With such wide acceptance of credit cards, the truly astonishing availability of ATMs, and online payments, the need for money transfers is shrinking. However, the need does occasionally arise.
Recently I had to put down a deposit for a hotel in Sudan. Because of recently lifted embargoes there is no real functioning banking business there (no ATM’s, no credit card use). To make the deposit I had to transfer USD to a Greek bank account, converting them to EUR. Another example was to prepay an English company, in GBP, for an overland run that started in Sierra Leone. The small company does not accept credit cards, so the payment had to be a transfer. Other instances might be payment that you receive for house sitting, or payments you make for professional services while traveling. Or, imagine you are a newbie traveler circling through Senegal, and you discover that your one bank card has been frozen and you have no access to cash (that was a rather lively lesson).
Back in the dark ages (about five years ago), sending money to an individual or business, especially when the currency had to be converted, was an expensive and pretty painful process. Western Union, Travelex and MoneyGram dominated the retail business, and transfers could be set up through your bank (either in person, or sometimes over the ‘phone). Transfer fees, poor conversion rates, and transfer delays were commonplace. Worst, for me, was that you had to show up in person and fill out forms.
Transferwise (now just Wise) has completed changed that. It essentially is a virtual bank. They provide bank credentials akin to those of your high street bank. You deposit USD and, when you want to transfer money to another person or company, you just get their bank credentials, open the App on your ‘phone, and click ‘send’. Fees are tiny compared to other services, and currency conversion rates are extremely competitive. Transferwise does not charge any account fees. Your balances do not earn any interest, so do not use this as a place to keep a lot of money. The bank card allows fee free cash withdrawals up to a certain limit, and is great as a backup ATM card (though the ATM owner will charge a fee).
A really interesting feature is that they offer bank credentials for many other countries. You are essentially opening a bank account in Australia, converting some USD and holding AUD. You can even hold currency from countries in which they do not offer bank credentials (CHF from Switzerland for example). Other than the cool feeling of being an International Moneyman (“I like to park some of my assets in Danish Krone” sounds rather swank), there are practical reasons to do this.
For me, destination specific savings and currency arbitrage are the most important. I am planning on going to Poland next year, and regularly add to my Polish Zloty balance. I like to have the money saved and earmarked for a specific adventure. While in that country I will use the Transferwise bank card to withdraw cash. If the value of the USD falls relative to the Zloty the country costs get ‘more expensive’ in USD. By holding Zloty I insulate myself from that currency move. Of course, the opposite can happen. In that case I will prefer to use my USD bank cards, and either hold or convert the Zloty to some other currency for a future trip. In a very modest way I am hedging against currency risk.
As with nearly all the financial services that I recommend, make sure that you open an account while you are employed and have a fixed US address. Do not wait until the last minute. Relatively recently Wise started offering a Debit card. I thought that I would like one. However, they figured out that both the addresses I provided are not houses, and refused me a card.
I would also recommend setting up a Western Union account. As noted above, money transfer via this service is expensive (9% for a domestic US transfer). However, they do have franchised storefronts all over the world and, if the shit really hits the fan, you can stagger in to one of these for a refueling from any family members you are on speaking terms with, or soon to be ex friends.
One last option to consider is Plastiq. This service links to your credit cards and you can use that line of credit to pay recipients who do not accept credit cards. Think monthly rent payment. The transaction fee is roughly 3%, which will be at least partially offset by the credit cards rewards that you earn. I have not had to use this yet, but can imagine a scenario where this can keep a roof over my head if I have a cash crunch and my Transferwise account is tapped out.