December 15, 2002
Your Money Deal of the Week; Send Cash Online as the Perfect Present
Cut the cost of currency transfer, says money-saving expert Martin Lewis
PRESENTS wrapped with the skill of an origami master and subtle tinsel bows
win the emotional prize but a gift of cold, hard cash is tough to beat.
A nd money is the perfect present for friends and loved ones overseas.
But anyone trying to send cash abroad has to walk a tightrope of expense or
risk. So this week's deal is a high-tech solution that could cut the cost of
sending money by more than 90 per cent. Western Union and Moneygram still
monopolise instant international money transfers for those without bank
accounts but they are costly. Electronic bank transfers and international
bankers drafts are slower options, although both are still pretty expensive.
However, there is a cheaper and faster solution. PayPal is an e-commerce
system owned by US online auction company Ebay.
Designed for auction payments, it is also possible and legal to use it to
send money overseas. Similar services from Yahoo, Egg and NatWest only allow
payment transfers w ithin the UK.
The sender will need a credit card to transfer the money from the UK and the
recipient must have a bank account. Both also need an e-mail address but a
free Internet address from w ww. hotmail. com set up for the purpose w ould
do the trick.
Register online for a free PayPal account. Then enter the amount to be sent
and the e-mail address it should go to. The recipient receives an e-mail
prompting them to set up a PayPal account too. They can then choose to have
the cash paid into their bank after three days or keep it with PayPal to
spend on the Net. The minimum w ithdrawal amount is $ 25 (GBP 16).
PayPal only operates in North America, Scandanavia, the UK, France,
Germany, Spain, the Netherlands, A ustralia, New Zealand, Japan, Singapore
and Hong Kong but is expanding rapidly. Exchange rates are similar to those
offered on High Street credit cards and usually better than in the local
bureau de change. Money can be sent in pounds, dollars, Canadian dollars,
euros or yen. Transactions sent to a country that doesn't use one of these
currencies should be done in pounds.
The cost is made up of a few elements but is low overall. Until February
2003 PayPal will only allow UK credit card - not bank account - payments and
the recipient has to set up a premier account which means a small cost. This
is 20p plus 2.9-3.4 per cent, depending on the currency, and an additional
0.5 per cent international charge. There is also a withdrawal fee for
transferring the money to a bank of about GBP 1, although this is free in
the US. And, as with any international transfer, the bank at the other end
may also make a charge.
PayPal transfers cost a fraction of others. Money transfers at Western Union
start at GBP 8 and then rocket.
The cost of electronic transfers and international bankers drafts depend on
the bank but most only allow customers to use these services, so shopping
around is difficult.
Post travellers cheques and there is commission to pay and generally poor
exchange rates, plus, as with sending bankers drafts, it can take some time.
The Post Office recommends using its insured postal service and it says
never to send cash.
The savings with PayPal are huge. To send GBP 30 to the US, PayPal costs GBP
1.37 or just 5 per cent. Use Western Union and it adds GBP 12 or an extra 40
A Lloyds TSB bankers draft with insured postage would take the cost to GBP
16, an extra 60 per cent, while an Alliance & Leicester electronic balance
transfer is GBP 25, nearly doubling the cost.
Overall, for GBP 30, PayPal is more than 90 per cent cheaper than any other
option. It works for larger sums too.
Copyright © Express Newspapers 2002. All Rights Reserved.