The Ultimate Money Remittance Guide for OFWs

Published: October 30, 2017 | Updated: July 23, 2021 | Posted by: Venus Zoleta | Personal Finance

Money Remittance Guide | Moneymax

If you’re a Filipino working abroad, every dollar (or any foreign currency you’re earning) counts. Without proper financial planning, the money you’ve worked hard for so many years could quickly go down the drain. This is why you have to manage your remittances. It starts with knowing which money transfer service can help you save money and send your remittance fast and safely to your loved ones in the Philippines.

Before you choose a company to entrust your hard-earned money with, it’s important to compare your options[1] first.

Factors to consider when sending money to the Philippines:

  • Cost – How much will it cost you to send money to the Philippines? This includes the exchange rates, service fees, and any hidden charges.
  • Speed – How soon will your money be transferred to your family abroad? Some remittance channels can transmit it in just a few minutes, while others take several days.
  • Convenience – Is the money transfer service easily accessible to you and your recipients back home?
  • Reliability – Can the provider transfer your money safely?

International money remittance service providers come in three types:

  1. Traditional money transfer operators
  2. Banks
  3. Online money transfer services

Let’s discuss each of these options in detail:

1. Traditional money transfer operators

money remittance to the PhilippinesPhoto by Ralf Roletschek via Wikimedia Commons

Also known as traditional cash agents, money transfer operators have physical locations worldwide that allow people to send and receive cash in person or online.

  • Pros: Very fast and convenient service
  • Cons: More expensive than other remittance channels and more prone to fraud and scam because in some cases, only the control number is required to claim funds
  • Ideal for: Sending funds for emergencies and to people who don’t have a PayPal account, a bank account, or access to internet

1.1 Western Union

Western Union is one of the best platforms to send money to the Philippines, being the world’s largest remittance service provider with over half a million locations in over 200 countries.

Transaction fees depend on the chosen turnaround time, remittance amount, and exchange rate of a foreign currency in the Philippines. You can save more by transferring money online using a bank account, but it can take several days to transfer funds.

Western Union currently offers a zero transfer fee for money transfers up to $5,000, but this applies only to remittances via the website or mobile app using a bank account to an eligible bank account in the Philippines.

Western Union offers same-day, next-day, and other cash delivery options.

International money transfers can be done over the counter or via the website or mobile app. Senders can choose to remit by bank account, credit card, debit card, or cash (for over-the-counter transfers only).

Receiving funds is just as convenient and flexible. Western Union has over 8,000 agent locations in the Philippines, allowing cash pickups in malls, pawn shops, supermarkets, and drug stores. Recipients just need to present a valid ID, the tracking number and receive a money transfer application form.

Its website has a tracking tool that enables recipients to check the status of the money transfer by entering the tracking number and the sender’s or receiver’s full name.

1.2 MoneyGram

MoneyGram is the world’s second-biggest money transfer company with around 350,000 location in more than 200 countries.

MoneyGram’s rates are quite as expensive as Western Union’s, charging slightly lower fees for certain types of money transfers. Like its closest competitor, MoneyGram’s service fees depend on the remittance amount and exchange rate of a foreign currency in the Philippines. The maximum amount that can be sent per transaction is $2,999.

Funds sent to a bank account in the Philippines will reach the receiver within the same day. When sending money for cash pickup, it can be received within minutes.

MoneyGram’s options for money transfer and pickup services are comparable with Western Union’s. Money remittances can be picked up from over 10,000 branches in the Philippines. Online money transfer can be paid via a U.S. checking account, credit card, or debit card. Funds can also be transmitted through nearly 7,000 ATMs in the country using LBC cards.

Like Western Union, MoneyGram also allows receivers to track the status of remittances on its website.

The Western Union vs. MoneyGram Comparison

Using the online fee estimators of Western Union[2] and MoneyGram[3], you can compare the differences between the two leading money transfer companies. The table below shows the cost and speed of sending $1,000 to the Philippines based on the type of money transfer and the payment methods.

The fastest and most expensive option is sending money in person for cash pickup through both providers. On the other hand, the cheapest and slowest way to send money via traditional cash agents is to pay with bank-to-bank transfer to the Philippines.

2. Banks

The country’s major banks such as BDO and BPI have branches in certain countries to facilitate OFW remittances. Sending bank remittances is fairly simple—just deposit money at the bank, and your family can easily withdraw the money from their bank account. Bank-to-bank transfers are the safest remittance options to the Philippines, as all major banks follow strict regulations by the Bangko Sentral ng Pilipinas.

  • Pros: Secure way to send money to the Philippines; cost-effective because of the usual fixed rates regardless of amount sent
  • Cons: Not an option for sending money to people without a bank account
  • Ideal for: OFWs who work in a country where a major bank has a branch and send money to people with an account with the same bank

2.1 BDO

Service fees vary according to remittance type, the country of origin, and whether the receiving bank account is a peso or dollar account. Remittances from Hong Kong, for example, range from HK$ 20 (US$ 2.56) to HK$ 40 (US$ 5.13).

