Sending money abroad isn’t always easy. One way to transfer money out of the US is via Xoom. Founded in 2001 and owned by PayPal since 2015, it’s become a popular way to send money abroad from the US. There may be an issue, though — it only offers transfers in one direction. You can’t transfer money into America using Xoom, only out of the US.
It’s easy to use Xoom online, and could work out cheaper than using some other services. But it’s worth checking out how much it’s really going to cost you, before you sign up and hit send.
Take a look through this article to see:
- A breakdown of Xoom’s costs and fees
- Xoom cost 1: Sending fee
- Xoom cost 2: Exchange rate markups (and a table to see how)
One of the reasons for the popularity of international transfer providers like Xoom is that banks tend to be inefficient and expensive when it comes to transferring money abroad. “Surely it’ll be cheaper to use a specialist service than sending an international wire,” you might think.
Well, you might well be right — but that’s not always the only reason, or even the main one, to use an alternative provider. One of the big reasons for Xoom’s popularity in particular is the straightforwardness of the service. You can get yourself set up in just a few clicks — or, rather, taps if you’re on a mobile device — and the interface is easy to use. By contrast, some banks might even make you go into a local branch which is far less convenient. Plus, Xoom often gets your money to its destination fast. Which is rarely a bad thing.
Another thing in Xoom’s favor is name recognition. They’re a well-known brand, and even better known is their parent company, PayPal.
So what about the costs? Well, these vary quite a bit, depending on where you’re sending the money, how you get the money to Xoom, and so on. And don’t forget about the exchange rate. Xoom says they offer “amazing exchange rates,”¹ but that’s a little vague. In regards to exchange rates, Xoom has a few things to say.
In their section on exchange rates, they tell consumers:
Exchange rates are based on world currency markets, which change all the time. Foreign exchange rates listed in newspapers or elsewhere are generally wholesale or inter-bank rates that are not available for individuals. Xoom is constantly working to provide you with the best foreign exchange rates.²
But then, if you read the fine print, Xoom says:
In addition to the transaction fee, Xoom also makes money when it changes your U.S. dollars into a different currency.³
In essence, on top of the fee they charge, Xoom squarely notes that they’re making money on the exchange rates they give you. Why? Because most everyone in the industry does it. In fact, on average, banks can mark up the exchange rate by somewhere between 4-6%.
It’s rare for transfer providers to actually offer the mid-market rate — what Xoom calls the wholesale or interbank rate.² However, as you’ll see further on, this is where Wise is an exception. Wise does actually offer consumers those generally out-of-reach interbank rates.
Regardless, though, before you press send, it’s worth comparing the exchange rate you’re offered against the rate you see on Google because it gives you an indication of how good the deal really is. Poor exchange rates can make just as much of a difference or even more than the fees shown upfront.
Anyhow, read on to get a better idea of what Xoom charges.
As Xoom notes on its website, their fees depend on a range of factors. These include the payment method — bank transfer, debit card or credit card — as well as the amount you want to transfer and how the money should be received. The fees also vary depending on which currency you’re sending to.
|Xoom international transfer||Feeⁱ|
|Cash pickup or delivery fee⁴||This may also affect cost depending on details|
|Bank account transaction fee⁵||Minimum of $0 or $4.99, depending on currency and transfer amount|
|Credit or debit card transaction fee⁵||Minimum of $4.99, but can rise substantially (like $298.49 for a transfer of $9,999 to Australia)|
|Exchange rate markup||Check it against an online currency converter because Xoom does note they make money on the exchange rate³|
ⁱ The figures in this table are indicative only — they might change, and could vary depending on which country you’re sending to.
Let’s get specific. Say you want to send US$1,000 from a bank account in America and end up with Canadian dollars in a bank account in Canada. For convenience and speed, you want to pay for it using your debit card.
This is what it’ll cost, according to the time the data was taken.
|Amount you want to send||US$1,000||US$1,000|
|Debit card fee||US$30.49||US$1.50|
|Exchange rateⁱⁱ||US$1 = C$1.2457||US$1 = C$1.2606|
|Total fees||US$30.49 (added on to transfer amount)||$8.45 (deducted from transfer amount)|
|Amount converted into CA$||US$1,000||US$991.55|
|Total transfer cost||US$30.49 + C$4.21||US$6.95|
ⁱⁱ Exchange rates taken at 9:00 UTC on April 14 2018
A quick note.
Xoom and Wise differ on one key issue, as you can see from the table. Xoom charges its fees on top of the amount you want to transfer, so to transfer US$1,000 you actually have to send Xoom more than that. Wise does the opposite, and deducts the fees from the amount you want to send, meaning in this case that you only have to part ways with $1,000 in total.
But as you can see from the final row, even though Wise ends up converting a slightly smaller amount into Canadian dollars, the recipient still ends up with more money. That’s because Wise uses a better exchange rate than Xoom. And, of course, with Xoom the transfer has actually cost you over US$30 more. So the real difference in cost is larger than it might look from the figures above.
How much can you send with Xoom?
It varies a bit depending on the precise details. Your own transaction history can play a part in this, for example, and so can whether you’re sending money to be deposited into a bank account, or received in person. In addition, some pickup options have limits.
But here are the limits in a general case:
|Xoom international transfer||Limit|
|Within 24 hours⁵||$10,000|
|Within 30 days⁵||$25,000|
|Within 180 days⁵||$60,000|
Xoom’s sending fees — transaction fees, as they call them — vary depending on a range of factors. One of the most important of them is how you make the transfer: via bank transfer, or with a credit or debit card.
