Online remittance providers have become significantly popular over the last decade or so. People no longer like to deal with the hassles of sending checks via mail, wiring money to another country, and paying hefty fees to make these transfers. Hence, it’s no surprise that many have turned towards a much cheaper and convenient option: Online remittance providers.
More than ever, people are interacting with the remittance market personally. But before sending money abroad online, they need to understand some essential concepts (like exchange rates) to find the best possible deal for their money. That’s why we’ve provided this guide to talk about four essential ideas.
When transferring money to another country, there may be a limit to how much or little you can send. These are maximum or minimum transfer fees, and they differ for every provider. Some remittance services may only impose a maximum limit, while others may do the opposite. Also, some may allow you to wire funds uninhibited with no limits.
Hence, before choosing a remittance provider, make sure to consider their transfer limits, especially if you’re planning to send a specific amount of money abroad on a regular basis.
One of the biggest factors when selecting a reliable service provider is coverage. This applies to international transfers and refers to the number of countries a service provider can support. Many online transfer services only support a handful of major, popular countries while lacking coverage in lesser-known countries, such as the ones in Asia and Africa.
Therefore, it’s vital to choose a provider that can cover your choice of countries, especially if you plan to transfer to countries like Pakistan, Nigeria, Benin, and Srilanka.
When you send money online to Pakistan via a provider, you’ll usually pay a fixed or a percentage fee. It’s better to choose fixed fees overpaying a percentage, especially if you plan on sending a significant amount. Depending on the payment method, you may pay additional fees, such as a debit/credit card fee, which will mostly come as a percentage.
Also, don’t buy into the “no fees” slogan some providers utter. They might offer you a “free transfer”, but they’ll adjust the exchange rate margin in a way that’ll easily make up for it.
In addition to fees, there’s another factor that can affect the total cost of your transfer. The exchange rate is the value of your country’s currency compared to that of the recipient country. When converting money from one currency to another, the exchange rates determine how much your money will be worth in another country. Depending on a number of factors, the exchange rates are constantly changing:
A country’s interest rates play a crucial role in fortifying or weakening the value of its currency. In an attempt to stimulate or inhibit economic activities, a country’s central bank may increase or decrease interest rates. As interest rates go up, it becomes more expensive for people to access credits, but they can easily borrow money when interest rates are down.
This is indirectly related to interest rates. Generally, low-rate inflation can be healthy for a growing economy, but if the prices of goods and services get out of hand, the central bank can cool off the situation by increasing interest rates. As mentioned before, that will decidedly affect the value of a currency.
One of the main factors affecting the exchange rates, often for the worse, are domestic or international political tensions. We’ve seen multiple cases where corruption, protests, and even armed conflicts in a country can significantly affect the value prospect of a currency. Similarly, rising international tensions may lead to a wide range of sanctions, especially on state banks and exports/imports, drastically weakening a particular currency compared to others.
It pays to know these essentials because such information will help you understand why remittance providers act the way they do and how you can review their benefits and drawbacks to choose the most reliable and affordable option. You need a provider that can give you 24/7 support, quick delivery, and maximum security while charging affordable fees and providing favorable exchange rates. Register with us at Lycaremit, and let us show you how easy it is to send money abroad.