Five questions everyone should ask when transferring money to the Philippines. Not all money transfer services are equal- we help you find your best option.
1. How are transfer fees calculated?
When sending funds from Australia to the Philippines, providers generally charge two fees:
- sending fee and
- exchange rate margin.
The sending fee is the amount the service provider will charge for processing your international money transfer. This sending fee can vary greatly from AUD 2.00 to AUD 26.00 per transfer. Service providers often charge a margin in addition to the sending fee.
The margin is the difference between what the provider buys the currency for (wholesale rate) and what they sell it on to the client for (retail rate). This margin also varies between service providers from 0.5% to 6.0%. When shopping around, it is important to take both the sending fee and exchange rate margin into account when comparing service providers. It is not uncommon for a provider to offer transfers with no sending fees; however, an exchange rate margin of 3-4%.
The simplest way to clarify the fees is to ask the provider directly, "If I transfer AUD 1,000 to the Philippines today how much will clear in my PHP account”? Asking this question should allow you to price shop between service provider to ensure you are getting the best deal available.
2. How long will it take my funds to clear?
It is important to note that the time it takes for the funds to clear into your Philippines account differs from service provider to service provider. Clearance times range from within the hour to five business days. Traditionally, remittance companies can offer faster service than Australian banks. The faster clearance time is due to the method the remittance companies use to complete the transfer. It is also worth noting that some providers may charge a premium for competing for your transfer within 24 hours.
It is generally recommended to avoid paying for these "speed services" as many providers will offer this service at no extra charge.
3. Are there any receiving fees?
When banks transfer funds from Australia to the Philippines, they often do so via international telegraphic transfers. A telegraphic transfer involves transferring the funds directly from an Australian bank directly to the Philippines receiving bank. Telegraphic transfers can often be a costly process as not only does the Australian bank change a transfer fee, the Philippines bank often charges a wire receiving fee. The associated fees to complete the transfer are not standardised across all institutions and can therefore vary dramatically from one institution to the next. Before transferring via your bank, it is always recommended to check with your Philippines receiving bank to check what fee will be paid beforehand.
Alternatively, specialists remittance companies often use a different process to credit Philipinese accounts. This method of completing the payment involves transferring from local PHP accounts. The benefit is that this process removes the receiving fee.
If you are transferring regularly, it is recommended is your find a service provider who offers zero receiving fees as this will help to maximise the PHP amount clearing into the receiving account.
4. Is the remittance service provider based locally or Internationally?
Being able to contact and talk to a representative in real-time is often an overlooked factor in choosing a provider. Often, funds need to be sent quickly, or account details need amending. Having the ability to contact a representative directly in real-time will dramatically reduce any delays and speed up the funds' clearance time. Although international providers often offer great online functionality, it can be challenging to contact the company directly when the need arises due to time zones and call volumes.
It is recommended that you check with your service provider that they offer phone support during Australian business hours to ensure any issues are resolved in real-time.
5. Is my provider licence to offer an international money transfer service?
Within Australia, companies which offer money transfer services to the Philippines need to be licenced by the Australian Securities and investment commission.
A licence means that the Australian Security and investment commission have checked:
- The organisation is run by suitable people who have not been convicted of financial crimes.
- The organisation has significant capital reserves to operate.
- Proper arrangements are in place to protect your money.
The easiest way to check the legitimacy of a money transfer company is via their Australian Finance Services Licence (AFSL). The Australian Security and Investment Commission recommends only using organisations who hold an AFSL to undertake your international payments. All Australian-based forex companies must hold an Australian Finance Services Licence.
You can check that an organisation holds an AFSL via the ASIC website at: www.search.asic.gov.au/fsr/flb.html