The United Arab Emirates (UAE) is one of the world’s major business hubs, so it does not come as a surprise that the amount of people who need international money transfer services is rapidly increasing. Businesses are striving in UAE considering the ongoing global economic crises. In the face of such difficult times, UAE has made itself more alluring for businesses and investors. However, all these people have to learn the hard way that transferring money from or to UAE is expensive.
If we look at the global trends, there is a common denominator; the local and foreign banks often charge customers high rates when it comes to transferring fees. Together with the inconsistency of the exchange rate the transfer cost is expensive and difficult. As a result, everyone living in the country who wants to send out money looks for other ways to reduce the money transfer expenses.
Table of Contents
Expats in UAE
Expats in the UAE almost make up to 90% of its population, which naturally pushes the UAE to be the second-largest contributor of remittance to other countries in the world.
Central Bank data revealed that UAE’s outward personal remittances reached (around $46.06 billion) AED169.2 billion in 2018; a total increase of 3% over the last year. In 2018, Indian expats were the biggest contributors with 34.2% of all the remittances, followed by Pakistanis and Filipinos.
Outward remittances from the UAE have a far-reaching impact due to the country’s large expat population. According to the UAE Central Bank, this is benefitting families as far afield as India, the Philippines, the UK, and the US.
International Money Transfer Challenges for UAE
UAE has rapidly developed itself as a major business hub and as a place with amazing employment opportunities. As a result, the market for international money transfers in the UAE is extremely well established. Banks, exchange houses, and digital transfer services, as well as more informal – and illegal – routes, all operate within the country. These banks and exchange houses offer their services to business and private investors as well as people working in UAE. Around 60 Billion Dirham are annually sent out by the people working in UAE but it was reported that each individual can accumulate about thousands in transfer costs.
It is similar for all businesses, private investors, and expats. Most people have to give away a huge sum of money as a transfer cost. The expense of transfer cost depends on the location and magnitude of the transactions but they are never economical.
The foreigners doing business with the UAE face similar inconveniences. Especially for businesses transferring money from the USA to UAE as a lot of banks in their country do not offer the service and they have to use an intermediary bank which racks up the cost. The process is expensive and complicated as well.
The United States makes it even harder for forex brokers to assist you as the laws are extremely strict for forex brokerage firms. For these reasons, a number of them operate in the country and are licensed only in a handful of states.
The conditions are not as dire in the UK compared to the US when transferring money from the UK to UAE. A lot of international money transfer service providers operate in the country that offers improved rates compared to the banks. Anyhow, customers are reluctant to trust these companies and persist when it comes to using banks that charge high transfer fees and offer awful exchange rates.
It should be noted that the UAE Dirham’s currency conversion rate is always poor since banks consider it an exotic currency. As a result, it has a significant FX margin.
How to Reduce the Cost of Money Transfer to and from the UAE?
Using the services of an international money transfer business to tackle the problem of expensive money transfers to or from the UAE is a simple solution. These businesses provide online platforms that facilitate simple and inexpensive transactions that may be done in a matter of minutes. Depending on the supplier, the speed and cost of these transactions will vary substantially.
Currency brokers and international money transfer providers are commonly confused. They do not, however, permit derivatives speculation. Instead, they carry out large-scale currency exchanges. They can provide inexpensive exchange rates because of the enormous volumes and low expenses of operating online-based platforms. Transferring money from the UAE to another country, for example, will cost you at least 5%. These expenses can be reduced to less than 1% if you use an international money transfer firm.
However, you must keep in mind that this is a relatively young industry that is not yet well-regulated. As a result, you must select a company with caution. TorFX, Moneycorp, Currencies Direct, and OFX are the current market leaders. Each of these businesses is trustworthy and provides low-cost international money transfer services. However, their conditions and supplementary services are vastly varied. If you need to transfer money from the United Kingdom to the United Arab Emirates, for example, TorFX is the ideal option, regardless of whether you are a corporate or private client. OFX, on the other hand, focuses on foreign merchants’ corporate services and multi-currency accounts.
In order to come to the best conclusion possible, the first step is understanding your own business requirements and then finding a solution that matches your requirements.
How to Pick the Best International Money Transfer Company in UAE
Always begin by searching for lists of the top-rated currency service providers in the region. Then read customer reviews to see if the list is legit and accurate. For example, Client evaluations for TorFX are overwhelmingly good, indicating that the company is reputable and reliable. They also showcase the company’s strongest attributes. These include great currency guidance and savings, as well as quick transfers, in the case of TorFX.
Examining customer evaluations will also reveal the most common customer problems. Because no service is flawless, there will always be some feedback that reflects the company’s shortcomings. It’s up to you to figure out whether those poor reviews are enough of a reason to hunt for another international money transfer firm.
An infrequent transfer delay or return, for example, is not a major issue because such occurrences happen even in the most dependable systems. “Hideous fees” and large exchange margins, on the other hand, are severe concerns and reviews of such reviews suggesting that should be taken seriously.
Exchange Rate and Transfer Fee
It’s worth noting that the vast majority of businesses will promote that they have no fees. In most cases, however, only specific sorts of transactions are free. As a result, for any single international money transfer, you should always examine how much the organization will charge you and what exchange rate it will offer.
The greatest businesses are open and honest about their fees and exchange rates. They will provide a transfer calculator on their website to help you compare prices before using its services.
Consider Bonus Services
One of the primary advantages of these firms is that they not only allow you to send money from the UAE to other countries, but they also allow you to send money from the UAE to other countries. They also provide a number of services to help you mitigate the dangers of currency volatility.
Hedging, for example, will appeal to business clients and investors since it can shield you against unpredictably fluctuating foreign exchange prices. Some excellent organizations, such as TorFX, additionally provide a beneficial currency advising service. This service puts you in touch with a currency specialist who will teach you how to get the most out of every transaction you make.
When transferring money from the UAE to another country, be sure you don’t overpay.
In the United Arab Emirates, there are numerous attractive business opportunities. One of the first steps you should take is to reduce the cost of international money transfer services. Otherwise, merely paying for transfers will consume a large percentage of your earnings.
You can save money while also growing your business by using the services of international money transfer firms like TorFX. Even during instances of high volatility, leading currency experts can provide essential advice and recommendations to help limit risks.
It’s worth noting that the UAE’s international money transfer business is undergoing certain adjustments right now. As a result, while selecting a money transfer service provider, you must be extremely cautious and comprehensive in your study.