Transfer Money to South Africa
When you transfer money to South Africa you may not even be aware that the transfer is subject to exchange control regulations.
The implication of these exchange control regulations is that you have to concern yourself with obtaining the best exchange rate as well as ensure that you exercise your transfer in the correct way.
- Failing to get the best exchange rate will of course affect the amount of rand you end up with in your bank account.
- Failing to take into account exchange control regulations can mean you are not able to transfer the funds you brought into South Africa back out of the country.
If you agree with the below three statements, keep on reading and discover for yourself the secrets for a SUCCESSFUL money transfer to South Africa.
A SUCCESSFUL MONEY TRANSFER IS WHEN:
- You get as much rand for your foreign currency as you can; and
- You are fully compliant with exchange control regulations; and
- You receive excellent service.
Keep on reading and get the perfect solution for when you transfer money to South Africa.
You can get a better exchange rate when you transfer money to South Africa
With all the jargon used in the money transfer business, you would be forgiven for thinking it was purposefully there to confuse you. So let's break it down to basics:
- The exchange rate is the price used when you buy or sell a currency.
- The interbank rate is the rate at which banks access foreign exchange.
- The 'spread' is the difference between the interbank rate and what you get as an exchange rate.
- Admin and service fees are fees levied by the bank or money transfer company to facilitate the transfer.
Broken down even further, as a client you want:
- A spread that's as small as possible; and
- No admin or service fees.
But how can you compare and ensure you get the best rate?
It's practically impossible to compare rates:
- If a company tells you its spread is 2%, how do you know what the 2% is based on? As an individual you cannot access the true interbank rate anywhere (yes, including Google) and neither can most companies. You need to subscribe to a system like Reuters (which is very expensive and only available to selected companies) to be able to see what the interbank rates are. Therefore being told a spread is meaningless unless you have a Reuters system in place to track it.
- Exchange rates change by the second, literally. Therefore any rate examined in the internet is already out of date by the time you view it.
- Calling around is even more out of date than the internet, as it is nigh on impossible to have two conversations at exactly the same time.
- Most companies will not be able to provide you with an exchange rate unless they are already holding your funds or your funds are with the authorised dealer (bank) that they use.
So what do you do?
Even if you somehow monitor an exchange rate offered by a company, are you going to continually do so every time you effect a money transfer to South Africa? Probably not.
So the key here is two-fold:
- Pick a company that does large amounts of money transfers. Such a company will get a better rate from the banks due their ability to negotiate a bulk discount.
- Find a currency company that is 100% transparent in its dealings. This means a company that can provide you with a fixed spread on the interbank rate and then prove that they have adhered to it.
Incompass is unique among currencies companies by virtue of its 100% transparencies on fees and spreads.
Our spread, including the bank's part, is just 1.2% (most currency companies will tell you their spread and miss out the bank's part) and our service fees are nil for transfers over ZAR 50,000 or its equivalent.
Warning - not understanding exchange control can seriously damage your wealth
As a non resident, i.e. someone that does not hold a bar coded SA ID book, you need to be aware of the following:
In simple terms we can say - How you transferred money to South Africa will dictate how you can transfer money back out.
Every transfer of foreign money into South Africa is recorded by the South African Reserve Bank. The money transferred gets classified according to:
- The purpose for which it was introduced to South Africa; and
- By whom it was introduced.
When the time comes to transfer your money out of South Africa, the key aspects will be:
- Can you prove you brought the money into SA?
- What was the purpose you brought it in for?
- How was it registered when it came in?
Unless all the paperwork is in order, you will have an issue when it comes to transferring your money back out of South Africa.
It can often be many years before you have a need to transfer money back out of South Africa, which can also compound the issue of 'paperwork' and we often get calls from clients who are struggling to prove the above two requirements.
What you should do
You may well have a bank or money transfer company that you use in your home country and we are by no means suggesting they are not efficient in what they do.
That said, exchange controls exist in less than 25 countries around the world and it is often the case that professionals have not even heard of exchange control, let alone understand the complexities it brings with it..
If you are from the UK, Europe or most Western economies, you will be used to simply transferring your money around the world as you please.
Indeed if you contact your bank or money transfer company they will be able to transfer money to South Africa for you.
What they will not be able to do is transfer it back out. Only South African authorised dealers can do transfers out of South Africa.
Therefore, if you want to deal with a company who knows all about exchange control regulations and want to ensure that you transfer money to South Africa correctly (so you have no problems if you wish to transfer it back out), use the services of a registered South African company such as Incompass.
Get better rates and better service when transferring money to South Africa.
- Market leading forex rates.
- No administration fees.
- ISO 9001 accredited service levels.
- ISO 27001 accredited security levels.
- 100% transparency on all money transfers.
- Tailored services to meet your money transfer needs.