International Money Transfers for Overseas Education: Guide & Recommendations

With record breaking numbers of overseas student enrollment in Canadian high education, and new initiatives to encourage Canadians to study abroad popping up, the subject of international money transfers is a hot potato. If a Canadian was to study abroad in the UK for just one year he would have to pay £9,250 or CAD 16,000, on average. If an overseas undergrad student is looking to study in the University of Ottawa he would have to pay up to $26,000 American or $33,500 Canadian. Those are significant amounts of cash to be transferred overseas, and the costs of such transfer end up taking an additional, unnecessary, toll on the parents who are already paying by their teeth to afford overseas education.

Use the menu below to discover you are looking for. This is a comprehensive guide which was put together in partnership with moneytransfercomparison.com Canada’s international transfers with the intent of supplying all the information you need on international money transfers to and from Canada, and enumerate the best international money transfers in Canada.

Table of contents:

1. Transfer money to Canada: Costs and Alternative Methods
2. Transfer money from Canada: Costs and Alternative Methods
3. International Money Transfer Companies
4. Top 10 Tips for Transferring Money Abroad with Currency Transfer Providers
5. Disclaimers

Transfer money to Canada: Costs and Alternative Methods

Transferring money to Canada is pretty straightforward regardless of where you live. You go to your bank branch (or if you are lucky, log into the bank’s website) and input the details of the Canadian bank account you need to transfer money into*. The biggest issue you may experience is the fees your bank levies from you. There are 3 types of fees you should know: commission, fixed transfer fee, and mark-up fee.

• Commission: most banks nowadays don’t take commissions anymore.
• Transfer fees: a per-transfer fixed fee. $15-$50 in the USA, £10-15 in the UK, and similar amounts across the globe. Few banks do offer fee-free transfers under certain conditions (like HSBC between two HSBC accounts owned by the same person).
• Margin fee: this is the tricky part. The rate you’re paying for a foreign currency is not the real rate that the bank is paying to purchase these currencies. They add an embedded markup. Today, June 10th, the rate is 1.73 between the GBP and CAD; but British bank NatWest sells you only 1.70 Canadian dollars for each Pound, and similarly, sell you pounds for 1.77 Canadian dollars. That is a give-or-take 2% markup.

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Based on these rates supplied by Natwest, you would be paying 2% of the total amount transferred, in addition to £22 in fixed transfer fees.  A payment of CAD 10,000 would cost approximately 250 CAD in fees. I have witnessed situations where a 10,000 dollar transfers incurred charges of 8 and even 10 per cent, but 2.5% of the overall transfer is expensive by itself.

So which other options do you have besides using a bank? Some universities will be able to charge your credit or debit card directly but the cost of foreign exchange is likely to make it even more expensive than the above.

* I realize not every person on this planet has a bank account and that is very unfortunate but this article’s scope is strictly international bank to bank transfer, inbound or outbound Canada.

Transfer money from Canada: Costs and Alternative Methods

Similarly to banks across the world, Canadian banks charge three types of fees off clients, making transferring money from Canada very expensive.

• Commission: Canadian banks don’t charge commissions.
• Transfer fees: a per-transfer fixed fee. Anywhere from $10 to $25 Canadian is standard.
• Margin fee: this is the tricky part. The rate that you will be given is not the actual interbank rate. Today’s (June 10 2018) USDCAD rate is 1.29 but using RBC (or any other bank) you would have to pay $132.25 for each dollar exchanged. That means they are charging between 2 and 2.5 per cent!

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Based on these figures, we can conclude that a payment from Canada to USA made with RBC (but any other bank) will be expensive. Transferring C$20,000 will cost C$13.5 in fixed costs and an extra 465 just in markups. If you are going to study in some ivy league university, it may add up to thousands and thousands of dollars just in fees.

Paying using your credit or debit card will end up being more expensive, and electronic means like Paypal are even more expensive than that, so the only real answer is international money transfer companies.

Best International Money Transfer Companies

Money transfer companies are providers of foreign currency that allow you to transfer money abroad (an in some cases receive it from abroad, but it’s not our focus in this post). The way it works is rather simple – you transfer funds to a intermediary account set up by the money transfer company and they take care of the transfer abroad while of course exchanging your money to foreign currency for a less fee than banks (that is not always the case but you can generalize and say that money transfer companies would not have existed if they were not able to provide significantly cheaper service than banks, because it’s a hassle to deal with them in comparison to using your bank).

