Foreign Currency - 7 Things to Consider When Transferring Money Abroad
Since the recent political shenanigans of our esteemed president, we at FX-Pro have seen a noticeable uptick in individuals sending money abroad for investment, buying of property and emigration purposes. Much of this business is still flowing through the established banking powerhouses who are benefiting massively from the exorbitant margins and premiums they are known to take on these transactions. I have compiled a list of 7 crucial aspects to consider when sending your hard-earned cash abroad.
1. Exchange Rate
The foreign exchange market is the largest industry in the world, accounting for roughly $ 5 Trillion a day in volume. To put this into perspective, this averages out to be $220 billion per hour. That makes it the most liquid market in the world as well, allowing companies and individuals to enter and exit the market instantaneously. Because of this liquidity, it is a very attractive speculation tool for traders looking to profit on daily price movements, and roughly 90% of the traded volume is purely traded on speculation. That leaves the remaining 10% of the market for companies and individuals looking to send their hard earned money abroad, and can fall prey to sharp movements around the time of their transfers.
Getting the best exchange rate possible is paramount to secure the best value for your international money transfer. Remember, a more favourable exchange rate on a large sum of money could save you significant sums of money. Currency specialists give more favourable rates than banks so don’t just use the bank because it is something you are used to. This is especially true for private individuals using their primary bank directly, as they have been known to take as much as 4% as a premium on the rate.
2. Fees and Charges
As well as the exchange rate, fees and charges are also a very important cost factor when sending money abroad. Both banks and currency specialists charge fees so you will need to beware of international money transfer charges and overseas bank receiving fees. Some local banks can charge between R 500 and R 800 per international money transfer, it can put you at ease if you know that the supplier you are using is not charging high fees for the sake of it, especially when the banks are already making substantial sums on the rate.
3. Tax Clearance
Every South African has an annual allowance, and depending on how much they would like to move, there are certain requirements. Below are the two standard allowances, however one can apply if they have more than R 11 million to move. We can consult on the process if that is a requirement for you.
- R 1 MILLION – DISCRETIONARY ALLOWANCE (DA)
Residents (natural persons) over the age of 18 years can make use of a single discretionary allowance of R1 million per individual per calendar year. No tax clearance certificate is required. If you have any questions about Discretionary Allowances, call us on +27 (0) 11 888 0125.
- R 10 MILLION – FOREIGN INVESTMENT ALLOWANCE (FIA)
This allowance can be used to invest funds overseas and requires the applicant to have a green bar coded South African ID book and to obtain tax clearance from South African Revenue Services (SARS) before proceeding.
4. Reputation of International Money Transfer Provider
Currency specialists are becoming an increasingly popular alternative to banks when making overseas payments. Before engaging in a foreign currency transaction with any specialist or bank, it is both paramount and easy to determine whether a particular provider is authorised by the appropriate regulatory body to carry out international money transfers. For South African based customers, they are well within their rights to ask for the license details of the supplier, and can also easily verify the FSP license with the FSB here.
5. Access to FX Dealers
If you are a large corporate making regular payments or an individual making a once-off transfer, having access to a dedicated FX dealer means that you can receive professional guidance for your particular needs. FX dealers are a great asset to business customers seeking advice on the timing of transfers and hedging strategies, market orders and rate alerts to help manage their risk. Likewise, an FX dealer will advise on the market conditions for the buying or selling of currencies, vital for the purchase of overseas property or other high value purchases and saving you money in the process. If your bank is not giving you access to a professional dealer, it might be worth your while to see who would.
Convenience of the whole process is also a massive consideration to be made. Banks are notorious for onerous FICA requirements, app forms and turnaround times to get you up and running. Physically going into a branch and standing in a queue is not something that is required these days so if you find yourself standing around at the branch, waiting for your ticket number to be called, you probably won’t enjoy the interaction and would be better off dealing with a brokerage who comes to you.
7. Customer Service
Having help at hand is always beneficial in case you face problems or have doubts. Make sure that the remittance company you choose has a reputable customer service track record in the event of glitches like delays or non-arrival of funds.
When you have worked so hard for the money, you have to ascertain that the remittance is carried out in a reliable manner, and there is a relationship manager who will take your call and prioritise your requirements. If you take into consideration these seven key factors prior to the money transfer, you can be rest assured of a safe, secure, and advantageous transaction.
FX-Pro is an established, well known money transfer specialist operating in South Africa from Victory Park in Johannesburg. We are a licensed Financial Services Provider and have professional key personnel who can help you stay in control and save money when considering sending your money abroad. Too many times we have seen our clients come to us after dealing with their primary bank, or even other brokerages after having their fingers burnt, and missing out on a professional approach that is built around getting the most out of the market for the client.
Please feel to check out our website, or contact us directly for an obligation free quote and consultation.
CONTACT: Joshua Wadge - Senior Broker at Private FX Sales
T: +27 (0) 11 888 0125
M: +27 (0) 72 107 3872
FX-Pro International Payment Specialists (PTY) Ltd is an Authorised FSP: 46213