Advertorial How does remittance even work?

[ASEAN NOW Sales]

 

This post is an excerpt of a longer article.

 

How does remittance even work?

 

Sending money home from Thailand doesn’t sound like it should be a particularly complicated process, right? You have money here, you want it to be somewhere else - how difficult can that be? You’ve sent packages and postcards home so sending money must be a breeze in this Digital Age we live in. Well, if you’re reading this, you’ve probably already discovered that it really isn’t that easy.

 

Fortunately, there’s remittance. It is without a doubt the simplest, fastest and cheapest way to get around the huge amount of suspicion that banks and governments have when it comes to people moving money around the globe. How it works is frankly kind of bizarre, but the important part is that it does work.

 

What is remittance?

Be honest - before you started investigating how to send money home from Thailand, you hadn’t even heard the word ‘remittance’, am I right? And yet, it’s a word that has been in surprisingly frequent use since the mid-1700s. The word literally means “to send money”, though it’s a somewhat old-fashioned way of saying it. It has a couple of other definitions - the act of putting off repayments and a task officially assigned to a specific person or organisation - but it’s the act of sending money that we’re interested in.

 

However archaic the word for it is, remittance was used for sending US$689 billion from one country to another in 2018 (according to the World Bank) and the amount continues to steadily increase each year. It’s worth noting that the word ‘remittance’ can be applied to any process of sending money overseas. This can include anything from bank transfers to stuffing cash in an envelope and sticking a stamp on it. However, the term is increasingly being applied specifically to remittance services like Western Union, TransferWise and DeeMoney.

 

Remittance services - or Money Transfer Organisations (MTOs), to give them their official title - have some significant advantages over the alternatives. They are safer than sending the money by post, cheaper (and more practical) than taking the cash home in person and quicker than using the old SWIFT system.

 

What is SWIFT?

SWIFT is the Society for Worldwide Interbank Financial Telecommunication, which was formed in 1973 to handle the need to send money directly from a bank in one country to one overseas - for example, expats sending money from Thailand to their bank in the UK, US, Australia, India and elsewhere. The problem is that the system hasn’t really changed that much since the ‘70s and it certainly hasn’t become any quicker or easier.

 

Despite its name, SWIFT is anything but swift. In fact, a typical transfer can take up to three days under the best circumstances and over a week in the worst. And that’s not even factoring the time it takes to fill in the forms just to start the transfer in the first place. The paperwork involved is about as complicated as it can get because you’re not only going through your bank’s own procedures, but also the banking regulations of your country of residence and those of the place you’re sending the money to.

 

The reason SWIFT takes longer to send your money home from Thailand than it would take you to fly there is simple: banks don’t trust each other. They worry that the bank your money is going to might miss some important information in the transfer or that they will not use enough security to protect the money and information being sent. A certain amount of paranoia is understandable when you’re dealing with trillions of dollars and the financial security of millions of people, but that’s not a great comfort when you’ve got a bill that needs to be paid back home and you have to wait a week for the money to get there.

 

It would be more of a comfort if the system was at least infallibly secure, but it can’t even claim that. In 2016, hackers broke into the SWIFT system and flooded the Federal Bank of New York with wire transfer requests from the Bangladesh Bank. Most were blocked, but enough made it through to cost the bank US$101 million. Less than a fifth of the money has since been recovered.

 

It’s also worth noting that this system isn’t even guaranteed to work. Plenty of banks just refuse to process international transfers because of the procedural and legal hurdles involved. This is particularly true in Thailand, where the banking regulations are especially restrictive when it comes to money leaving the country.

 

Fortunately, there is the aforementioned alternative which, while a little complex in theory, is significant simpler in practise.

 

What makes DeeMoney so special?

Western Union is to remittance what Biro is to ballpoint pens and Google is to online searches - they are so synonymous that the brand name is practically the verb for the process. Between them and their competitor, MoneyGram, it’s possible to send cash from virtually anywhere in the world to virtually anywhere else in the world. You’ll even find Western Union offices in many tiny rural towns in Thailand.

 

These companies are fantastic at what they do - you don’t get that popular by being bad. However, what they do is a little limited. You will often need to send cash to a named individual, who will need to go into their local Western Union office to collect it. That’s great if you’ve got someone to send money to back home, but what if you need to deposit the funds into your own bank account? Unfortunately, this service is not always available from Western Union.

 

The added convenience of putting your money directly into your account is what has made TransferWise so successful. They’ve risen from being the new kids on the block to one of the biggest names in remittance in a handful of years, largely by being entirely online-based. Without offices to maintain and so many wages to pay, they can keep their costs down and keep their fees to a minimum. However, this added convenience comes at the cost of having to abide by local banking regulations. As has already been stated, Thailand’s regulations are unusually strict, to the extent that TransferWise are currently unable to send money out of Thailand.