Below are some of the best money transfer companies that deal with the Canadian dollar:

OFX (Canadian Forex)

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OFX is one of the better known providers in the rather niche industry of international money transfers. It is boasting volumes of 20bn Australian dollars annually with an impressive reach of currencies and regulated by the world’s strictest regulators, Canada included. The strong points are very friendly rates and extremely high level of credibility and service. The strong point may be an online platform which is a tad behind in comparison with its fresher competition but of course its online platform is fully functional.

The brand has consolidated after 15 years of operating in different models. It was formerly known in Canada as Canadian Forex, in the UK as UKForex, in Australia as OzForex (which is still its official company name) and in the US as USForex.

OFX was reviewed by MoneyTransferComparison and received a rating of 90.4% (true for June 10, 2018).

Top 10 Tips for Transferring Money Abroad with Currency Transfer Providers

Using a money transfer company over a bank to conduct an international transfer to Canada (or outbound from Canada) doesn’t necessarily guarantee your overseas transfer will be optimal. We have created this list of the top 10 best tips for international money transfers to make sure you are getting the most bang for your loonies.

1. If you are sending large sums of money abroad – negotiate the rate you are given. For comparison sake, most of these companies’ personal client desk is used to deal with the purchase of property abroad, so a large sum is at least high five figures Canadian dollars. What does it mean to negotiate the rate? don’t use the online system but instead speak to your personal dealer and tell him you have shopped around and looking for a better rate. It is a very competitive industry and more often than not, companies will make better rates to maintain you as a client.
2. Before you make a payment, make research (you can use your personal dedicated dealer at the money transfer company to help you with that) in regards to recipient fees. Although uncommon, some countries or banks charge a fixed amount for each incoming transfer. Your money transfer company may know how to tackle the situation, but if not, you may want to send more money than you originally intended so the recipient will receive the amount he is expecting.
3. Make sure you are aware that the selling point of this service is price and level of service rather than speed. If you are in need to make an instant payment due this week you may want to stick to your bank.
4. Make sure you follow the rates to make your transfer in the right time when the rates are high (or before they are expected to drop further). For example, if rushed to make a payment of Canadian Dollar to Euro on March 18, 2018, the best rate you could have got is at around 0.61 (which represents a small markup from the interbank price that day). If you were to wait a little longer and conduct the same transfer on June 3, 2018, you would have received approximately 0.645 (again a small markup from the real rate of 0.66 that day). That is a 5% difference, or 5,000 Euro extra for each 100,000 Euro transferred.
5. Utilize the knowledge, experience and expertise that money transfer companies possess and ask them for guidance in regards for the best timing to transfer you money abroad, if you are not certain or not equipped to make this research on your own.
6. Currency transfer companies tend to give honeymoon rates to new clients. Honeymoon rates are, in other words, introductory rates intended to lure in clients at close to 0 profitability. After your first transfer with the currency provider, it may attempt to widen its margins. That’s why you need to check the rate you are given and the markup you are paying with each and every transfer.
7. International money transfer is an ever-changing market. A few years back no one has ever heard of Transferwise, one of the largest money transfer companies in the world currently. Until last year, Moneycorp’s focus was on its highly-criticized travel money business. XE Money Transfer was bought by Euronet worldwide and switched to HiFX (sister-company) as a service provider. Due to that, it is incredibly important to keep an eye on the industry and stay updated.
8. Businesses have different requirements which we have not covered in this article intended for overseas students. You should be seeking to work only with currency transfer companies who specialize in B2B payments and offer hedging tools, mostly Forwards.
9. We feel that the best money transfer companies are the global leaders in this industry who are turning billions in turnover each year, and recommend steering away from smaller companies which may be excellent (and definitely cheaper) because it’s such a sensitive reputation-driven industry. No reason to risk your money with a company that does not have years and years of experience.
10. Making your own research is always the best route.

Disclaimers

1. We receive compensation by some of the providers appearing on this article
2. Companies go through their own vetting/KYC processes, you may be not eligible to use a certain company or all of them based on your location or based on other considerations
3. International money transfer is a high-paced topic; We tried to make this article as up to date as possible but some of the information might have changed from the time we’ve conducted our research by the time it was published
4. All figures used in this article are rough figures – each bank/company has its own rates and there are subtle differences in terms of service
5. This guide is intended for overseas students from Canada or overseas students studying in Canada but is applicable for all personal uses that require transferring money abroad