Here's why banks are not the best solution for sending money to or from Israel

By JERUSALEM POST STAFF
Updated: MARCH 16, 2017 17:20
Foreign exchange (photo credit: Courtesy)
Foreign exchange
(photo credit: Courtesy)
What are international money transfers?
International money transfers are financial transactions through which an individual or corporate entity sends money to a recipient in another country. International money transfers meet an important economic and financial need by ensuring that people can access funds without the actual movement of cash over national borders.
An International money transfer makes it easy for people to buy and sell goods and services in foreign countries. These transfers also make it easy to send and receive personal payments from friends and family abroad. This piece seeks to provide insight into why banks might not be the best solutions for sending money to Israel.
Why is it so expensive to use banks to move money to Israel?
Banks are usually the first option that comes to mind when you want to make international money transfers to/from Israel. The fixation on banks at the expense of other options is understandable because banks invest huge sums of money into ads for their international funds transfer. 
However, banks are simply expensive for moving money to Israel. For instance, sending £100 to Israel could cost between £1.40 and £3.00 from one of moneytransfercomparison.com's best-rated choices; yet, banks might charge you as much as £23.08 to send £100 to Israel.
The main reason it is expensive to use banks to move money to Israel is that banks have many overhead costs. To start with, banks need to maintain physical branches in all the countries where they have operations and they'll need to cover the costs of running and staffing their branches.
Secondly, international money transfers are responsible for a very small fraction of banking operations; hence, banks don't typically enjoy economies of scale when they help people to send money abroad. The fact that international money transfer is not a core banking operation makes it more expensive for banks to transfer funds and the high cost of the transfer is often passed down to the clients.
In addition, international money transfer through banks can be expensive in terms of the time it takes for the money to 'travel' from the sender to the recipient. An international money transfer sent through a bank is usually routed through partner banks in a couple of countries until it reaches the local bank of the final recipient. However, the partner banks don't usually expedite the onward processing of such fund because money transfers is not a core .
Why are money transfer companies better?
From the foregoing, it would be in your best interests to shop around for money transfer companies that can offer you a cost effective service for sending money abroad.  Below are some of the reasons money transfer companies offer a better solution than banks for sending money abroad from Israel.
Money transfer companies specialize in overseas fund transfer and as such, they offer clients an effective service as opposed to banks where money transfer only takes a small fraction of business operations. International money transfer companies use agents spread across many locations in different countries whereas international money transfer from banks is often limited to countries where they have direct or partner operations.
Money transfer companies are better than banks because they offer a cheaper service for transferring money. The cost of an international money transfer through money transfer firms could be 70% cheaper than money transfer processed through a bank. Money transfer companies typically offer a cheaper service because they enjoy economies of scale for funds transfer. More so, these firms have fewer overhead costs in relation to banks.
Money transfer companies offer a more convenient service than banks because they make it easy to send and receive money. Banks prefer to transfer money for their account holders alone and they may insist that you open an account with them before they can initiate your money transfer. However, international money transfer companies won't insist that the sender or receiver open accounts before the transaction can be processed.
Money transfer companies won't also require you to fill out tons of paperwork before they complete your transaction. More so, money transfer companies have provisions for both small and large money transfers.
Article contributed by Journalvoice