What is peer-to-peer money transfer?

A peer-to-peer money transfer uses a website or app to transfer funds from one person to another over the internet or mobile networks. For international payments, peer-to-peer will match buyers and sellers of different currencies to deliver a competitive exchange rate.  

Peer-to-peer is convenient, yet limited

Peer-to-peer (P2P) is a good way to save on the excessively high exchange rates margins charged by banks for international money transfers. Banks often charge 5%, while P2P services usually charge a commission of 0.5 to 1.5%. But there are substantial drawbacks to the P2P model.

 

  • Estimated rates. When you book a peer-to-peer transfer, the low margins can be enticing, and the rates are certainly competitive. The problem is, the rate you see may not be the rate you get. P2P sites will publish the rate that’s available right now, but by the time your deal is booked and paid for (it can take 3-5 days to find a buyer), the currency rate may have moved substantially. With P2P, you never know how much you’re actually going to get until the deal goes through. At OFX, when you book a deal with us, the rate is locked in. What you see is what you’ll get.

 
  • Delayed processing. Currencies change rapidly and suddenly and P2P models automatically pause your transfer if the currency has moved 3% from when you booked your deal. When that happens, you may end up waiting an extra week for your money. If you can’t afford to wait, that kind of delay could be problematic.

 
  • Imbalanced buyers and sellers. P2P transfers rely upon there being the same number of buyers and sellers available at any given time. When this balance doesn’t exist, as happened during Brexit, you may not be able to make the transaction at all, and you could miss out on a great exchange rate. Look for a company with a robust online platform and established banking relationships, so you can keep control of your money. To learn more about how Brexit-style volatility can impact peer-to-peer, click here.

Select a Better Alternative: OFX

At OFX, we focus on making it easy and affordable to transfer money for business or pleasure, and we even provide support to online sellers. Choose the money transfer whaprovider who can adapt to your unique needs.

  

When you transfer money with OFX, every transaction will be swift and secure, and you can reach us by phone 24/7 if you need to. When it comes to international money transfers, you’ve already got a friend in the business: OFX.

 

 

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If you have any questions that aren't answered in our FAQs, feel free to ask us here.

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