I had a sum of money held in an account at the Bank of America. My problem was how to get this money back to Australia quickly and cost-effectively. Due to the said bank instituting some very strict regulations (or maybe it just hasn’t moved into the 21st century) and a very modest weekly withdrawal limit, my options were limited. I thought simply closing the account might be the easiest way if they’d wire the balance of my account to my nominated bank. But alas, I cannot close the account remotely (via phone, letter or fax) unless the balance of the account is zero. I have a cheque book which is exempt from the withdrawal limit, but it takes nearly a month for an international cheque to clear these days and my local Australian bank suggested I find an alternative means of getting my money home. The Bank of America’s online banking system allows transfers only to accounts held with other US banks, and even then only to accounts that are held in your name. I could have used my cheque (or check, if you want to use the American spelling) card, but the withdrawal limit meant I’d have to transfer my cash in installments, with each transaction incurring foreign exchange charges as well as any other charges the banks wanted to tack on. So, I started investigating alternative methods.
One option was to use PayPal. This solution is quite attractive, because the fees are quite competitive, and I can hook up both my US and Australian bank accounts to a single PayPal account. By setting up my PayPal account to directly debit the funds from my US account, and then to credit my Australian account, I could get my cash home fairly cheaply. Direct debits, like cheques, seem to be exempt from the withdrawal limit. The costs in using PayPal are incurred in the conversion from US dollars to Australian dollars. There are no fees, per se, for withdrawing money from your PayPal account, as long as you withdraw above a certain threshold amount. Furthermore, there are no withdrawal limits once you’ve verified your identity.
I looked into using traditional telegraphic transfer companies such as Western Union, but that was a no go since there was no way to transfer my funds from the Bank of America to the wire service.
Moneybookers was another potential option, but again, I could not get my funds from the Bank of America to Moneybookers, because Moneybookers’ Bank Account is held in Frankfurt. Besides which, due to the restriction that I must own any account I’m transferring money to via SWIFT or whatever, Moneybookers turned out not to be a viable alternative.
I also came upon OzForex, who are an online foreign exchange service. You open an account with them, and you can buy and sell almost any currency through them. I needed to sell US dollars and buy Aussie. I told them I needed a US account into which I could deposit my money, and it turned out they had one (at this point I wasn’t aware of the Bank of America transfer restrictions; in fact, I’d called up Bank of America to confirm that I could transfer money to someone else’s account held at another US bank and they said it wouldn’t be a problem!). Of course, it turned out I couldn’t transfer money to their US account because I didn’t own that account. But, I thought, what if I could transfer money to their account via PayPal, thereby taking advantage of OzForex’s excellent rates and low fees, and avoiding any PayPal fees? Unfortunately, anti-money laundering regulations prevent OzForex from accepting deposits from a PayPal account, since PayPal is essentially acting as a third party. Nevertheless, I found OzForex’s customer support to be absolutely fantastic. They were on top of everything, and tried to ensure that everything was progressing smoothly. When you trade currency through OzForex, you’re more or less exposed to spot market rates, meaning OzForex’s rates are more volatile than the rates you get at banks, who generally leave their rates unchanged for hours at a time. This means it’s possible that at any given moment, you might be better off converting your money through a bank. But the thing is, with OzForex you can credit your account, and then have the conversion take place at a time of your choosing. You can even make a limit order, which means you instruct OzForex to buy or sell one currency for another at a target rate that is better than the current spot rate. This allows you to beat the banks on most occasions. Their testimonials page makes for interesting reading. If ever I have a need to transfer money internationally in the future, I’ll be sure to remember OzForex.
In the end, the pure PayPal solution won out. A bit more expensive than if I’d been able to use OzForex, but cheaper and much faster than transferring the money via cheque or ATM withdrawal.