For low transfer amounts, from $10-100 for example, you might find that these methods all cost the same ($4.99). But for higher amounts, like US$1,000 to CA$, it’s often cheaper to pay via your bank account and more expensive to use a credit/debit card. Sometimes, in fact, there’s no sending fee at all for a bank transfer, while the credit or debit card fees can shoot up quite steeply. But don’t let the notion of no transaction fee get you too excited. As you’ll see in the next section, the transfer still comes at a price which isn’t so clearly marked out.
As Xoom makes clear, the fee also changes depending on which currency you’re transferring into — and the receiving option. That’s how your recipient will get hold of the money, which might be via bank transfer, cash pickup or door-to-door delivery.
Not all methods are available in every country, but Xoom notes:
Fees may vary depending on your payment method, transfer amount, currency selection, and receiving option.³
Which means, in some instances, which method you choose could affect the cost.
As you’ll see from the table earlier, Xoom doesn’t charge a specific conversion fee. At least not something they call as such. Before you get too excited, though, that doesn’t mean there isn’t a cost rolled up into your exchange rate.
In fact, when they convert your money, they always make some money for themselves. They’re open about this — although they stop short of actually calling it a fee. It’s always worth reading the smallprint when you transfer money. On Xoom’s fees and exchange rate calculator they have a note:
In addition to the transaction fee, Xoom also makes money when it changes your U.S. dollars into a different currency.
Talking about transaction fees is fine, but that note makes it quite clear that Xoom has another way to charge you for each transaction — by using an exchange rate that’s effectively marked up.
To make it even more complicated, Xoom often tailors your exchange rate to how much you’re sending. If you send more, you’ll find the exchange rate will likely get better. Conversely, the exchange rate will regularly get worse for smaller amounts.
The mid-market rate, also known as the interbank rate or just that rate you find on Google, is the rate that banks tend to use when they trade between themselves on the global financial market. It’s calculated as an average of all the exchange rates going in both directions, so it works out as significantly better value when compared to the ‘sell rates’ that banks and money exchange companies tend to offer.
To calculate how much you’re actually losing on that exchange rate from Xoom through that spread, it’s never a bad idea to compare the rates Xoom offer to the rates you find on Google.
To see some examples, we put together a table with a sampling of 8 different currencies for $100. The rates were taken from:
- Google (exchange rates provided by XE)
- Wise (exchange rates independently provided by Reuters)
Each row of exchange rates was recorded within 1 minute to get an indicative snapshot.
|100 US dollars to||Google exchange rate (XE)ⁱⁱⁱ||Wise exchange rate (Reuters)ⁱⁱⁱ||Xoom³ exchange rateⁱⁱⁱ|
|Australian dollars||1.29964 AUD||1.29970 AUD (+0.00006 better)||1.2505 AUD (-0.04914 worse)|
|British pounds||0.711911 GBP||0.71197 GBP (+0.000059 better)||0.685 GBP (-0.026911 worse)|
|Brazilian reais||3.38430 BRL||3.38475 BRL (+0.00045 better)||3.311 BRL (-0.0733 worse)|
|Canadian dollars||1.26519 CAD||1.26500 CAD (-0.00019 worse)||1.2301 CAD (-0.03509 worse)|
|Euros||0.812836 EUR||0.81280 EUR (-0.000036 worse)||0.7862 EUR (-0.026636 worse)|
|Indian rupees||66.1601 INR||66.12500 INR (-0.0351 worse)||65.0204 INR (-1.1287 worse)|
|Mexican pesos||18.4685 MXN||18.46880 MXN (+0.0003 better)||17.753 MXN (-0.7155 worse)|
|Nigerian naira||359.989 NGN||359.00 NGN (-0.989 worse)||350.2 NGN (-9.789 worse)|
|Singapore dollars||1.31385 SGD||1.31385 SGD (exact same)||1.2926 SGD (-0.02125 worse)|
ⁱⁱⁱ Each of the 3 exchange rates in each row were taken for $100 with the currency pairing within the same minute. All rates in the table were recorded on Friday, April 20th 2018 between 11:58 and 12:06 UTC. Exchange rates on the global market fluctuate constantly, so current rates will vary from those shown above. It’s a good idea to do your own research and compare all 3 rates to see what kind of deal you’re getting when you send your own money abroad.
You can find the mid-market rate, which is constantly changing, on websites like XE or Google. Wise uses Reuters as an independent exchange rate provider to calculate their exchange rates, which, as you’ll see in the table examples above, usually amount to nearly the same or even better than you’ll find on Google.
So, then. What’s the price of a money transfer?
Well, if you use Xoom, it varies quite a bit, depending on a range of factors. Upfront fees aren’t all you’ll need to factor in to get those costs figured out. To make sure you’re getting a fair deal, you’re going to want to grab your calculator to factor in that exchange rate, especially.
Always beware of offers of zero transaction fee or “great exchange rates.” There’s almost always a cost. Unless you’re being offered the real mid-market exchange rate, you’re not getting as good a deal as you might think.
- https://www.xoom.com/india/send-money (April 20 2018)
- https://www.xoom.com/help/how-does-xoom-determine-exchange-rates (April 17 2018)
- https://www.xoom.com/money-transfer-fees (April 20 2018)
- https://www.xoom.com/en-us/us/send-money/options/payment (April 20 2018)
- https://www.xoom.com/help/how-much-money-can-i-send-from-xoom (April 20 2018)
| This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date. |
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