When sending money overseas, there is a good chance you will get to choose from SWIFT and peer-to-peer (P2P) transfers. If presented with a choice between the two, going the P2P way might be the better option, and not without reason.
While both SWIFT and P2P transfers work in transferring money across borders and between bank accounts, there are differences that make one alternative better than the other. However, this does not hold true in every scenario.
Globalization, innovations in technology, increased customer expectations, and the entry of several new players have driven the growth of overseas money transfers significantly. An example in case is the peer-to-peer (P2P) space. According to a report released by Deloitte, there are more than 20 P2P applications in the United States alone. Forrester predicts that P2P payments will get to $17 billion by 2020 – a significant increase from $5 billion in 2014.
Overseas money transfer companies that provide P2P transfers have bank accounts in various countries, and they work in matching people who wish to transfer money between different countries.
This is how it works. You transfer money into a local bank account of the company you work with. Then, the company matches your transfer with someone who wishes to send money in the opposite direction. The sender on the other side also deposits money into a local bank account. Both recipients then receive money from local bank accounts, and no actual overseas money transfer takes place.
In instances when companies that provide P2P transfers are unable to match transfers at both ends, they carry out the transfers on their own, although this comes at a slightly higher cost. Peer-to-peer transfers can be a great way to transfer funds involving major currencies, but not many companies provide P2P transfers for exotic currencies.
Usually, there are no minimum limits for P2P transfers, and maximum limits can be rather high depending on the company you select. CurrencyFair, for instance, is said to have carried out a single P2P transfer valued at €17 million. TransferWise, on the other hand, has transferred over £1 billion since its inception.
Paying For Your Transfer
Peer-to-peer money transfer companies are predominantly online, and you will be hard-pressed in finding one that lets you pay for your transfer using cash. However, this is not a problem with banks that carry out SWIFT transfers. Paying for a P2P transfer using your bank account is fairly simple. Depending on where you live, you might also be able to pay using debit cards, credit cards, and other region-specific methods.