International money transfers are a significant topic for discussion for the approximately 7.8m expatriates living in the UAE. It’s more of an issue in Dubai than it is in other major expatriates’ hubs across the globe for several reasons, as follows:
- First and foremost, the reported bank fees on transfers involving the Dirham are excruciating. The Dirham is considered as an “exotic currency”, and the exchange rate markup banks take for it can be as high as 5%. People are eager to find cheaper and better alternatives for moving their funds.
- Secondly, there a great deal of demographic diversity between in the expat community in UAE, unlike Spain or Australia, whose expat demographics are quite hemogenic. Dubai calls itself home for a fine blend of westerns and foreign workers from developing countries. The above leads to confusion about non-bank money transfer services – to which sector do they apply, and what are the limitations with each company.
- Lastly, unlike in most expat destinations, westerns feel a sense of urgency to move their funds away from Dubai as soon as they receive them. The banking system is Dubai and the entire UAE is sharia compliant, and their investment options are limited compared to what they have in their home countries. In addition to that, the UAE law dictates that if you don’t have a valid will in place, in case you pass away, your assets will be distributed according to Sharia law. That makes it a constant chase for western expats to transfer money from their UAE bank account.
TL;DR – If you want to find a reliable and cheap money transfer service to move to and from UAE, and have no time or patience to read through this detailed article, you can find some of the best options on MoneyTransferComparison.com. They are the industry experts who supplied the materials for this article, and they assure us all top recommended firms on their site can AED transfers.
Sorting Out The Difference: Remittances VS Foreign Exchange
The easiest point to address from the list of UAE-specific money transfer topics is the second one on the list – which money transfer service fits which audience. To do that we will divide the 2,000,000 expats living in Dubai to two groups:
- Foreign workers: people who came to Dubai to work in industries like construction, nursing, or customer support. Fairly low paid, and usually coming from developing countries such as India, Saudi Arabia, Pakistan or Bangladesh. They need to send money home, and because the banking system is unreliable in their originating countries, they are looking for their families to be able to pick up payments in cash.
- Western expatriates: people who relocated to Dubai to open up a business, invest in the market, work in a high-paying job, or retire there. Brits, Americans, Canadians, Australians and Europeans. They need to frequently move money between their bank accounts abroad and their UAE account.
The first group would use remittances providers, while the second one would foreign exchange services, and the differences are immense.
| Remittances Provider | Foreign Exchange Service | |
| Audience | Foreign Workers | Western Expats |
| Minimum Transfer | As low as AED 100 or Equivalent | Usually more than AED 1,000 or Equivalent |
| Who Can Use | Anyone | People who own bank accounts, with a foreign nationality in a developed non-trading-banned country |
| Expected Fees | High: transfer fee in addition to a large markup. Sometimes even more expensive than banks. | Low: no transfer fees and wholesale currency rates. |
| Known Firms | Western Union, Moneygram, Al Ansari | Transferwise, Moneycorp, HiFX, Currencies Direct |
| Market Familiarity | Western Union has more than 7,000 employees and 200,000 agents across the globe. It is a gigantic publicly traded firm. | Foreign exchange companies are relatively small in comparison, dealing with tens of thousands of clients each year. |
| Client Responses | You can find thousands of complaints about all the large remittances providers. There are many delays and mishaps, and almost always unreasonably high fees. | The vast majority of clients who use any of the larger money transfer firms is content with the service. Out of tens of thousands of client reviews online, less than 5% are complaints. |
| Receive Funds | In cash against a receipt or a code. | Only in a bank account. |
Focusing on Wire Transfers to UAE
It is probable to believe most readers are more interested in hearing more about foreign exchange services. The use case is as follows: an expat who is receiving payments domestically to his UAE bank account and wants to move it abroad. This payment solution obviously applies to individuals and businesses who are sending money into UAE from their home country through a bank wire, whether it may be for relocation purposes, business payments, or buying a property in the booming Dubai market.
The main consideration such a client would have in mind is reliability and security of funds. There’s a lot of money in risk in case things go sour, either by using a company who is an outright fraud, or using a company which doesn’t manage its risks correctly and collapses, leaving clients in vain. There are two main ways to mitigate that risk:
- Making sure the company is authorized by the British FCA. As part of their code of conduct to authorized payment providers, clients accounts should be fully segregated from the company accounts. Please note that foreign exchange services which are trading less than GBP 3m per annum are only registered with the FCA and not “authorised” by them, and thus, it is important to select larger, well-known, companies.
- Making sure the company has a good D&B credit rating. This is a good indication for the risk level any business can have. As a matter of fact, some foreign exchange companies like Moneycorp have better credit ratings than some banks. Another way of measuring up how reliability is via objective industry review websites like MoneyTransferComparison.com who write about this aspect in detail, including stating which companies have offices in the UAE (one even has an office in Dubai).
The second consideration a client could have is pricing. He would go outside of his comfort zone when he steps away from his banks, and he expects to experience a significant saving when he does that. By default, the cost with international money transfers companies should be 20-30% lower than with banks, and without any transfer fees (depending on which foreign exchange company has been chosen).
A 20-30% difference is quite a lot, but for people who are moving substantial volumes, the fees can still amount to thousands and even tens of thousands. In that scenario, it is always recommended to sign up with multiple companies and compare between their quotes. Note: When you compare international money transfers quotes it is extremely important to use quotes from the same 15 minute time-frame because the rates constantly move.
This method not only will help you find the cheapest money transfer service from UAE, it will help you push the companies which are being compared to improving their offering, if they know you are currently looking into their competitors. It’s a very competitive industry and because of the client’s nature (lives abroad and likely to use the service again in the future), and each company will eventually give its very best price. Then, these 20-30% saving can grow to as much as 60-70% saving against banks.
When transferring money to Dubai or anywhere else in the UAE, it’s recommended to use a foreign exchange service. It’s safe, cheap, and quite expat-oriented. These are companies with tens of thousands of clients, of which at least 50% are expats. These is no consideration against using them, but for the sake of safety, it is recommended to read a bit about them before signing up.
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