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Overseas money transfers can be scary and expensive, especially if you have never done one before. But they don’t have to be. This is my OFX review.
Last month I had the opportunity for an investment in a foreign startup company and needed to move several thousand dollars to an overseas bank account in the local currency.
My first step was to see how much USAA (my military bank of choice) charges to wire money. It’s $45 for an international transfer and $20 for a domestic transfer. Not too bad, especially when moving thousands of dollars. Next, I checked with my partner overseas to see what his bank would charge to accept an international wire transfer. In this case, it was free, but they would have to convert the funds into the local currency.
The rate the foreign bank was offering for converting US dollars to local currency didn’t seem very good to me. According to Google the rate was 1.17. The bank was offering me 1.14. Three cents may not seem like a lot, but for every $10,000, 3% was $300. I decided it was worth investigating other options, especially if it meant saving over $1000.
Reasons You May Need to Send Money Overseas
Sending money internationally may seem like something only immigrants with family in the “old country” do. There are a variety of legitimate reasons you may need to send money to a foreign bank account.
- You’re stationed in Europe, Asia, or elsewhere and want to pay bills with your host nation bank account
- You have friends or family living in another country and want to send them money
- You conduct international business and receive payments from overseas as well as make payments to overseas accounts
These are all great reasons to use a foreign exchange company, or “forex.” My investment opportunity in my friend’s startup caused me to go on a mission to find the best forex company for the best price.
Online International Money Transfers
It’s amazing that even in the 21st century it’s so difficult to move electronic money around. We even still call it a “wire transfer,” as if the money is being sent by telegram! To send my money overseas, I had to talk to 3 people at 2 different companies on the phone. On the phone! It’s like the Internet hasn’t even been invented. Fortunately, it seems that after my first transfer all subsequent transfers can be conducted online.
I started my search for a better exchange rate on Google and found the site us.OFX.com. While the site was definitely professional built and looked legitimate with testimonials, press releases, and an in depth FAQ, I had to do my own research to determine if I was going to trust them with a $xx,xxx transaction.
The main difficulty in transferring money overseas is not getting burned on the exchange rate. Rates fluctuate constantly throughout the day. The rate your quoted to exchange cash is usually much worse than the rate you’ll get if you use a credit card or ATM card. The best rates are between the largest banks in the world, who trade at what’s known as the inter-bank rate. Buying or selling your money as close to this rate as possible saves you the most money.
The first thing I noticed about OFX was their attractive pricing. The rate I was quote for my transaction was 1.1634, only a fraction of a penny and percentage below the inter-bank rate. The maximum fee they charge is only $5 and there are no fees for transactions over $5000! This was an amazing exchange rate and a no fee transaction for me. The savings really add up when you do larger transactions. Check out the savings between what the bank was offering me and what OFX offered me:
|Amount of Foreign Currency Purchased||Regular Bank charges .8772||OFX.com charges .8595||USForex saves me…|
Huge savings by going with USForex! The more you transfer, the more it makes sense to skip the big banks and work with the industry disruptor.
The Internet is finally allowing the average consumer to access the exchange rates previously only available to the wealthy and mega-corporations.
Can I Trust OFX?
Even though I was getting a good deal, I still wasn’t sure if I could trust them, so I did my research. While researching I noticed a couple of good things right away:
- Lots of 24/7 phone numbers and contact information
- Free registration
- Lots of positive testimonials and no negative reviews on Google
- Better Business Bureau registration
- OFX is registered with the Financial Crimes Enforcement Network (FinCEN) under the US Department of Treasury
- The company is registered as a money transmitter with 46 states and has application pending with the remaining 4
OFX is a Delaware based company with an officer in San Francisco. They are owned by OzForex Group, an Australian based company founded by banker Matt Gilmour in 1998. A couple stats I found:
- 170 employees in 6 cities: Toronto, San Francisco, London, Sydney, Hong Kong, Auckland
- $9.1 billion moved in 2013
- 460,000 transactions processed in 2013
- Over 100,000 clients
- OzForex also owns UKForex, CanadianForex, NZForex, and Tranzfers
Based on these facts and reading some financial statements the company had registered with the Australian government, I decided that they probably weren’t going to run off with my money!
My First International Wire Transfer
I set up my account and received an email instantaneously and a phone call from a USForex dealer within 5 minutes. See the video here on how to setup your own account. He was extremely polite and helpful in getting my details confirmed and my account set up. After confirming my details both online and over the phone, I was ready to make my first transaction.
Setting up my transaction is an easy three step process:
- Get a spot quote for the transaction. This locks in your exchange rate and is the best available rate at the moment you click “Get Quote”
- Then you designate your beneficiaries, the bank account and person who will receive your funds
- Finally, confirm all the details. For your first transaction, USForex will phone you to confirm all the details of your transaction. Once you confirm the transaction, you’ll have 24 hours to wire the money to USForex’s holding account.
USForex leverages its massive transaction volume to cut its rates to a fraction of what the big banks charge. The process is pretty simple for how USForex converts your funds:
- After you finalize your transaction, you wire the funds to USForex’s US bank account. For me, this cost $20 with USAA. Your bank may charge more or less.
- Then, USForex converts the funds (settling thousands of other transactions at the same time, so your money gets as close to the inter-bank rate at possible) and wires the money to your beneficiaries.
- The money arrives in the foreign bank account usually in less than 2 business days, and sometimes as quick as 1 business day.
The process could not be easier or more simple. The funds I transferred to my overseas partner were receive in less than 24 hours after I wired them. I am definitely a happy customer! I highly recommend using USForex for all of your foreign exchange transactions, especially if you're moving large amounts of money ($20,000+). The savings are just too big to ignore, the dealers are fast and professional, the transaction runs smoothly, and the 24/5 access to dealers is unmatched in the industry.
USForex is disrupting the opaque and archaic foreign exchange market for the United States. It’s good to see the Internet spurring innovation and competition to create better products for consumers and small-medium size businesses. Just like Uber is rocking the taxi and transportation world and AirBnB is shaking things up in the hotel world, USForex is changing the rules of the game in the forex industry.