Skip to main content

Receiving Money from Abroad Using Currency Brokers

Expecting a payment from overseas?

Receiving money from abroad can, at times, be a complex process. Even more so as a beneficiary, you can fall victim to high fees, poor exchange rates, and lengthy transaction times. 

However, with the right knowledge, you can navigate this process far more efficiently to make sure you’re getting the most value from the payment you’re receiving.

In this guide, we focus on using currency brokers for receiving international money transfers, as they offer a more cost-effective and customer friendly approach compared to traditional banks.

Why Choose a Currency Broker?

Currency brokers specialise in foreign exchange and offer more competitive rates than traditional banks.

Whether sending or receiving money from abroad, you’ll receive a very personalised service, with access to your own dedicated account manager. 

Want to track your funds to know when they’ll arrive? Access instant support from an account manager who can provide you with real-time updates.   

Whether it’s the sender or beneficiary handling the currency exchange, choosing a currency broker means choosing lower fees, tailored solutions, and better service. 

It’s a win-win for all parties.  

Let’s look at how currency brokers excel in different areas, and what this means to the person receiving the funds. 

Understanding fees and exchange rates

When receiving money internationally, there are two main costs to be aware of, as they may affect how much you receive.

Transaction fees: Many providers will charge the sender a transaction or ‘transfer fee’. In some cases, this is a fixed amount based on various factors, such as how the transfer is made; online or over the phone. 

Other providers charge a variable transaction fee, which is calculated based on the total send amount and the currencies being exchanged. 

Exchange rate markup: Almost all providers will offer a different exchange rate to the interbank rate. The percentage difference is what is known as the ‘fx markup’ and is how most providers make the majority of their profits in processing overseas transfers. 

Whether or not these markups and fees will affect you as the beneficiary will depend on how the sender processes their transfer. 

They will either confirm the send amount, let’s say $10,000 USD as an example, or they will specify the exact amount you, as the beneficiary,r needs to receive, which might be £7,700 GBP.  

If the sender specifies the amount you will receive, then you don’t need to worry about these fees, as they will be paid for by the sender. 

But if they instead confirm the send amount, then the transaction fees and fx markup are deducted from the total funds you’ll receive. 

One of the many reasons we recommend working with a currency broker, is you’ll most often pay zero fees and receive some of the most competitive exchange rates on the market. 

By choosing a broker like moneycorp, who offer  zerofee transactions and provide rates closer to the mid-market rate, you’ll be ensuring you receive the highest amount possible of your transfer total.

Not only that,  but by registering with a currency broker, you’ll also avoid costly fees implemented by banks for receiving international wires. 

Using a broker with the right international footprint means both you and the sender can pay zero wire fees, and are only subject to a slight markup on the currency exchange.

The Role of Technology in Money Transfers

Advancements in technology have made the process of receiving money from abroad faster and more secure. 

Most online money transfer companies utilise technology to streamline the registration process to onboard new customers.

Despite the increase in speed, this process is secure as ever, as they leverage tools like ID document scanning and video recordings to quickly confirm your identity. 

Therefore, you can be confident that your sender is who they say they are so long as they’re sending your funds via a currency broker. 

Many currency brokers offer impressive online platforms and mobile apps, allowing for easy tracking and self-management of your funds. 

This technology also speeds up the transfer process, reducing the total time it takes from the sender initiating the transfer to you receiving your  money.

Hedging Your Transfer: A Smart Strategy

An important aspect of receiving money from abroad is managing currency risk. 

Currency brokers offer tools like forward contracts, allowing the sender to lock in an exchange rate for a set period of up to two years in the future. 

If you’re expecting to receive regular overseas payments from someone, currency fluctuations can result in you receiving a different amount each time. 

By entering a forward contract, you and the sender can secure a rate that you’re both happy with, providing you with stability as you’ll know the exact amount you’ll receive for each regular payment.

Hedging tools are not commonly available with banks or app only money transfer companies. 

