- Discover the cheaper ways to transfer USD to COP (Colombian Peso)
- Compare money transfer specialists vs banks
- Learn what to look for when choosing the safest way to transfer money
Are you trying to find a way to send money from the US to Colombia? This post goes over your options. We'll provide you with a range of services to suit your international transfer needs.
In this guide
- Common reasons people transfer money overseas to Colombia
- Why you shouldn't send money overseas using your bank
- Is it safe to use a money transfer company?
- USD / COL exchange rates
- What are the fees?
- Minimum and maximum transfer amounts
- Alternative ways to send money to Colombia
- Business vs. personal considerations
Common reasons people transfer money overseas to Colombia
People transfer money back to Colombia for a variety of reasons, including:
- Sending relatives or friends money.
- Purchasing Colombian real estate.
- Funding your suppliers or business partners.
- Paying for emigration fees.
- Subsidizing tuition costs.
- Paying for a wedding or special events.
- Making charitable donations.
Why you shouldn't send money overseas using your bank
If you're sending amounts under $5,000 to Colombia, the bank is an incredibly expensive and inefficient option. Sure, the transaction might go directly to the recipient's bank account, but you'll pay for that privilege.
Typically the average transaction cost for a bank wire can be between $25 to $65, depending on the bank and the transaction amount. These are only the base costs, and there are additional fees that ramp up your expenses using this method.
Is it safe to use a money transfer company?
There are dozens of retail money transfer companies available. Finty’s list of providers are established players with experience transferring millions if not billions of dollars around the world. We compared the rates of the top companies, looking for the most affordable fees and fastest transaction times.
USD / COL exchange rates
When you're placing a transfer with your bank or retail transfer service, the margin on the exchange rate presents the largest portion of the transaction costs. The margin rate is the commission the bank or service charges you above the "spot" currency rate for the USD/COL pair.
As an example, the spot rate might be 1USD = 3500COL. However, the bank doesn't give you that price. Instead, they give you a lower amount, so they make a profit from the transaction. For example, they might offer you 1USD = 3400COL. The bank or service takes the 100 pesos as the commission on the deal.
What are the fees?
The bank or exchange service also charges a transaction fee on top of the margin fee. Here's what you can expect to pay.
What is a typical fee?
Banks typically charge around 5% of the total transaction amount for the processing fee. You could pay anywhere from $25 to $65 for an average transaction cost with the bank.
It's considerably more affordable with retail exchange and transfer companies, which charge a fraction of what banks do and are generally more transparent about fees.
However, you get the best prices using e-wallets and cryptocurrency. Pay cards are also a good option, but rates vary widely depending on the service provider.
Can they be avoided?
Using e-wallets and cryptocurrency allows you to circumvent some of these fees when sending money to Colombia from the United States but they are considerably more complicated and the recipient must be comfortable with transacting in these methods.
Minimum and maximum transfer amounts
If you're looking at sending amounts over $7,000 from the US to Colombia, it's better to do it with a bank wire.
Most retail exchanges have limits set on transactions, capping them at between $7,000 to $10,000. These institutions adopt this strategy to prevent money laundering through the company's accounts.
However, banks may have limits on small amounts under $1,000. Retail exchange and transfer services are the better options for amounts under $5,000. E-wallets and pay cards typically don't have minimums on transfers.
If you want to send large amounts over $1,000 using e-wallets like PayPal, Google Pay, or Apple Pay, you'll need to verify your identity to comply with KYC protocols.
Alternative ways to send money to Colombia
Bank wires and retail transfer services are not the only options for sending money from the US to Colombia. E-wallets such as Paypal offer great alternatives for sending smaller amounts.
Cryptocurrency is also gaining in popularity. Both e-wallets and crypto also offer lower fees than traditional methods, as well as faster transfer times.
However, it depends on the recipient's preferred method. Some individuals may not know how to transact using these financial vehicles. Online money transfer companies have the benefit of being user-friendly for both the sender and recipient.
Business vs. personal considerations
If you're sending money to a private person or a business in Colombia, you'll have to comply with KYC protocols. Sending money directly to a nominated business bank account means that you only have to issue the sending service with a copy of your ID or passport and your cell phone number.
However, if you're sending through a retail service like Western Union, the recipient also needs to produce their ID or passport and give the service their cellphone number to comply with KYC. These rules ensure that the retail transfer service complies with KYC and AML procedures.
How can I fund my money transfer?
There are four primary options available for sending money from the United States to Colombia. You have the traditional bank wire, as well as retail exchange and transfer services like OFX. Unconventional methods like e-wallet transfers and cryptocurrency payments are also viable options for sending money from the US to Colombia.
How fast can my money transfer be sent to Colombia?
The fastest method for sending money to Colombia is through e-wallets and crypto payments, with transactions taking from a few minutes to a few hours to process. Retail exchange and transfer services like MoneyGram take around one to three days to process, depending on the amount. Bank wires are the slowest option, taking up to five days to process.
What are the money collection options?
If you're sending through the bank, the recipient receives the deposit directly in their nominated account, even if it's across different banking institutions. If you're sending through Western Union or other retail exchange and transfer services, the recipient can collect the cash at partner locations anywhere in Colombia. Check your local listing for locations near to you.
Are there any tax considerations?
If you plan on sending money to Colombia regularly, you'll need to consult with your tax attorney or accountant for tax advice. In 2021, the IRS allows a $15,000 gift tax threshold for these types of transfers. Sending more than that amount may expose you to tax liabilities.