If you’re like most people who send money overseas, then you’ve probably looked at the transfer fees offered by various money transfer companies. When they offer you a low (or even zero) transfer fee, this looks appealing—but just because a service doesn’t charge you anything in fees doesn’t necessarily mean it’s offering the best value overall.
Just as importantly (and perhaps more), the actual currency conversion rate used when transferring international funds will play a major role in determining exactly how much money actually gets into the hands of the recipient.
Let’s say that you want to send money from Malaysia to India, and while looking around, you find two companies—one offers a lower (but non-zero) transfer fee than another. You might go with them thinking they’d be cheaper—but what if their MYR-to-INR exchange rates aren’t as good? Then your family won’t get as much money!
So understanding how to calculate both of these things together will help you make more informed choices about how much it's going to cost you to send that money to another country.
What Are Money Transfer Fees?
A ‘transfer fee’ is essentially just the charge applied by your money transfer provider for their efforts in processing your transaction – either as a fixed sum, or a fee depending on the amount transferred.
Other providers might set a fixed rate for sending money internationally to a bank account in another country. Some may vary their prices according to where you’re sending money, how much, which payment option you choose, etc.
Before starting an international transfer, check:
- Does a transfer fee apply?
- Is this fixed or percentage based?
- Are there any additional charges?
- Would my recipient’s bank charge me a fee?
- Do they have any special promotional offers?
- How much am I expecting the recipient to receive (in total)?
While a low transfer fee will definitely lower costs for your transaction—especially if you frequently send money—it shouldn’t factor in on its own without also taking into account the exchange rate.
What Is An Exchange Rate?
Exchange rates determine how much of one currency you get when exchanging with another. For example, if you want to send money from Malaysia to India, we'll typically be converting your funds between the Malaysian Ringgit ( MYR ) and the Indian Rupee ( INR ).
For instance, if you want to transfer MYR to INR, then the exchange rate will determine how much INR your recipient would get for the MYR sent. It should be noted that these exchange rates usually fluctuate based on various elements such as market conditions, economic events, interest rates, inflation, international trade, and other forms of currency demands. The above means that the value you’ll get from your family may differ based on the exchange rate prevailing at the time you make the transfer.
How Exchange Rates Affect the Amount Your Family Receives
Of course this means that your exchange rate will have an impact on the final amount of money that arrives at your destination, which may be important if you’re making regular payments for large sums.
Transfer Fee vs Exchange Rate: Which One Matters More?
Ultimately, this will depend on the size of your transaction and what rates are being quoted by different providers. Fixed charges could be far greater for smaller transactions than just the spread between two currencies if you’re making bigger payments!
How to Compare International Money Transfer Services
For comparison purposes when evaluating different providers for your international money transfer you should specify the same sending amount and destination currency for each one of them
Here are some factors to consider:
Check the Exchange Rate:
Firstly, check out the exchange rate that’s being offered to you when trading your currency pairs.
Ensure that you’re checking out the exchange rates for the same date/time since currencies change all of the time.
Check the Transfer Fee:
Find out exactly how much you’ll pay when initiating the transfer.
Check if there are any additional charges involved.
Look at the Final Amount Received:
Instead of just asking “how much will this transfer cost me?”, what if you asked “how much money your recipient would get?”
This is one of the most helpful things you can compare with each service.
Check Transfer Times:
Also consider the time frame – if you need cash urgently, it’s worth checking how quickly they’ll process your request.
Consider Convenience:
Online services could also make transferring money overseas easier for customers – who could then do so digitally without having to visit in person or fill out lots of forms, if they meet applicable requirements.
Check Security and Reliability:
Select a provider that has transparently explained their transfer process, fees, exchange rates, customer support, security measures etc.
Tips to Get Better Value When Sending Money from Malaysia
If you frequently move cash around between Malaysia and somewhere else, there are some simple steps that will go a long way toward ensuring you’re making the most-informed decisions about your finances.
Compare the Total Value
Don’t pick your provider only based on their advertised low transfer fee—compare how much they charge for transfers versus what you’d get from another one when factoring in both the exchange rate and transfer fee to see who will end up giving the recipient more money.
Check Exchange Rates before Transferring
Bear in mind that exchange rates fluctuate constantly - please ensure to verify the current rate prior to finalising your transaction. However, if you're not in too much of a rush to complete your transaction, keeping an eye on exchange rate trends could be quite beneficial for understanding the currency's movement.
Consider Your Transfer Frequency
Small variations will add up if you are sending money every month.
It's also worth reviewing your fees and exchange rates from time to time to check that you're still getting great value with your transfer services.
Understand Promotional Offers
Some providers may offer reduced or waived fees on select transaction types, such as when you send money to a new customer. Make sure to read through the terms and conditions of the service to determine if this offer applies to you.
Calculate Before Confirming
Check that you’ve selected the correct amount to send, exchange rate, associated fees, and how much you’ll receive before proceeding with your transfer. This can save you from unpleasant surprises.
Use a Trusted Provider
The cost of your service is an essential factor to consider when choosing a good provider. But don't just focus solely on that.
Ensure you find a provider with a transparent process and appropriate customer support.
How Lotus Remit Helps Customers Compare Their Transfer Value
If you are a customer based in Malaysia, we’re pleased to offer online remittance services that allow you to send funds abroad – including to India and elsewhere.
Using Lotus Remit allows our customers to view the relevant exchange rates and associated transfer fee upfront when they make international transfers.
And with this flat rate RM 5 service charge, available on select Lotus Malaysia to India transfers, customers now have more visibility into the total costs of an international transfer via our online platform. Please note the current exchange rates, fees and transactional requirements and transfer conditions apply.
We’re designing our platform to offer more convenience around making international money transfers for people that have regular needs to send money to family or manage other financial obligations overseas.
Whether it is a single or recurring international money transfer, being able to compare the exchange rate and overall cost of a transaction could help you make a more informed choice.
Conclusion: Don't Look at the Transfer Fee Alone
While the transfer fee might seem to be all that matters when considering how much you will pay for transferring money abroad, don’t forget about the impact that the exchange rate has on the total cost as well.
What appears to be an excellent deal because of its low fees could potentially be worse off due to the exchange rate. On the other hand, paying just a little more in fees can lead to getting better rates which will mean that your recipient gets a lot more money than they would otherwise.
If you are thinking of doing an international money transfer then do make sure to compare different providers’ exchange rates, their fees (transfer and additional), processing times, level of security and general convenience alongside the final amount being sent to your recipient.
For example, Indian and others living in Malaysia now have access to financial transfer service Lotus Remit.