How to use peer-to-peer money transfer services to your advantage

Save money and enjoy fast processing times when you send money overseas using a P2P money transfer service.

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By

Matthew Boyle

Edited by

Hannah Nissen-Ellison

Updated

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Although international money transfers were traditionally conducted via banks, it’s now possible to use peer-to-peer (P2P) banking services for transfers. These services provide networks where people can share access to currencies without the need of a central server, allowing you to cut out the middle man. As a result, the money transfer process is simplified and helps you save money.

You can use the table below to compare P2P money transfer services based on fees, minimum transfer amounts and transfer speed. If you’re interested in finding out more about a transfer service click “More”, or if you’d like to open an account click “Go to Site”.

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Optimized-How peer-to-peer international money transfers work

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How do P2P transfers work?

The process of a peer-to-peer money transfers (also known as a P2P money transfer) is simple. First, you need to select how much money you wish to transfer and where you’re sending it. You can then upload your funds to your money transfer provider, which will then convert your money at the mid-market rate and match you up with a person sending funds in the opposite direction. So if you’re sending money from the UK to the United States, you’ll be matched with someone sending funds from the United States to the UK.

This allows customers to cut out the middlemen in the transaction (the banks) and enjoy better exchange rates and lower transaction fees.

Example: Peer-to-peer vs Bank

Lauren wants to send £1,000 to her mother in the US. In order to find the best possible money transfer deal, she compares the services offered by her Big Four banks with a P2P money transfer service like Wise or CurrencyFair. The results can be seen in the table below.

Cost to send a £1,000Bank (NatWest)P2P money transfer service (Wise)
Amount transferred£1,000£1,000
Exchange rate1.171.21
Fee charged£5*£5
Total received (in USD)$1,170.30*$1,206.41

As can be seen in the example above, if Lauren sent her funds using a P2P service she would be sending an extra £36.11

*It is also important to note that when exchanging money from one bank to another, the receiving bank may also charge a transaction fee – meaning your savings could be even greater!

* This is a fictional, but realistic, example.

How do I compare peer to P2P money transfer services?

You’ll need to take the following features into account when comparing peer-to-peer money transfer services.

  • Exchange rates. The exchange rate is a very important factor when determining how much money you can save, so look for the company that offers the best rates. However, keep an eye out for companies that suck you in with great rates but then slug you with high fees.
  • Fees. Make sure you’re aware of all the fees attached to your transaction. Does the company charge a flat fee or is it a percentage based on the amount you’re transferring? Is the fee waived entirely if you transfer more than a certain amount?
  • Minimum and maximum transfer amounts. You’ll need to check how much a company will allow you to transfer, as minimum limits might be too high for some and maximum limits may be too little for others.
  • Transfer methods. Compare whether your transfer can be lodged only online, or whether there are phone and in-person options available as well.
  • Other extras. Compare whether providers allow you to lodge forward contracts — where you lock in an exchange rate for a transaction that will occur at a later date — or limit orders, which is where you lock in a minimum exchange rate and the transaction is not completed until the market fluctuates and your chosen rate is available.
  • Customer service. Is the company known for providing excellent customer assistance? Is there an online help centre and live chat available? Can you email or phone for support, and what hours are each provider’s support centre open?
  • What currencies are available? You’ll need to compare which currencies each provider offers and which destinations you can send money to.

Phone apps make it easy to pay (and collect) among friends

What are the pros and cons?

Pros

  • Better rates. Peer-to-peer money transfer services usually offer better exchange rates than banks.
  • Lower fees. You’ll typically pay less to transfer money via one of these providers than you would through a bank.
  • Fast. Peer-to-peer money transfer services regularly offer faster processing times than banks, with transfers often able to be completed within 1 business day.

Cons

  • Supported currencies. While more supported currencies are added all the time, as peer-to-peer money transfer providers are relatively new, they do not yet offer the same number of exotic currencies and transfer destinations as major money transfer services.

Are there any risks?

When you’re making an international money transfer, it’s important to keep an eye out for exchange rates and fees. Poor exchange rates can eat up a big chunk of your money if you’re not careful, while hidden fees can be a nasty surprise if you don’t read the fine print before lodging a transfer.

It’s also essential that you ensure you are dealing with a reputable company. Do your research before you commit yourself so that you don’t end up the victim of a dishonest provider.

Frequently asked questions

To make sure you get accurate and helpful information, this guide has been edited by Hannah Nissen-Ellison as part of our fact-checking process.
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Matthew Boyle is a banking and mortgages publisher at Finder. He has a 7-year history of publishing helpful guides to assist consumers in making better decisions. In his spare time, you will find him walking in the Norfolk countryside admiring the local wildlife. See full bio

Matthew's expertise
Matthew has written 285 Finder guides across topics including:
  • Helping first-time buyers apply for a mortgage
  • Comparing bank accounts and highlighting useful features
  • Publishing easy-to-understand guides
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2 Responses

    Default Gravatar
    HameedMay 9, 2018

    I wish to retire abroad as I am disabled and could get cheaper carers. I wish to sell my home for over half a million. However, I wish to make a trial and if not happy return to U.K. I would buy a one bed flat in U.K and with the other part transfer at least 300K to buy and accommodate myself abroad. Would the government permit 300,000 to be transferred? Thankyou inn advance for your esteemed counsel.

      AvatarFinder
      JoshuaMay 10, 2018Finder

      Hi Hameed,

      Thanks for getting in touch with finder. I hope all is well for you. :)

      It is most probable that you won’t be able to transfer 300K in one batch. Every international money transfer service company has their maximum limit. For this reason, you need to limit your transfers according to what the company allows.

      The government would allow you to transfer money provided that you meet their requirements or you don’t violate any law. It would be a good idea to directly get in touch with your chosen money transfer service company to know more about these laws or requirements.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!

      Cheers,
      Joshua

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