Welcome to moneyboys. We provide tools for money transfer customers to evaluate and compare money transfer transactions with the goal of identifying the cost-effective option.
Our Evaluation Tool
When you use a money transfer app to send money internationally, the question that arises is: which combination of options will give me, the sender, the best deal while maximizing the amount for my reciever? This is actually a complex mathematical question. Not all options are equal for a given exchange rate on a specific day with applicable fees. For example: Should I pay by bank account to the recievers mobile wallet or should I pay by debit card to the reciever bank account? Knowing that fees or time delays may or may not apply. Given these factors, what amount should I send that will be of best advatntage to me and my reciever? Most of us simply pick the most convenient options without considering the value of the services provided, which is of great benefit to the money transfer companies. For a consumer, any amount that can be saved by the sender and transfered to the reciever can never be too small. Our Evaluation tool allows you to pick a money transfer service provider and war game their transaction options and identify the the best combination of options beneficial to you and your reciever. For example, on a given day it may be more profitable to the consumer to send $112 instead of $100. Our Evaluation tool can inform and advise a user on which combination of options on a given day is to the sender and reciever's advantage and that added value is realized by the consumer.
Our Comparison Tools
Different companies offer different exchange rates and fees, and differnt forms of payement for the sender - bank account, debit card, credit card, and different options for the reciever in the destination country - cash pickup, mobile wallet and bank deposit. On a any gvien day, which company or transaction options should I use that will be of maximum benefit to me and my reciever? Most of us simply use the most convenient or favorite company we are most familiar with and percieved to have the best exchange rate or customer satisfaction rankings. By so doing we are helping the money transfer companies immensely instead of saving some money and realizing any monetary benefits, or added value, however small, to ourselves and our recievers. Our Comparison tool and our Simplified tool are each an extension of our Evaluation tool that can compare multiple companies services or competing transaction options on a given day and advise on which one will be to the advantage to you the consumer. A famous Ghanaian saying is 'kitwa biaa nsua' meaning, when it comes to saving money, 'no little amount is too small'.
Mathematical Analysis
The paramount question for the money transfer consumer is, which transaction option will be cost-effective? In other words, which option will be of lowest cost to the sender, while yielding the maximum amount to the receiver? This is actually a challenging mathematical question to tackle. To answer this question, we must note that money transfer products have been uniqely designed in a variety of ways by the various companies. In order to ensure we are comparing apples to apples, in a simple way, we have developed the following methods.
1. Effective Exchange Rate Algorithm (EERA)
Consider sending a money transfer amount of $100 from the United States to a receiver in India.
The money transfer fee is $2.99. The exchange rate advertized for US dollar to Indian rupee
is US$1 to INR81.00.
So US$100 will yield INR8100.
The total transaction cost to the sender will therefore be $102.99
We can therefore adjust our exchange rate to
US$102.99 yields INR8100
This would be
102.99 yields 81(100)
and so
1 yields 81(100/102.99)
and so we obtain the effective exchange rate to be
US$1.00 yields INR78.6484
We can generalize the above relationship as follows.
If N is the amount sent, M is the total transaction cost, F is the transaction fee, and
R is the advertized exchange rate,
M = N + F (1)
N
and so the effective exchange rate is US$1.00 to ____ .R
M
So for competing money transfer options, the customer will select the one with the higher
effective exchange rate.
Consider two competing options to send an amount N dollars.
For option 1, we have M1, F1, R1, and
for option 2, we have M2, F2, R2 .
If option 1 is the cost-effective option, then
N
N
____ .R1 > ____ . R2 (2)
M1
M2
Substituting Equation (1) into Equation (2) and manipulating further, we obtain,
F1 R2 - F2 R1
R1 - R2 > ______________ (3)
N
and
F1 R2 - F2 R1
N > ________________ (4)
R1 - R2
Equation (2) or Equation (3) establishes the relationship that must be true for option 1 to be the cost-effective option,
otherwise option 2 is the cost-effective option. Equation (4) gives the minimum amount sent for option 1 to be the
cost-effective option, given the advertized exchange rates and applicable fees, otherwise option 2 will be the
cost-effective option.
Proceed with a comparison calculation with our Comparison tool or Simplified tool, or review an example below for further guidance.
Example
Dalisay is considering two money transfer options to send $100 from United States to her family in the Philippines.
Option 1: Exchange rate (R1) is $1 to PHP59.56, transfer fee (F1) is $1.00, delivery in 0 - 2 business days.
Option 2: Exchange rate (R2) is $1 to PHP58.83, transfer fee (F2) is $1.99, delivery in minutes.
What is the cost-effective option?
If option 1 is the cost-effective option then,
F1 R2 - F2 R1
R1 - R2 > ________________ (3)
N
Plugging in the numbers,
(1.99)(58.83) - (1.00)(59.56)
59.56 - 58.83 > ______________________________
100
0.73 > 0.5751 , which is a valid and true statement.
Option 1 gives the higher effective exchange rate and is thus the cost-effective option.
