Remitting money from the UAE to your home nation - all you need to know

UAE expats remitting money to their home nation can find it hard to decide which service is the most efficient or cost-effective.

Rajeshwari from Sri Lanka sends money from UAE Exchange at Lulu hypermarket in Al Barsha in Dubai. Pawan Singh / The National

Sending money to your home country can be a complicated process. With a plethora of services to choose between - from banks to exchange houses and online brokerages - it can be confusing for the remitter to know which service is best. Here we answer some frequently asked questions to help simplify the process for you:

Why do I need to pay fees to remit money?

The fees you pay to transfer money - either taken in the form of a commission that’s factored into the exchange rate or as a separate fee – covers a number of costs. If you send month through an exchange house, it needs to send it to a bank that it has a relationship with in the country you are sending it to. It cannot transfer the money directly to a bank account in another country if it doesn’t have a relationship with that bank. The intermediary financial institution is called a correspondence bank. The exchange house or bank you are sending through will also need to cover it’s business costs as well as making a profit. Customers can choose whether to pay the fee upfront, split it between themselves and the beneficiary or have the beneficiary pay the charges.

Is there a good time to send money?

Some experts say it is best to transfer money during the Western working week - from Monday to Friday - to ensure you get a live rate. Preety Bhambri of the financial comparison website moneycamel.com advises sending money on week days in the recipient country and never on public holidays to ensure you get a good rate. However, foreign exchange prices fluctuate constantly and many people who aren’t obliged to transfer funds on a monthly basis or other timed intervals can hoard dirhams to wait for the best rate. In the past two years, for example, the US dollar, to which the dirham is pegged, has been strengthening against all of the world’s major currencies, meaning that most expats have been getting more bang for their buck. It’s extremely difficult to predict currency movements but many countries around the world have been devaluing their currencies to make exports more attractive and at some point these currencies may start to strengthen again as economies become stronger.

How do I get the best deal?

Compare, compare, compare. It’s important to shop around to get the best rate and to pay as little as possible when sending money back home. Also make sure that the rate you agreed upon is the rate actually used in the transaction as some online exchange houses can indicate one rate on their website and another when you actually log into your account. You can double check on the receipt once the transaction is processed.

What documentation do I need to send money?

A bank will already have your information logged and will simply need the details of the bank you want to transfer money too, such as the IBAN number, Swift code, bank address and contact number. Most exchange houses will only ask for an ID card or passport. However online brokerages may ask for copies of a tenancy agreement, utility bills and even evidence of the UAE account the money is sourced from to confirm UAE residency. Financial service providers are under increasing pressure from market regulators to ensure they know who their customers are to prevent money laundering and other criminal activities.

Is there a more effective way to make regular payments?

Those sending monthly remittances – for example to pay a mortgage outside the UAE – can consider a forward contract. Online brokerages allow you to agree an exchange rate in advance so you know exactly what rate you will get on the day you make a transfer. Locking in an exchange rate is beneficial as it manages the risk you are exposed to from significant currency fluctuations.

How about transferring to someone with no bank account?

If you want to send money to a remote location or to someone who doesn’t have access to or hold a bank account, then the best channel is through international remittance companies like Western Union and MoneyGram, according to Josiane Assaad of the financial comparison website Souqalmal. “You can also take advantage of loyalty rewards that most companies offer, for example Western Union offers WU rewards,” adds Mr Assad.

Any other tips?

Yes, those making an online remittance transfer from their bank are often charged a lower fee than those that making the same transfer in the branch. An HSBC account holder, for example, is charged Dh50 for an international online transfer compared to a Dh100 fee for the same transfer made in the branch or by phone. Also, if you frequently remit money, Ms Assad advises staying abreast of periodic campaigns and promotions that banks and brokers run that can make sending money cheaper. [e-mail]