How to Send Money Abroad with a Neobank
Sending money abroad with a neobank can be cheaper and faster than traditional banks. This guide explains key features to compare and provides a step-by-step process to make your first transfer.
Neobanks have revolutionized the way we handle money, especially when it comes to international transfers. Unlike traditional banks, they operate entirely online and often offer more competitive exchange rates and lower fees. This guide explains how to send money abroad with a neobank, what to look for, and how to make the most of these digital financial services.
What Makes Neobanks Ideal for International Transfers?
Neobanks are built on modern technology, allowing them to process transactions faster and with less overhead. Many offer multi-currency accounts that let you hold, manage, and exchange multiple currencies at once. Key advantages include:
- Real-time or near-real-time transfers to many countries.
- Transparent fee structures with no hidden charges.
- Mid-market exchange rates or very close to them.
- User-friendly mobile apps with instant notifications.
Key Features to Compare When Sending Money Abroad
Exchange Rates and Markups
The exchange rate is often the biggest factor in the cost of a transfer. Neobanks typically offer rates very close to the mid-market rate, with a small markup (e.g., 0.5% to 1%). In contrast, traditional banks can add markups of 3% or more. Always check the rate being offered before confirming a transfer.
Transfer Fees
Some neobanks charge a flat fee per transfer (e.g., $3), while others are free for certain amounts or currencies. Watch out for receiving fees charged by intermediary banks, though many neobanks use direct partnerships to avoid these.
Transfer Speed
Neobanks often use faster payment systems like SWIFT gpi or local ACH networks. Transfers can complete within minutes for some corridors, but may take 1-3 business days for less popular routes. Always check estimated delivery times.
Multi-Currency Accounts
A multi-currency account allows you to convert money in advance when rates are favorable, then send it later. Some neobanks also let you receive payments in foreign currencies like a local bank account.
Understanding the Costs: A Closer Look
When you send money with a neobank, the cost consists of two parts: the exchange rate spread and the transfer fee. The spread is the difference between the mid-market rate and the rate you actually get. For example, if the mid-market rate for EUR/USD is 1.1000, a neobank might offer 1.0950, meaning a 0.45% spread. Add a flat fee of $3, and the total cost for a $1000 transfer is about $7.50 (0.75%). Traditional banks might charge a 3% spread plus a $25 fee, costing $55. Savings are significant.
Step-by-Step Guide to Sending Money with a Neobank
- Sign up for a neobank that offers international transfers. Verify your identity as required.
- Deposit funds into your account via bank transfer, debit card, or other methods.
- Initiate a transfer: select the recipient's currency and enter the amount. The app will show you the exchange rate and total cost.
- Review the details and confirm. The money is sent from your neobank to the recipient's bank account.
- Track the transfer in the app. You'll receive a notification when it's delivered.
Comparing Neobanks: Which One Is Best?
Popular neobanks for international transfers include Wise (formerly TransferWise), Revolut, N26, and Monzo. Each has different fee structures and supported countries. Consider factors like:
- Number of currencies supported.
- Transfer limits and speed.
- Account maintenance fees.
- Customer support availability.
Use comparison tools on sites like ours to find the best option for your specific needs.
Neobanks vs. Traditional Banks vs. Specialized Services
While neobanks are great, it's worth comparing with specialized money transfer services like OFX or CurrencyFair. Neobanks offer convenience because your main account is the same place, but specialized services may offer better rates for very large transfers. Consider the trade-off between convenience and cost.
Global Considerations
Supported countries vary. For example, Wise supports 80+ currencies and can send to 80+ countries. Revolut supports 150+ currencies but transfers to some countries may be restricted. Always check the specific neobank's coverage for your sending and receiving countries.
Safety and Deposit Protection
Neobanks are regulated in their home countries. For instance, Revolut has an EU banking license and accounts are protected under deposit guarantee schemes (up to €100,000 in the EU). However, money held in transit may not always be covered. Ensure the neobank is regulated by a reputable authority like the FCA (UK), BaFin (Germany), or APRA (Australia). This provides peace of mind.
Tips for Getting the Best Deal
- Compare the total cost (rate + fees) across multiple neobanks before sending.
- Set up rate alerts if you want to transfer a large amount.
- Consider using a neobank with a multi-currency account to lock in rates.
- Send larger amounts in one go to reduce per-transfer fees.
Sending money abroad with a neobank is straightforward and often more affordable than traditional methods. By understanding the features and comparing options, you can save money and time on every transfer.