Latin business owners routinely send money transfers from the United States to friends and family members in Central and South American countries. According to a 2019 report by the Washington Examiner, US legal and illegal immigrants sent 148 billion dollars to recipients in their countries of origins during 2017.
In this article, you’ll learn about the best ways to send money to Latin America, and the pros and cons of bank transfers and money transfer services. Furthermore, you can review the differences between the most common money transfer services and decide which one is right for you.
Why Being Able to Transfer Money to Latin America Is Important
You can be a Latina mompreneur, a Latino veteran, or even an entrepreneur from Mexico pursuing a better home life or job and business opportunities. Whether you immigrate to the US so your children receive a better education or you want to live a more prosperous life, many times you leave family members behind.
The money you send home is a lifeline for family members to build a future whether it’s providing for necessities, getting an education, or starting a business.
If you’re a business owner, you know how important it is to transfer money regularly and not overpay for services.
There are two main options for transferring money: bank transfers and money transfer services.
International bank transfers allow you to send money from your bank in the US directly to a foreign bank electronically. You can go to a local bank or a credit union that services countries in Latin America.
Pros of Bank Transfers
- If the sender and recipient use the same bank, you can reduce or eliminate transfer fees and taxes.
- The recipient receives funds immediately or within hours as long as you don’t make errors typing in the account number or name of the person receiving funds.
Cons of Bank Transfers
- Wire transfer fees can range between $35-65 per transaction.
- Banks usually charge more to make a transfer in person compared to using their online service.
- Banks may impose additional fees and taxes based on each financial institution’s transfer policy. Keep in mind, it’s likely the receiving bank will also charge fees. It’s a good idea to check before making a transfer.
Money Transfer Services
Because you want your money in the hands of loved ones safely, money transfer services are a viable option whether sending a money transfer to Mexico, Brazil, or other Latin American countries.
Make sure to stay on top of exchange rates, fees, transfer limits, and delivery times as they vary and fluctuate per provider.
Pros of Money Transfer Services
- Because money transfer services are located all over the world, they’re convenient. Plus, you can transfer money in your preferred currency.
- Recipients can claim and receive money in real-time.
- Money transfer services are considered safe because regulations are in place that wire transfer companies must follow.
Cons of Money Transfer Services
- Since international money transfer services charge fees, you don’t get the full use of your money.
- Transfers are nonreversible. Once you send the money it’s gone and there’s no way to get it back.
- Scammers take advantage of wire transfers by creating fictitious stories to deceive people. Someone could claim one of your relatives needs money immediately and they will offer help at a generous fee to make that happen.
The Most Common Money Transfer Services
If you have decided that your best bet for sending money to your loved ones is a money transfer service, you need to decide which one works best for you.
The company provides financial connections to cover “life’s essentials and daily needs.” Founded in 1988 as MoneyGram Payment Systems, it merged with Travelers Express to become MoneyGram. The company offers other products such as bill payment services and money orders.
Since 1998, OFX has focused on providing the best exchange rate and faster money transfers. The company services over 1 million customers globally and averages $100 billion annually in transfers. OFX specializes in helping businesses manage overseas transfers to streamline operations.
Founded in 2011, the company takes pride in helping people transfer money without paying hidden fees. TransferWise provides its services at the lowest possible cost and provides services to over 5 million customers.
On average, they help move $4 billion per month. They list their total fees upfront before you transfer money. Additionally, the company uses the real exchange rate found on Google, XE, and Yahoo finance.
In business since the mid-1850s, Western Union offers person-to-person money transfers, business payments, money orders, and commercial services. In 2018, they helped people move 300 billion to locations all over the world which includes remote areas.
Western Union provides a way for families and businesses to send money while providing risk and cash management solutions to financial and educational institutions as well as small to medium-sized businesses.
The company is a PayPal service offering ways to send money securely. Xoom partners with companies around the world so transfers are safe, convenient, and affordable. The company also offers services to reload phones and pay bills on behalf of family and friends.
The table below provides a quick comparison of the features offered by these popular money transfer services.
With 33 countries in Latin America, each provider has specific limits on how much you can send to recipients based on which method you use to send and receive money. Moreover, exchange rates will also vary per provider.
Bear in mind if you pay using a credit or debit card, the credit card company may charge a transfer fee.
|Name of Service||Available Countries||Fees||Ways to Send Money||Ways to Receive Money||Delivery Time|
|MoneyGram||Available in more than 200 countries at 350,000 well-known retailer and business locations||$4.99 or less processing fee to a bank account, transfer fees vary depending on where and how you send & the payment method||Online bank account, credit or debit card, cash at MoneyGram locations||Cash pickup, directly on a bank account||1-3 hours, same day, next day|
|OFX||Available in 190 countries||Zero OFX transfer fees, bank transfer fees vary, an exchange rate fee may apply, recipients may pay a fee to receive wire transfer||Bank wire transfers or ACH direct debits||Bank account||1-2 business days|
|TransferWise||Available in 59 countries||Varies on destination||Credit or debit card, wire transfer, bank debit (ACH)||Bank account||1-3 days|
|Western Union||550,000+ agent locations in over 200 countries||Varies based on destination and how money is sent and received||Credit or debit card, direct to a participating bank account, cash at a WU location||Cash pick up, direct to a participating bank, mobile money transfer||Cash within minutes, bank account averages 0-5 business days|
|Xoom||Available in 134 countries||Transaction fees vary based on the payment method, the amount sent, destination, and currency type||Bank account, credit or debit card, or payment methods stored in PayPal account||Bank account, cash pick up, hand-delivered in-person to the recipient||Within minutes or a few days|
How do you choose the best money transfer service?
Each option for sending money to Latin America has its pros and cons.
It makes sense to use a bank to transfer money when both the sender and receiver use the same banking institution. Likewise, you can follow up with a bank representative should the transfer be deposited into the wrong account.
For the most part, bank transfers may cost you more when paying wire transfer fees. However, you can transfer money in minutes safely from bank to bank.
Money transfer providers are more convenient and depending on the payment method you use, recipients normally receive money quicker compared to a bank transfer.
One money transfer provider may offer more favorable features compared to another. In the end, you must choose which transfer method gives you the most flexibility, options, and security.