In this article I tell you my experience sending money to Russia using different methods: bank transfer, Western Union, PayPal and TransferWise. You will see how the price differences between one method or another are very noticeable.
On several occasions I have had to send small amounts of money to relatives to Russia or Georgia. Sending money abroad always means paying commissions, and if you do it to countries of the former USSR (Russia, Ukraine, Georgia, Armenia, Azerbaijan, etc.) these commissions are even higher.
Let’s analyze what it costs today to send $300 to Russia, with the recipient receiving the money in rubles, by comparing 3 methods:
- Traditional methods: such as WesternUnion or MoneyGram.
- Online payment services: such as PayPal, WebMoney or Yandex Money.
- P2P money transfer services: like TransferWise.
For comparative purposes, all calculations were made on February 14, 2017.
The first thing I have to say is that for small amounts of money, a bank wire transfer is the worst method, since the fees charged by the banks (from both the issuing bank and the receiving bank in Russia) are usually very high. For this reason, I have stopped using bank transfers for sending money to Russia for many years, since these are very expensive.
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1. Traditional methods: WesternUnion or MoneyGram
WesterUnion or MoneyGram are specialized companies in sending money abroad. They have an extensive network of offices, which I have used on different occasions, though they are now offering the money transfer service through their Internet website.
Well, sending $300 to Russia through Western Union has a high commission if you send it by bank transfer ($23) and very high if you do it by debit or credit card ($32), but it applies a favorable exchange rate (close to the real exchange rate). This means that if you send $300 to Russia today, you would be charged an exchange rate of 57.6589 rubles per dollar, so that the recipient in Russia will receive 17,297.70 rubles.
2. Online payment services: PayPal, WebMoney and Yandex Money
PayPal is a payment method already known by virtually anyone, which allows you to buy in many websites, as well as transferring money between users by email. Other similar methods implemented in Russia are WebMoney and Yandex Money.
PayPal, contrary to what many people think, is not an economic method to send money to Russia (or to countries in which it implies a currency change), mainly due to two reasons:
- Firstly, when it comes to international personal money transactions to Russia, the commission is not free, as PayPal charges a fee of 0.5% if it’s being sent from a bank account, and 3.9% if it’s sent from a credit card, whether debit or credit. In the case of commercial transactions, commissions are even higher. You can consult the commissions at this link.
- Secondly, when you send dollars to a recipient in Russia, Paypal applies a rather unfavorable exchange rate. Today it applies an exchange rate of 55.5599 rubles per dollar.
Thus, if you send $300 to a relative or friend of Russia, the commission would be $1.5 ($12 if you use your bank card), but your friend or Russian family member would receive in its Paypal account a total of 16,667.97 rubles. Also, keep in mind that if the recipient wants to transfer this money to its Russian bank account, it would have to wait a couple of days to have the money available.
3. P2P Money Transfer Services: TransferWise
Recently, several financial peer to peer (P2P) online services have emerged, offering money transfers with low commissions and that apply the actual exchange rate of the moment. The most popular of all is TransferWise (from the creators of Skype).
For example, sending $300 to Russia today has a commission of 1.49% (4.47 USD) but the good thing about TransferWise is that it applies an exchange rate close to the real exchange rate (57.23350 rubles per dollar). As a result, the recipient in Russia receives 16,914.22 rubles (having discounted already the applied commission). In addition, note that TransferWise allows you to make the payment by card without additional costs:
In summary:
- You send $300 and the recipient in Russia receives 17,297.70 rubles.
- In addition, you have to pay a commission ranging from $23 to $32.
- You send $300, and the recipient in Russia receives 16,667.97 rubles.
- In addition, you have to pay a commission that varies between $1.5 and $12.
- You send $300 and the recipient in Russia receives 16,914.22 rubles (with the commission of $4,47 already discounted of this amount in rubles).
Conclusion: Western Union applies a good exchange rate but high commissions; Paypal applies a bad exchange rate and acceptable commissions; and TransferWise applies a good exchange rate and low commissions.
All calculations were made on February 14, 2017.
Have you sent money to Russia or to countries of the former USSR? You can tell me your experience below.
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