How to send money overseas for free
The international money transfer industry has been moving towards greater customer empowerment – and cheaper service – ever since brokers challenged the monopoly of banks. And now it faces an even bigger shake-up: completely free foreign exchange, courtesy of bitcoin startup Bitreserve. The company lets users exchange, send and receive euros, US dollars, British pounds, Chinese yuan, Japanese yen, Mexican pesos, Indian rupees and Swiss francs instantly, with zero fees.
So today we're going to investigate how Bitreserve works and, most importantly of all, if it's really as good as it sounds.
How it works
Users sign up for a free Bitreserve account and then have to become verified members to access the service. Conversion is straightforward: all you need to do is buy bitcoin using one of the eight supported currencies and send it to a 'money card' address.
If you wanted to transfer funds to someone in Britain using US dollars, this is how the process would go:
- buy bitcoin using US dollars
- send bitcoin to your money card address
- send that bitcoin to the British recipient's money card address
- the recipient can then store that money, or use it to pay for goods wherever bitcoin's accepted.
- For each purchase, Bitreserve buys the currency you've chosen, which is stored in reserve. That means your cash is secured in a form that tracks your chosen money market, removing the volatility that's previously impacted on bitcoin's credibility.
- The service lets you send money across borders for free. That makes it a major competitor to banks and money transfer providers, which can charge you as much as 10% of the transfer.
- Bitcoin’s blockchain system is quick and transparent. All transactions are completed instantly, and published in real time with verifiable proof of solvency.
- Bitreserve operates a ‘bitcoin-in/bitcoin-out’ system. Users need bitcoin to start the process, and can only spend their Bitreserve currency as bitcoin.
- As it sits outside the conventional banking system your funds won't get the kind of protection provided by the likes of the UK’s Financial Services Compensation Scheme.
- It lacks many of the powerful financial tools forex brokers use, like forward contracts. These give your money's value greater stability, which is particularly useful for regular payments.
There's still work to be done before this is a practical enough solution for the international money transfer market, particularly around security and convenience. But while we wouldn't suggest switching to Bitreserve just yet, it certainly hints towards an exciting future.