Peer-to-peer money transfers match people who are trading 2 specific currencies with each other, generating savings by cutting out the middleman.
Although international money transfers are traditionally conducted via banks, it’s now possible to take advantage of peer-to-peer banking services for money transfers. These services provide networks where people can share access to currencies without the need for a central server, allowing you to cut out the middleman. As a result, the money transfer process is simplified and you can save money.
First, you need to select how much money you wish to transfer and where you’re sending it. You can then upload your funds to your money transfer provider, which will then convert your money at the mid-market rate and match you with a person sending funds in the opposite direction.
For example, if you’re sending money from Australia to the United States, you’ll be matched with someone sending funds from the United States to Australia. This allows customers to cut out the banks and enjoy better exchange rates and lower transaction fees.
Lauren wants to send $1,000 to her mother in the UK. In order to find the best possible money transfer deal, she compares the services offered by her Big Four bank with a peer-to-peer money transfer service like Wise or CurrencyFair. The results can be seen in the table below.
| Bank | Peer-to-peer money transfer service | |
|---|---|---|
| Amount transferred | $1,000 | $1,000 |
| Exchange rate | £0.52 | £0.55 |
| Fee charged | $25 | $2 |
| Amount received | £507 | £548.90 |
As you can see in the example above, if Lauren sends her funds using a peer-to-peer service, she will be sending an extra £41.90.
* This is a fictional, but realistic, example.
| Response | |
|---|---|
| Sending to family/friends | 64.44% |
| Investing | 24.44% |
| Travelling | 24.44% |
| Paying bills | 21.11% |
| Other | 16.67% |
| Relocating | 5.56% |
You’ll need to take the following features into account when comparing peer-to-peer money transfer services.
Compare peer-to-peer money transfer services
When you’re making an international money transfer, it’s important to keep an eye out for exchange rates and fees. Poor exchange rates can eat up a big chunk of your money if you’re not careful, while hidden fees can be a nasty surprise if you don’t read the fine print before lodging a transfer. It’s also essential that you ensure you are dealing with a reputable company. Do your research before you commit yourself so that you don’t end up the victim of a dishonest provider.
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I am going to Europe in February 2017 which is 9 months away and I want to buy euros when the AUD is at its highest. If this were to happen in 4 weeks time and I entered into a peer to peer transaction then,
1. how and where do I collect my funds?
2. is it possible to have a forward contract like this or not?
If this sort of transaction requires a bank account then it would be possible to use a low cost forex company and park the funds. The real issue is that it is nigh well impossible to open a banking account in Europe unless you reside there. I have tried. Hence the interest in peer to peer transactions.
If all else fails meeting the counterpart when one half or the other arrives overseas seems like an option, where a physical exchange of funds is possible.
Getting rather messy!
Hi Mick,
Thanks for your question.
Unfortunately you cannot use a peer-to-peer currency exchange service to pick up money in Europe unless you have a bank account there.
Peer-to-peer international money transfer services like Transferwise and Currency Fair don’t offer limit orders as well, so it’s generally not possible to conduct these.
Alternatively, you may want to consider bringing a debit card overseas for your travel. we have a dedicated page for you to compare Australian debit cards for overseas travel or overseas shopping online.
I hope this helps,
Harry
My recipient in Chiang Rai Thailand does not have a bank account, is there any other provider besides Western Union that will be able to facilitate a cash transfer?
Thanks
Hi Neville,
Thanks for your question.
Moneygram and Worldremit also offer cash pick up options. Please ensure to read through the relevant product disclosure statement and terms and conditions to ensure that you got everything covered before you initiate money transfer.
Cheers,
Shirley
I am in Rwanda,I would like to use World Remit and i realise that rwanda is not eligible in your list.how to do?
Hi Cyprien,
Thanks for your question.
There are number of organisations that may be able to assist: MTN Mobile Money Online, Ria Financial Services and I&M Bank.
Your local bank may also be able to assist with this transaction.
Cheers,
Shirley