Another reason why choosing to receive your money via a currency broker is the smart choice!

Predicting Future Exchange Rates

Sticking to the topic of currency swings, it’s always a smart question to ask ‘is now a good time to receive money from abroad? 

This of course depends on the current state of your relevant currency pair, and how much volatility that pair is subject to.  

Take the GBPAUD pair for example, which has had a 20% swing during the last 5 years. In 2023 alone, the rate increased by 13% in the space of 6 months! 

If you’re receiving funds and there’s an option to have your sender wait for an optimal time to complete the trade, you can greatly capitalise on a favourable currency swing. 

But how do you know when that will be? 

Well, while predicting currency movements is challenging, staying informed about market trends can help you decide when to initiate a transfer. 

But, you of course have to be familiarised with the key concepts of forex to do that.

This is where your dedicated currency expert can step in. 

Currency brokers often provide market insights and rate alerts, assisting you in making more informed decisions about timing your transactions.

There is another hedging tool known as a ‘limit order’ where the currency exchange only occurs when the desired rate is met. 

The account manager will then put the transfer on hold until this target rate is reached, so that you’ll receive your funds at a time where you can achieve best value.

These are just two of the several tools available with currency brokers to optimise the process of receiving funds from overseas, getting you the most out of the transfer.

The Process of Receiving Money Internationally Through a Broker

In order to receive money via a currency broker, you’ll need to set up an account.

With most leading providers, this is a pain-free process, you’ll simply need to enter some basic details and then breeze through a ‘know your customer’ ID verification check. 

Once you’ve provided the necessary documentation, your account will be activated and you’ll then be able to instruct the sender to transfer the funds to your new account. 

The broker then converts the funds into your desired currency and deposits them into your bank account.

Put simply, by opting to manage the currency exchange yourself, you can ensure you’re achieving the best possible rate and pay the minimum amount in fees.

To make this process even smoother and more cost effective, many leading currency brokers like OFX have local settlement accounts in place. 

In short, this means that even though a currency exchange needs to occur, if you’re using a broker that has a local account in the sending and receiving currency, you avoid making an ‘international transfer’ so you can bypass having to use the SWIFT payment network. 

Don’t worry, your account manager will be able to walk you through this step by step, and will provide your sender with all the necessary details, so it’s easier for everyone. 

Tax Implications and Compliance

It’s crucial to be aware of any tax obligations and reporting requirements when receiving money from abroad. 

Whilst currency brokers handle the transfer process, they cannot provide tax advice,  so it’s your responsibility to ensure compliance with local tax laws and regulations.

There’s a lot of nuance to each of the 4 main aspects that affect whether or not you’ll need to pay tax, so let’s take a brief look at these aspects and how you can learn more. 

Residency Status: Those deemed a UK resident will likely have to pay tax on foreign income (not savings, more on that below). The UK government has an online Statutory Residence Test that will determine your residency status. 

Income or Savings: To generalise, there are normally no tax implications of transferring money to the UK when you’re sending your own assets to yourself i.e repatriation of funds. However, any overseas income is more than likely taxable.

Source of funds: This is important as the UK has tax treaties with many countries, the details of which will likely affect your tax obligations for receiving your money from overseas. 

Remittances basis fixed sum option: Applicable to UK residents who are not domiciled here, this taxation method could work out more cost effective, particularly if you have substantial overseas income. If your tax liability would likely exceed £30,000 or even £60,000, then definitely do your research on the remittance basis.Conclusion: Best way to simplify the process of receiving money internationally cheaper

Whilst there are several ways to receive money abroad, using a currency broker is the smart choice as it offers numerous benefits, including better exchange rates, lower fees, and personalised service. 

Now you have a better understanding of the process, simply choose from one of the leading currency brokers to register an account. 

From there, you can reach out and discuss how to best utilise their tools and expert guidance. 

You’ll be ready to receive money from overseas, the right way, in no time.