correct.	Yes, but keep your PIN to yourself.	Yes. But prepaid cards are not covered by the Consumer Credit Act.	Yes if you use an established provider.
How much does it cost?	The cost of buying foreign currency including commission, postal charges and any insurance purchased.	It depends on your bank. You should also remember the recipient may be charged too.	Within the EEA all charges are paid by the sender. Outside the EEA expect to pay £20 or more per transfer with also a cost to receive the money. Quick transfers cost more.	It depends on your bank. Most will charge foreign currency exchange fees and a charge per transaction.	There is usually a charge to load a pre-paid card and some charge per transaction.	Costs vary on the service you use, the amount you want to transfer and how quickly it needs to be transferred.
How long does it take?	Depends on the destination and postal service.	Longer than a normal cheque.	Four to five days for Europe and North America, up to eight days elsewhere. From 1st January 2012, euro payments within the EEA will take one day.	Funds will be reserved on your account as soon as the payment is authorised. It will take a few days to show on your statement.	If you’re sending a prepaid card to someone abroad, it will depend on the post. When you use the card funds will be reserved on the account immediately.	The same day is the most expensive option, or a few days for a smaller fee.
How much can I send?	The Royal Mail has a limit of £100 and will not let you send coins through the post.  Some countries prohibit sending cash in the post.	There’s no set limit for foreign cheques but check if your bank has a limit.	There are no regulatory limits for sending money overseas but individual banks may have limits.	There are no regulatory limits for card payments – but your card may have a limit itself.	The maximum amount that can be loaded onto a card varies by provider – contact them to check.	There are no regulatory limits but wire transfer companies may have their own limits.
What exchange rate applies?	This depends on where you buy the currency.	Your bank will charge you a foreign currency exchange fee. This varies from bank to bank.	Exchange rates are updated daily and you’ll be told an indicative amount when you send the money. The exact amount will be on your statement.	Most card companies or banks either use their own daily exchange rate or one provided by the card scheme (Visa, MasterCard or American Express).	You’ll know the exchange rate up front for euro and US dollar pre-paid cards, as it’s set when you load the currency on.  If the card’s used in another currency a Visa or MasterCard exchange rate will apply.	The exchange rate depends on the provider to check before choosing one.
Anything else I should know?	You can buy insurance but it’s generally not safe to send cash in the post.	Cheques are not accepted everywhere worldwide and not all banks will issue foreign currency drafts.	You can normally use electronic transfers to any country unless there are government sanctions against a particular country.	Credit and debit cards abroad benefit from the same fraud protection as they do in the UK. You can’t use them to send money to individuals, only to pay businesses.	Once the card is loaded with euros or dollars the sterling value will fluctuate with the exchange rate.	Wire transfers are commonly used for scams and illegal activity. For this reason it’s best not to use a wire transfer to send money to someone you don’t know.

General internet banking advice

If you use internet banking and are making a payment to a bank account abroad, it may be possible to do this online. Your bank will ask for certain information such as the recipient’s account name, the Bank Identification Code (BIC) and International Bank Account Number (IBAN). Some banks will also need the recipient’s bank address and home address.

It’s really important to make sure you get the details right; it may be difficult to get the money back if it ends up in the wrong account.

Never tell anyone else your online banking passwords. If you’re sending money to someone else they won’t need these details to receive it. Whether you’re home or abroad it’s important to keep your PIN and passwords safe – avoid writing them down if possible.

If you receive an email purporting to be from your bank and asking you to verify your details to stop your account being closed, treat it with suspicion. These “phishing” emails aim to persuade bank customers to enter their log-in details on to a fraudulent site with a view to capturing enough confidential details to be able to steal money. It’s best to report any suspicious emails to your bank’s fraud department and remember that your bank will never ask for your log-in details, PIN or password in an email.

For more security tips, go to www.financialfraudaction.org.uk