Guide to Sending Money Abroad for Newcomers in Canada

Why International Money Transfers Matter for Newcomers

Sending money back home is one of the most common financial activities for newcomers to Canada. Whether you are supporting family members, paying off obligations in your home country, or helping with emergencies, international remittances are a significant part of your financial life. According to the World Bank, Canada is one of the top remittance-sending countries in the world, with billions of dollars flowing to developing nations each year.

The challenge is that international money transfers can be expensive if you do not choose wisely. Fees, exchange rate markups, and hidden charges can significantly reduce the amount your recipient receives. Understanding your options is essential to ensuring that as much of your hard-earned money as possible reaches your loved ones.

Bank Wire Transfers

The most traditional method of sending money internationally is through your Canadian bank. All major banks, including RBC, TD, Scotiabank, BMO, and CIBC, offer international wire transfer services. You can initiate a wire transfer in person at a branch or through online banking.

How Bank Wires Work

To send a wire transfer, you typically need the recipient's full name, their bank account number, the bank's SWIFT/BIC code, and the bank's address. The funds are transferred through the SWIFT network, which is a global messaging system used by banks. The transfer usually takes 1 to 5 business days, depending on the destination country and the banks involved.

Fees and Exchange Rates

Bank wire transfers are generally the most expensive option. Canadian banks typically charge a flat fee of $20 to $50 per transfer. In addition, they apply their own exchange rate, which includes a markup of 2% to 4% above the mid-market rate. The recipient's bank may also charge an incoming wire fee. For a $1,000 transfer, the total cost (including fees and exchange rate markup) could be $50 to $80 or more.

Online Transfer Services

In recent years, online money transfer services have become popular alternatives to traditional bank wires. These services typically offer better exchange rates and lower fees, making them an excellent choice for newcomers who send money regularly.

Wise (formerly TransferWise)

Wise is one of the most popular international transfer services for Canadians. It uses the mid-market exchange rate (the real exchange rate you see on Google) and charges a transparent, low fee that varies by destination. For many corridors, the total cost is 0.5% to 1.5% of the transfer amount, significantly lower than banks. Transfers typically arrive within 1 to 2 business days, and Wise supports transfers to over 80 countries. You can send money from your Canadian bank account via Interac e-Transfer or direct debit.

Remitly

Remitly specializes in remittances to developing countries and offers competitive rates for popular corridors such as India, the Philippines, Mexico, and many African and Latin American countries. Remitly offers different delivery speeds: Economy (3 to 5 business days, lower fees) and Express (minutes to hours, higher fees). A unique advantage of Remitly is the variety of delivery options, including bank deposit, mobile money, cash pickup, and even home delivery in some countries.

Other Online Services

Other notable services include WorldRemit, Xoom (a PayPal service), and OFX (for larger transfers). Each has different strengths depending on the destination country, transfer amount, and delivery method. Comparing multiple services for your specific corridor is always recommended. You can use comparison tools like the FCAC's resources to understand your rights when sending money.

Western Union and Cash-Based Services

Western Union and MoneyGram are traditional money transfer services with extensive global networks. They are particularly useful when your recipient does not have a bank account, as they offer cash pickup at thousands of locations worldwide.

Advantages

The main advantage of Western Union is its reach. With over 500,000 agent locations globally, your recipient can pick up cash in person, often within minutes of you sending it. This is particularly valuable for urgent transfers or for recipients in rural areas with limited banking access. Western Union also allows you to send money online, through their app, or in person at agent locations across Canada, including many convenience stores and pharmacies.

Disadvantages

The primary drawback is cost. Western Union's fees and exchange rate markups are generally higher than online services like Wise or Remitly. For a $500 transfer, you might pay $15 to $30 in fees plus a 3% to 5% exchange rate markup, resulting in your recipient receiving significantly less. For regular, non-urgent transfers, online services are almost always more cost-effective.

Comparing Fees and Exchange Rates

The true cost of an international money transfer has two components: the flat fee and the exchange rate markup. To compare services accurately, always look at the total amount your recipient will receive, not just the fee you are charged. Here is a general comparison for a $1,000 CAD transfer.

Tax Implications of Sending Money Abroad

Many newcomers worry about the tax implications of sending money to family abroad. The good news is that in Canada, sending money as a gift to family members in another country is generally not taxable for the sender. There is no gift tax in Canada, so you do not need to pay tax on money you send to relatives overseas.

However, there are some important considerations. If you are sending large amounts regularly, the Canada Revenue Agency (CRA) may want to ensure the funds are from legitimate, already-taxed income. Financial institutions are required to report international transfers of $10,000 CAD or more to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). This is an anti-money laundering measure and does not mean you will be taxed, but it is important to keep records of your transfers and their purposes.

Tips for Getting the Best Deal

To minimize costs when sending money abroad, consider these strategies. Compare multiple services for each transfer, as rates and fees change frequently. Send larger amounts less frequently rather than small amounts often, as many services charge per-transaction fees. Use Interac e-Transfer to fund your transfer when possible, as it is often cheaper than credit card or debit card funding. Set up rate alerts on services like Wise to send money when the exchange rate is favorable. Avoid airport or hotel currency exchange services, which typically offer the worst rates. Consider opening a multi-currency account if you send money regularly to the same country.

Cryptocurrency and Emerging Options

Some newcomers are exploring cryptocurrency as a way to send money internationally with lower fees. While this can work in some situations, it comes with significant risks, including price volatility, regulatory uncertainty, and the complexity of converting between currencies. For most newcomers, established transfer services remain the safer and more practical choice. As regulations evolve, the Financial Consumer Agency of Canada is a reliable source for consumer protection information.

Resources and Next Steps

Sending money abroad does not have to be expensive or complicated. By understanding your options and comparing services, you can save hundreds or even thousands of dollars each year in transfer costs. Start by identifying the services available for your specific corridor, comparing the total cost (fees plus exchange rate), and choosing the option that offers the best combination of price, speed, and convenience.

WelcomeAide is here to help you with every aspect of your settlement journey, including financial decisions. Use our AI Newcomer Navigator to get personalized guidance on sending money abroad and other financial topics. Check out our blog for more newcomer guides, learn about our mission, or find out how to get involved in supporting newcomer communities.