One of the first things you discover after moving to Japan is that you need some money. They charge for stuff like food and rent here. I guess a job is an option, but let’s say you already have $146.82 in a bank account back in the United States. What is the best way to get it from America to Japan?
My own American bank was willing to set up an international “SWIFT” wire transfer for me. The fee for a standard transfer was $40, and they promised to only take an additional three percent of the total transfer amount as a markup on the exchange rate. Then there is the fee on the Japanese side for receiving and processing the funds, plus (in some cases) fees charged by an intermediary bank. My US bank was willing to waive the $40 fee if I deposited a few hundred thousand dollars into my account—I’ll check my pockets. But the hit on the exchange rate and the Japanese-side costs would stay no matter what. It all seemed like a lot just to get my own money from my own account to another of my own accounts.
It turns out that there are alternatives to standard bank-based SWIFT wire transfers, and with greatly reduced fees. After doing a bit of research, I selected a money-transfer provider called Wise. After plugging a few numbers into their web site—they also have an app—and uploading some identifying documentation, they moved my money from Point A to Point B.
The fees Wise charges are not fixed, but vary based on the amount to be transferred. For large amounts, this could exceed my bank’s routine $40 charge. But that is more than offset by savings in other parts of the transaction.
- There are no receiving fees charged by my Japanese bank.
- There are no intermediary fees charged by whatever institution is facilitating the transfer.
- Most importantly, you get the published mid-market exchange rate—the rate you see on the evening news—with no markup.
That last benefit is key. Instead of losing three to five percent of my initial amount during the transfer, I typically only pay about one percent in basic fees to move the money to Japan. (Some other destinations are much less.) I would rather pay zero percent, but they held firm.
How does Wise end up costing so much less than the bank? The secret is that they do not actually transfer your money overseas. Don’t get me wrong: You do get your money—often within minutes instead of days. But from the perspective of your Japanese bank, the transfer is domestic, not international. Wise has local bank accounts in each country they serve. When you ask to move funds from the US to Japan, your dollars go into their American account, and yen pops out of their Japanese account, moved domestically to your bank in Japan. Since another of their customers is bound to initiate a transfer in the other direction, it all kind of balances out.
If you are going to transfer extremely large amounts (above one million yen), the money is sent via the traditional SWIFT method, and incurs slightly higher fees. And for very small amounts—a few dollars—you are probably better off using app-style tools like PayPal. Still, for routine transfers of moderate size, I have found Wise to be a convenient and cost-effective method of moving funds overseas.
Wise works not just between America and Japan, but between sixty different destinations (as of this writing). If you would like to try it out yourself, click the following graphic to be taken to their site.
For full disclosure, if you click that image and opt to use their service, Japan Everyday will receive a small affiliate fee. But Wise does not share any details about who clicked it or what services were used; it is all very secure. Plus, you will be helping Japan Everyday to continue offering practical and interesting content about Japan.
NOTE: Before March 3, 2021, Wise was known as TransferWise.
[Image Credits: sorara/photo-ac.com]
Tim, thank you for the informative research. It is good to know that there are ways to keep most of your money without getting gouged. I’m sure that you spent a lot of time sorting through the different options.
I think the scariest option, though, is the SWIFT “wife” transfer!!! Didn’t know the bank offered those controversial services! 😉
Ha ha! Thanks for catching the typo! I fixed it in the text.