If you are looking to transfer money to someone quickly, you have a lot of choices, including Zelle, Venmo, Wise (form. Transferwise), Paypal and Xe.com. But with choice comes learning what is involved in using each vendor, including getting answers to the following questions:
- Can you move money internationally? Not with Zelle or Venmo, but the others offer this service. Zelle can only be used to move money between US bank accounts with US mobile numbers. Venmo also requires users to be physically in the US to complete their transactions. Paypal has the widest selection of currencies, claiming they are available in 200 countries (which is pretty much everywhere), and Xe claims 170 countries. Wise is available in 59 different countries.
- What is the effective exchange rate for your funds? Exchange rates change constantly, and it is hard to anticipate when the best time to move your money can be. None of these services makes it easy to figure this out, and tack on various fees for particular circumstances. I say “effective” because each service quotes rates differently. For example, Xe and Wise both use “midmarket rates” which they are very clear about up front, and for both you can actually run a quote before you do the transaction and see the rate and the fees deducted. Paypal has a whole bunch of fees, terms and conditions that are explained here, and their rates are usually less favorable. Monito.com, another money transfer service, has a real-time rate comparison shopping tool that looks at several competitors (I am not sure how accurate it is, but it can be helpful).
- How safe is it to use the service? A recent NYTimes article documents how Zelle has become the fraudster pipeline of choice, with banks making it difficult to resolve complaints or reimburse fraud victims.
- Can you secure your account with MFA? Speaking of fraudsters, you should set up this additional authentication factor to protect your accounts and your transactions. Some services make this process easier than others.
- How easy is it to use the service? Some of the services have really poor usability experiences, making the process a lot more difficult that they could be. Some only work with a mobile app, while others support both mobile and web platforms. Some of the services can move funds into your recipient’s bank account, others require your recipient to open an account on their platforms before they can access their funds.
- How fast is the money moved? Everyone operates at different speeds, so if this is important, check the fine print on when the funds will actually be available.
- What other services are offered? Some of the vendors (like Wise) have prepaid debit cards and multi-currency accounts that reduce fees. If you have to move money on a regular basis, you might want to check into these.
Here is one other alternative: using a brokerage account to move your money. I recently had to get funds to my daughter in Israel. She wanted dollars, not Shekels, but we both used Morgan Stanley to manage our investments. It was a simple matter to take money from my checking account, and deposit it in her brokerage account, and no fees were involved and the whole operation took a few minutes.
One other thought. When I needed some extra cash for the downpayment on my new house which was closing two months before the sale of my current home, my financial advisor suggested I take out a margin loan. I was able to pull out a sizable amount out of money for a couple of months to carry me over between the purchase and sale times and it cost me pennies on the dollar. They took the cost for the loan and some of the loan itself out of dividend earnings in my account so that when I went to pay it back, I actually paid back a bit less than I took out. I’d never done this before but it turned out to be a great resource. Check with your brokerage to see if they have a special deal along these lines. Could save you time and money.