The fastest way to send money via BDO is through a BDO Kabayan savings account, which is credited in real time. If the remittance is sent to another local bank account, it takes 1 to 2 days for peso accounts and 3 to 4 days for dollar accounts. Remittances for cash pickup can be claimed within an hour. Door-to-door deliveries take the longest at 1 to 2 days for Metro Manila and 4 to 7 days in the provinces.

BDO offers two main services for OFW remittances[4]: Credit to BDO Kabayan Savings Account and Cash Pick-up Anywhere. The BDO Kabayan savings account is like a regular savings account, except that it has a zero maintaining balance (as long as at least one remittance is sent per year). The cash pick-up option is a good alternative for recipients with no BDO account; remittances can be claimed from one of the 1,000 BDO branches nationwide and SM malls that are open from 10 a.m. to 7 p.m. 7 days a week.

2.2 BPI

Service fees vary based on the country where you’re sending money, the type of remittance service, and the speed of transmission. When sending funds from Hong Kong, for instance, BPI charges HK$ 20 (US$ 2.56) to HK$ 30 (US$ 3.84).

For sending funds between BPI accounts, remittance can be credited in real time. If you’re sending from a BPI to another bank account, the funds will be received within 2 to 3 banking days. Funds are ready for cash pickup at any BPI branch on the next banking day. Door-to-door deliveries take the longest: next day for locations within Metro Manila and 3 to 5 days for outside Metro Manila.

BPI has overseas locations in Hong Kong, Japan, UAE, and the UK. It also has remittance partners in Australia, Canada, China, France, Germany, Saudi Arabia, Kuwait, Qatar, Singapore, and the United States, among others.

OFW remittances sent via BPI[5] can be received in the Philippines through direct credit to a BPI or another local bank account, cash pickup, or home delivery.

BDO vs. BPI remittance services comparison

If an OFW in Hong Kong is sending money to the Philippines, here is a comparison of the cost and speed of money transfer between BDO and BPI.

Money transfers between accounts in the same bank are the cheapest and fastest option, while door-to-door deliveries are the most expensive and slowest, especially in locations outside Metro Manila.

3. Online money transfer providers

remittance Philippines

Online money transfers are considered the fastest, cheapest, and safest remittance services because transactions are done digitally, thus reducing the risk of errors and theft.

  • Pros: Fast and convenient transactions
  • Cons: May be prone to online fraud and malware attacks
  • Ideal for: Internet-savvy users

3.1 Xoom

Owned by PayPal, Xoom is one of the popular web-based money transfer options for many OFWs based in the United States. Up to $10,000 can be remitted in a single transaction.

Remittance fees vary depending on the amount. Payments made via a U.S. Bank account has the lowest fees. Having funds (in PHP) delivered comes at no cost.

How fast money is transferred via Xoom depends on the transaction payment method and the delivery option. Most remittances are sent just within minutes or less than an hour, while door-to-door deliveries take 6 hours at most to Metro Manila and 1 to 2 days to provinces.

On the other hand, there are customer complaints on the Consumer Affairs website about Xoom putting money on hold for too long, asking for additional information or proof, and asking too many questions.

Money can be transferred from PayPal, credit card, or debit card. To send money to the Philippines, you have to create a Xoom account, which is free and easy.

Xoom has more than 10,000 pick-up locations in the Philippines, including major banks, grocery stores, and pawnshops. Remittances can also be received through home delivery and bank deposit to BDO, Metrobank, RCBC, and PNB.

For secure transactions, Xoom uses data encryption[6] to protect customer data. The online remittance provider is also regulated by U.S. government agencies.

Xoom’s money-back guarantee refunds money in case it doesn’t get to the intended recipient.

3.2 TransferWise

An online money transfer provider based in the UK, TransferWise is known to be cheaper than other remittance service providers. It uses peer-to-peer technology that matches currency flows, meaning if you convert dollars to pesos, the provider will find a person who wants to convert pesos to dollars. This way, exchange rate costs are reduced and hidden charges are avoided.

The money transfer rate is 1% for the Philippine peso. Depending on the amount to be sent, TransferWise fees start at $5 to the Philippines.

OFWs can benefit from the best exchange rate this online provider offers. Unlike banks and other remittance centers, TransferWise doesn’t charge an exchange rate markup. It makes money only from charging transfer fees.

The downside of this low-cost remittance channel is its slow delivery that takes more than a week. It doesn’t offer a same-day delivery option.

Like other online channels, creating an account is fast and easy—you can use your email address or link your Facebook or Google account to register with TransferWise. After your first money transfer, your next transactions can be done with just one click because your recipient and payment information is already saved in its system.

The service, however, is available only for bank-to-bank transfers and those received in Philippine pesos.

TransferWise has security measures in place, such as a two-step login and verification procedures to protect user accounts against unauthorized access.

Xoom vs. TransferWise comparison

The table below shows how much it will cost you and how long it will take to send $1,000 to the Philippines.

Final Thoughts

No single provider can offer the perfect balance of all these factors. For instance, you’ll pay more if you want your money transferred fast. So choose the right provider based on your priority, like when your family in the Philippines needs funds ASAP or when you need to save on money transfer fees. Ultimately, your choice of remittance provider must be aligned to your financial goals as an OFW.

In the second part of this topic, we will explore the best money transfer services from the Philippines to various countries.