What You Should Know About Cross-Border Remittances for USA Citizens

Sending money abroad is a lifeline for millions of Americans. Whether you’re supporting family, paying for education, investing, or covering emergencies, cross-border remittances are a big part of life for US citizens and residents. Let’s explore everything you need to know about cross-border remittances for USA citizens. 

With new regulations, hidden costs, and evolving technology, making smart choices is more important than ever. This practical guide will help you navigate the world of international money transfers.

The Basics: What Is a Cross-Border Remittance?

A cross-border remittance involves sending money from the US to someone in another country. Most often, it’s to support family, pay tuition, cover medical bills, invest, or donate to charity. Unlike business payments, remittances are typically personal and involve smaller amounts, but the impact is especially for families relying on support from relatives in the US.

US citizens send billions of dollars annually, with India, Mexico, and the Philippines among the top destinations. In 2023-24, Indian-origin individuals in the US sent back $32 billion, making the US the world’s largest source of remittances.

Main Methods for Sending Money Internationally from the USA

Traditional Bank Wire Transfers

Banks are the old-school way to send money abroad. The process involves providing the recipient’s full name, address, bank account number, and the bank’s SWIFT/BIC code. Fees are expected to be $40–$50 per transfer, plus extra charges from intermediary and recipient banks. 

Processing times are slow, ranging from 1–5 business days. The upside? Banks are secure and reliable but rarely the cheapest or fastest option.

Specialized Money Transfer Services

Companies like Wise, OFX, Western Union, MoneyGram, Remitly, and Xoom have changed the game. They offer lower fees, better exchange rates, and a range of payout options: deposit, cash pickup, or mobile wallet. Wise, for example, uses the real mid-market exchange rate and charges a transparent fee, usually less than 1% for bank-funded transfers.

Western Union and MoneyGram have vast agent networks, making cash pickup possible even in remote areas, but watch out for higher fees and exchange rate markups.

Digital Payment Platforms and Apps

Services like PayPal, Xoom, WorldRemit, and Xe let you send money from your phone or computer. They’re fast and convenient, but not all apps support international transfers (Venmo and Zelle are mostly domestic). 

PayPal and Xoom can deliver funds in minutes, but credit card payments may incur higher exchange rate markups and fees. Always check if your recipient can access the funds in their country.

Also Read: How to Send Money Overseas Without Paying Fees

Understanding the True Cost: Fees, Exchange Rates, and Hidden Charges

Sending money abroad isn’t just about the upfront fee. Here’s what to watch for:

• Transfer Fees: Banks charge $40–$50 per wire. Money transfer services and apps may have lower fees but vary by payment method and destination.
• Exchange Rate Markups: Many providers offer a worse exchange rate than the real (mid-market) rate, pocketing the difference. In 2023, Americans lost $5.8 billion to hidden exchange rate markups alone.
• Intermediary and Receiving Bank Fees: Some banks along the transfer chain deduct extra fees, reducing the amount your recipient receives.
• ‘Junk Fees’: Providers may advertise “no fee” transfers but hide costs in the exchange rate or add surprise charges at the last minute.

How to avoid surprises

• Always compare the total cost (fee + exchange rate).
• Use online calculators and comparison tools.
• Prefer providers with transparent pricing and clear breakdowns.

Regulatory and Tax Considerations

Consumer Protections

The US has strict rules to protect remittance senders. The Remittance Transfer Rule requires providers to disclose all fees, exchange rates, and the exact amount the recipient will get before you pay. You also have the right to dispute errors and get a refund if your money is lost or delayed.

Reporting Requirements

• Large Transfers: Banks and providers must report cash-in and cash-out transactions over $10,000 daily to comply with anti-money laundering laws (Bank Secrecy Act).
• Foreign Accounts: If you have over $10,000 in a foreign account at any point in the year, you must file an FBAR with the IRS.
• FATCA: US citizens must report certain foreign assets and income to the IRS.