 

That’s where DeeMoney comes in. We offer the same convenient service as TransferWise but, having started in Thailand and having dealt with the Thai banking code from the onset, we are able to transfer your money from Thailand directly into overseas bank accounts using the pre-funding/matching process.

 

This post is an excerpt of a longer article from DeeMoney, Thailand’s payment provider. Exchange and send money to 14 countries, register via our app, website or in store. 

 

Send money to Australia, Bangladesh,  Cambodia, China, India, Indonesia, Malaysia, Myanmar, Nepal, Pakistan, Philippines, Singapore, Sri Lanka, and Vietnam from just 150 baht per transaction plus a foreign exchange fee.

 

DeeMoney serves as a hybrid solution that’s similar to both Transferwise and Western Union, yet distinguishable from both. Whilst TransferWise offers only digital transfers, and WesternUnion mainly cash transfers, DeeMoney is Thailand’s only service to provide both means of transferring money.

[Classic Ray]

But still no alternative way to send money to the UK, US or Europe? 

[JDGRUEN]

A friend of mine recently sent several million baht to where he was relocating - Malta. It took about 3 days and the fee was reasonable. I do not know the method used but it seemed to be nothing unusual. 

[Scott Tracy]

It's not an article, it's an advert. I hope TV got some money for letting them promote their service.

[PeeJayEm]

I find WU is by far the fastest (1 day) and cheapest (£1.50) for account-to-account transfer Thailand. (At least from UK to  Bangkok Bank). The exchange rate was good too.

I no longer use my UK bank’s (Lloyd’s) money transfer instruction.

[Seeall]

1 hour ago, Scott Tracy said:

It's not an article, it's an advert. I hope TV got some money for letting them promote their service.

ha ha, I worked out its going to cost us 24% wow...

[DeeMoney]

On 12/29/2019 at 10:15 AM, Classic Ray said:

But still no alternative way to send money to the UK, US or Europe? 

Transfers to the UK and US are now available through our platform. ????

[Europeanguy]

I believe the subject of this post is money transfer from Thailand to another country (UK in my case). But allow me to come back to that later and start with pension or any other money transfer from the UK in Thailand. It is actually relevant to the other way round as you will read later. 

I use TorFX and Moneycorp for my pension transfers from the UK. Why both? They compete with each other and I get better rates everytime I quote the rates from the other. You can easily check on their website. They have some sort of switch in their systems (ie. (I guess) client, good client, extremely good client - or something like that). Differences easily reach 1 Baht on the exchange rates which represents 8,000 Bahts on a £8,000 quarterly transfer. It is a coincidence that both figures are the same - the calculation is (£8,000*37 Bahts)-(£8,000*38 Bahts) = 8,000 Bahts.

It goes to show how much these firms make on unsuspecting clients.

So worth keeping that in mind. Both companies provide easy online transactions and a manager that you can contact if there is something special going on (eg. a particularly large transfer like it was the case for buying my house here in Thailand)

Why is relevant to the other way round (Transfers from Thailand back to the UK)? Simply put because I understand that Thai banks will question and need proofs of where the money is coming from before transfering back to the UK.

Why do I worry about that? Because I have a house in Thailand and all is setup to get the money of a sale (in case of my death for example or other reasons) back to my 3 children in the UK.

So it is essential to keep the forms the banks call "MT103", a proof that the money comes from the UK. I attach one with personal information blanked out to give you an idea if you haven't come across it.

I left highlighted the clause "71A: OUR" which means "our costs" which in turns means that the Thai Bank will not charge anything(Moneycorp). Torfx has a different clause 71A which reads "71A: SHA" which means shared costs. Torfx tells me it is because of the bank making the transaction (Barclay in Torfx case). That means the Thai banks, in my case Bangkok Bank and Kasikorn, both takes 0.25% of the transaction with a ceiling of 500 Bahts.

That is insignificant compared with differences in exchange rates but it took me 2 months to get to the bottom of that and I thought it was worth sharing what I have found out.

When it comes to prepare how to bring money back in the UK, I still haven't come to the bottom of it. Both my Thai banks do not come up with any suggestions yet but I am working on it. I guess that will be longer to sort out and probably with little chance of making sure my children will get the money - which is the main thing I worry about.

I hope this information is of use to somebody and I welcome any corrections to what I am getting wrong or suggestions to move forward.  

If you have read this mIf If you have read this marathon long post so far, you will need a joke to finish: do not confuse MT103 banks forms with TM130 immigration forms, same lengths and letters and numbers in  a different order ???? 

Edited January 11, 2020 by Europeanguy
Same letters and numbers! not different