Bridging borders: How to send money to family abroad
16 October 2017
With year-end on the horizon, many of us have begun planning holidays, staycations or the logistics of travelling home to spend the festive season with family and friends – a prospect that is both exciting and stressful.
The reality for many in this global marketplace is that finding work or pursuing that dream job sees them stationed abroad, far from home and a family that is often dependent on their financial support. Whilst the more affluent workers and high-paid professionals handle this with ease, using official banking channels, a larger majority turn to unofficial methods to ensure their funds make their way home.
Hard-earned salaries are sent home via taxis or buses, in the hands of a friend, relative or trusted intermediary, but the unfortunate reality is that this is a risky method of transferring funds. If something goes wrong, there’s often very little that can be done about it, and a family in desperate need of money can be left in the lurch.
It’s a situation that seems inescapable for so many workers throughout Africa, but it doesn’t need to be this way. Absa has been working to develop a range of digital Cross-Border Payment solutions to allow anyone to move money across international borders, in the quickest and most convenient manner.
What is a Cross-Border Payment?
There is a basic distinction to be made between a Domestic Payment and a Cross-Border Payment, with the former being a simple payment made in a single currency, and the latter being somewhat more complex, with the payment being made in currency other than Rand. Rand, for instance, will be converted into the currency of the country to which it is being sent, as it crosses the border. When this is done through Absa’s official Cross-Border Payment channels, it is converted automatically at a set, market-related and competitive retail rate, it is also subject to commission including VAT, but there are no additional taxes and it is entirely safe and secure.
There are two ways to make a Cross-Border Payment with Absa. The first is a Western Union Transfer, which delivers cash directly into the hands of the recipient, via 500 000 agents in more than 200 countries – so basically anywhere in the world. The second is an electronic SWIFT Transfer, which sends funds directly to the recipient’s bank account. To make a Cross-Border payment online, customers do not need to provide any documentation. The most commonly used exchange control category for sending money is the ‘Gift’ category, and customers do not need to provide any documentation when this is used.
Why choose Absa’s Cross-Border Payments over informal channels?
There is a certain level of fear surrounding Cross-Border Payments and digital banking in general amongst the unbanked and informal banking sector. But ultimately, the benefits of using Absa’s official payment channels outweigh those of informal channels. Most importantly, the bank is responsible, in line with Absa’s customer protection promises, and legally liable for ensuring a Cross-Border Payment is completed. When making use of informal channels, none of these legal protections and guarantees are in place, making it inherently far riskier.
What are the other benefits of becoming an Absa customer and using official payment channels?
Absa also offers ‘International Savings’, allowing anyone to create foreign currency accounts to save in and instantly transfer funds between their local and foreign currency accounts. This will eventually be linked to the Cash Passport service, so a customer will be able to save currency in their foreign account and pay for services in the relevant country (such as hotels), directly from this account, when travelling.
Absa’s Foreign Currency Investment Account offers a great way for you to exchange your Rand into hard currency (dollar, euro, pound and another 15 currencies) until you need to use it. As opposed to exchanging your funds at once, you can protect yourself from currency volatility and add to your Foreign Currency Account, as and when you need to. A great way to save in foreign currency from home.
Planning a trip overseas anytime soon? You might want to check out some of our International travel tips:
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.