The Proposed 5% Remittance Tax

A new bill in Congress proposes a 5% tax on all remittances sent by non-citizens (including green card and visa holders), with no minimum threshold. US citizens are exempt if they’re verified as such by the provider. If passed, this tax would be collected at the point of transfer and could cost the Indian diaspora alone $1.6 billion a year. If you’re a non-citizen, consider making larger transfers before this law takes effect.

Documentation and Compliance: What You Need to Send Money Abroad

To send money internationally, you’ll need:

• Sender Info: Name, address, government-issued ID, and sometimes proof of income or source of funds (for large or first-time transfers).
• Recipient Info: Full name, address, bank account number, bank name, SWIFT/BIC or IBAN, and sometimes the recipient’s ID.
• Purpose of Transfer: Some providers ask why you’re sending money (family support, tuition, etc.).

Compliance checks can delay transfers, especially for large amounts or new recipients. Double-check all details and keep your documentation handy.

Also Read: What Are the Cheapest Ways to Send Money Internationally?

Speed, Accessibility, and Convenience

How Long Does It Take?

• Banks: 1–5 business days, sometimes longer if intermediary banks are involved.
• Money Transfer Services: Minutes to a few days, depending on payment method and destination.
• Apps: Instant to a few hours in many countries, especially for cash pickup or mobile wallet transfers.

Delivery Options

• Bank Deposit: Secure, but may take longer.
• Cash Pickup: Fastest option, especially with Western Union or MoneyGram’s global networks.
• Mobile Wallet: Instant delivery is available in many countries, but check if your recipient has access.

Transfer Limits and Cut-Off Times

Most providers have daily or per-transfer limits. Cut-off times for same-day transfers vary, so check if timing is critical before sending.

Security and Consumer Protection

How Your Money Is Protected

US law requires providers to safeguard funds, keep data private, and resolve disputes quickly. If something goes wrong, you can cancel within 30 minutes (unless the money’s already picked up or deposited), dispute errors, and get a refund.

Tips for Safe Transfers

• Use regulated providers (look for state or federal licenses).
• Never share passwords or verification codes.
• Double-check recipient info before confirming.
• Monitor your transactions and keep receipts.
• Consider extra protection for your identity and finances. Beem offers identity theft monitoring and support.

Choosing the Right Remittance Method for Your Needs

There are several factors to consider when choosing the right remittance method for your needs. Ask yourself:

• Where is the money going, and how does your recipient want to receive it?
• How urgent is the transfer?
• What are the total costs (fees + exchange rates)?
• Does your recipient have a bank account or need cash pickup?
• Are there transfer limits or documentation requirements?

When to use a bank:

Large amounts, high security, or when both sender and recipient have bank accounts.

When to use a money transfer service:

Speed, convenience, lower fees, or when your recipient needs cash pickup.

When to use an app:

Regular, smaller transfers, or when you want to send from your phone.

Always compare your options before sending. Beem offers tools and resources to help you find the best, safest way to send money abroad.

Sending Money via Gift Card: A Fast, Flexible Twist

Ever thought about skipping the wire transfer altogether and sending a gift card instead? For many U.S. senders, digital gift cards (like Visa, Mastercard, or Amazon) are a clever way to get money across borders in minutes. Your recipient doesn’t need a bank account, just an email address. It’s perfect for birthdays, emergencies, or when you want to add a personal touch. Plus, there are no long waits or surprise bank fees. But here’s the catch: not every gift card works everywhere, and some have sneaky activation or conversion fees.

If your loved one needs cash, turning a gift card into spendable money can be tricky. So, before you hit “send,” double-check that the card is valid in their country and fits their needs. When it works, it’s fast, fun, and refreshingly different from the usual money transfer routine!

Also Read: How to Send Money Across the Globe with Gift Cards in Minutes

FAQs on What You Should Know About Cross-Border Remittances for USA Citizens

Conclusion

Cross-border remittances are a lifeline for families, students, and communities worldwide. In case of cross-border remittances for USA citizens, understanding the true costs, new regulations, and your rights as a consumer is essential. Always compare your options, keep your documentation, and use trusted, transparent providers. 

Explore Beem’s send money online guide and start making smarter, more cost-effective transfers today. Download the Beem app here.