Cross-border money transactions are showing an upward trend in Malaysia. More money is being sent abroad and more is received from overseas. Yet for small and medium-sized enterprises (SMEs), overseas money transactions can be a tough issue to figure out.

Various financial institutions offer remittance services, from banks to foreign exchange brokers to new FinTech players, but every platform has its own cost structure. The many options can be confusing.

What are the factors to consider for overseas remittance?

Sending money abroad depends on you, really. Figuring out your overseas transfer needs will help you choose the right remittance provider. Some important factors to consider are:

(a) the amount of money you need to send
(b) maximum transaction cost you are willing to pay, and
(c) how often you need to send money. For instance, is it a one-off transaction or a periodic payment?

Depending on your clients, you would also need to consider how they prefer to receive the money and how quickly does the money need to get to its recipient.

Carefully reflecting on the above helps you choose the right provider. If you need to make regular payments, select a remittance company that can accommodate such an arrangement. Otherwise, the transfer fee per transaction will really add up over time.

Align your needs with an appropriate remittance provider

Banks are reliable and secure, but they are often not the fastest and cheapest method for cross-border transactions. Specialist remittance providers, such as foreign exchange brokers and FinTech startups, are faster and cheaper, and more convenient, but you need to research for platform legitimacy and security.

With the rise of FinTech, fully digital platforms can be the right solution for your overseas payments. You will have to spend time comparing providers, but if you pick a well-operated and professional remittance FinTech platform, the transfer process will be fast, cheap, and simple.

SMEs, in particular, can find FinTech platforms beneficial for their overseas money transfers as banking or broker fees can be too expensive for their budgets. One example is the partnership between Arba Travel, a Malaysian halal travel agency, and MoneyMatch, a local FinTech startup.

As a travel agency, Arba Travel needs to pay its international logistics partner over RM150,000 per month. Arba Travel’s prior remittance provider cost over RM5,000 in monthly expenses. MoneyMatch’s cost structure fit Arba Travel’s needs better, with a lower FX spread and cheaper fees – helping Arba Travel save RM2,000 per month.

To secure a trustworthy FinTech remittance provider, look for a platform that has been regulated. MoneyMatch, for example, operates with approval from Bank Negara Malaysia (BNM).

Proper due diligence

Ask the necessary questions: How long has the remittance provider been in business? Does it have good reviews and feedback on its website and social media accounts?

Check for transparency. A transparent remittance company will have no reservations showing its fees and costs clearly across all its channels, from its website to its social media to its media coverage. If it is not user-friendly to get the relevant information on costs to pay, or if the company’s terms and conditions are too lengthy, try comparing with another cross-border transaction provider.

Be mindful of the total remittance cost

Overall remittance costs include (1) foreign exchange costs, and (2) transfer fee per transaction. Be careful and check if the overseas beneficiary platform charges another fee on top. Be wary of hidden costs. When in doubt, try comparing with other remittance providers. It really doesn’t take too much time and will save you money in the end.

These days, there are more solutions for cross-border transactions than ever before. With research, you can find a cost-effective platform to accommodate your overseas transfer needs.

Interested in trying out MoneyMatch services after reading this? We have a surprise for you. Every FS user who signs up then makes a first-time transaction on MoneyMatch’s transfer platform can use the Discount Promo Code REFFunding to get RM8 waived from your transfer fees.