The United Arab Emirates UAE is the world’s largest outbound remitter to all countries around the world with a high expat population that come to the country to leverage tax free salaries.
As all expats are bound to go back to their home countries one day, they prefer to save money in their own currency than in the Emirates for a number of reasons.
The good part of being an expat here is that, you have just too many options to send your hard earned Dirhams overseas. The money transfer industry is just too competitive here.
According to recent data from the Central Bank of the UAE, “Dhs 39.9 billion were sent to home countries by residents in the fourth quarter of 2018 with Indians sending 34.2 per cent of total remittances in that period followed by Pakistan and the Philippines. The competitive industry and advancement in technology helps keep the costs down as well as make the process of remittance more convenient and faster.
However, it’s not as simple as it may look. There are things you are supposed to cross check to get the best rate and not get charged with hidden charges, high fees and high currency exchange rates that pinch.
Further in this feature, we discuss a few things to be careful about when sending money back home, as well as different ways of remitting the cash overseas.
Here’s What To Be Careful About:
Before we jump to the options, let’s get familiar with the common things we need to know. Sending money overseas is not a tough task, however, a little research can pay well.
Stay Updated On Current Exchange Rates
It is important to know the current exchange rates of your currency to evaluate the transaction costs beforehand. Download apps such as XE which update the latest currency exchange rates. This little step will help you make a decision on when is the right time to send money back. With the same amount of Dirhams, you can send more money back home in your own currency.
Carry Out Legal Research
There are a number of exchange houses which offer attractive rates to lure customers, but are not registered with the regulatory bodies. Transferring money through these exchange houses is quite risky, therefore do proper research to avoid losses and falling into the trap of fake money exchange houses.
Evaluate Each Option
Once you have all the remittance options handy, evaluate and compare each option. Discuss the costs, negotiation parameters and assess the time it takes to transfer money before you make a final choice.
The Options To Send Money Back Home
There are three popular ways to send money from the UAE- bank transfers, exchange houses and online transfers.
It is the most popular way to send money overseas. According to the Central Bank report, it accounts for almost 75% of remittance transactions. There are many registered exchange firms such as UAE Exchange, Al Ansari Exchange, LuLu Exchange, Al Ghurair Exchange, Al Fardan Exchange, GCC Exchange, Al Ansari, Wall St Exchange, Western Union, and many more.
These exchange houses offer different transfer services-including bank-to-bank, cash-to-cash and transfers to wallets, however the best deals are often found on bank-to-bank transfer rather than cash.
There is usually a flat fee per transaction, which generally ranges and depends on the country of remittance and exchange house. Compare the rates before you choose any service to send money back home.
Where possible, it is recommended to secure a better exchange rate by sending large amounts in one go rather than small amounts multiple times. Do your maths before you send money.
Also, as mentioned, there can be hidden charges at some exchange houses so pay close attention to what an exchange house is offering and ask as many questions you can to get the clearer picture. Not every exchange house will have hidden charges, it’s just advisable to ask questions. You can also try to bargain down to the best possible rate when sending money through an exchange house. If you are remitting huge amounts or the exchange house is looking to make you a regular customer, they might offer you a better rate than what they display in store.
As any bank has better rates for their priority customers, likewise the exchange houses also offer better rates than the regular ones to their priority customers. The exchanges offer customers to be a member of their loyalty programme that offers benefits including competitive rates, a dedicated relationship manager, a doorstep service and priority treatment when you visit a branch. The entry to the loyalty programme depends on your salary and eligibility varies between exchange houses.
Banks are generally considered to be the safest option as the level of risk and fraud involved is almost nil. In the past few years, UAE banks have rolled out special services catering to their customers looking for options to remit money. These products give more competitive rates when compared with an exchange house. Emirates NBD launched its DirectRemit product in 2014, which can be used to send money to the top listed countries of remittance: India, Pakistan and the Philippines, in as little as 60 seconds. The bank rolled out its service in the UK as well in 2018. Likewise Mashreq Bank offers Quick Remit services which can be used to send money in seconds to banks in India and Pakistan.
Experts also suggest to open bank accounts with international banks in Dubai that have a branch in their home countries to get more attractive transfer deals.
Another popular method of sending money is through online international platforms such as Currency Fair or Moneycorp. These platforms receive Dirhams in the overseas bank account and can transfer them to your local account in local currency at a cheaper rate than a regular international transfer. The margins are more attractive than banks offer.
The flip side is the process is slower than a bank and exchange house and you need to make sure that your bank in the UAE transfers Dirhams to the overseas account rather than exchanging them automatically to your local currency.