Alternately, we can use,
F1 R2 - F2 R1
N > ________________ (4)
R1 - R2
Plugging in the numbers,
(1.99)(58.83) - (1)(59.56)
N > _____________________________
59.56 - 58.83
N > 78.78
That is, the minimum amount sent for option 1 to be the cost effective option is $78.78.
One point to note is that the money transfer companies promise transmittal of the funds to the recipient within a stated time frame, often minutes, sometimes hours, and in some cases days - 2 days, 4 days even up to 6 days, depending on the method by which the funds are paid or the method by which the recipient receives the funds. These transmittal time frames are often pegged to different exchange rates on offer. Due to the general inherent fluctuations in foreign exchange rates on a continuous basis, some of the longer transmittal times may indeed have a non negligible impact on the value of the funds, particularly on the receiver side. In our calculations and tools we neglect any such temporal effects. For the sake of simplicity and predictability of our results, in all of our calculations, we assume the amount sent will be transmmitted instantaneously to the recipient.
Example
Sanjay is considering two money transfer options to send $100 from United States to his family member in India.
Option 1: Exchange rate (R1) is $1 to INR85.64, transfer fee (F1) is $5.99, delivery in minutes.
Option 2: Exchange rate (R2) is $1 to INR84.14, transfer fee (F2) is $0.99, delivery in 0 - 2 business days.
What is the cost-effective option?
If option 1 is the cost-effective option then,
F1 R2 - F2 R1
R1 - R2 > ________________ (3)
N
Plugging in the numbers,
(5.99)(84.14) - (0.99)(85.64)
85.64 - 84.14 > ______________________________
100
1.5 > 4.19 , which is a false and invalid statement.
Option 1 fails, option 2 is the cost-effective option.
Alternately, we can use,
F1 R2 - F2 R1
N > ________________ (4)
R1 - R2
Plugging in the numbers,
(5.99)(84.14) - (0.99)(85.64)
N > _____________________________
85.64 - 84.14
N > 279.48
Thus for option 1 to be cost-effective the amount sent must be greater than US$279.48. In this case Sanjay is sending US$100, therefore option 1 cannot be the cost-effective option. In other words, option 2 is the cost-effective option and will remain as such on condition that the amount sent is less than US$279.48.
It is pertinent to note that by looking at the exchange rates of the options, it is tempting to suggest that the higher exchange rate will make option 1 the better option. However, this higher exchange rate of option 1 is offset by the higher transaction fee. It is only above the US$279.48 threshold that the higher exchange rate of option 1 is large enough to overcome its higher fee and then surpass the exchange rate - transaction fee combination of option 2. This is indeed one motivation behind this website, as we now see that the decision-making information may not be apparent when the numbers are taken at face value and may present a rather unclear picture.
2. Equal Total Cost Algorithm (ETCA)
Consider a money transfer customer weighing two options to send an amount that will each result in a total transaction cost (M) to a recipient in a foreign destination. The competing foreign exchange rates are R1 and R2 respectively. The applicable fees on the sender's side are F1 and F2 respectively. Which option will yield the higher amount to the receiver? The amount received by the receiver can be expressed as
(M - F) x R
For option 1 to yield the higher value to the receiver, at the lower cost to the sender (cost-effective), it can be shown that
F1 R1 - F2 R2
R1 - R2 > ______________ (1)
M
otherwise option 2 is the cost-effective option because it yields the higher amount to the receiver with lower cost to the sender.
Alternately, we can re-arrange the expression in terms of M, as follows
F1 R1 - F2 R2
M > ______________ (2)
R1 - R2
In this alternate set up, M tells us the minimum total transaction cost for option 1 to be cost-effective, that is, it will yield the higher value to the receiver in the receiving country currency while being the lower cost to the sender.
Proceed with a comparison calculation with our Comparison tool or Simplified tool, or review an example below for further guidance.
Example
Danny is spending (M) $100 on a money transfer from the United States to his family in Ghana. Danny found the following options from the money transfer apps.
Option 1: Exchange rate (R1) is $1 to GHC15.96, transfer fee (F1) is $1.00, delivery in minutes.
Option 2: Exchange rate (R2) is $1 to GHC15.67, transfer fee (F2) is $0.00, delivery in 3 days.
Which is the cost-effective option?
We know that if option 1 is the cost-effective option, then
F1 R1 - F2 R2
R1 - R2 > ______________ (1)
M
otherwise option 2 is the cost-effective option.
So plugging in the numbers,
(1.00)(15.96) - (0.00)(15.67)
15.96 - 15.67 > _________________________
100
0.29 > 0.1596 , which is a true and valid statement.
Thus, option 1 provides the higher value to the receiver and the lower cost to the sender.
Alternately, let's look further using
F1 R1 - F2 R2
M > ______________ (2)
R1 - R2
(1.00)(15.96) - (0.00)(15.67)
M > ________________________
15.96 - 15.67
M > 55.03
Thus, comparing these two money transfer options, option 1 will be the cost-effective option on condition that Danny's total transaction cost is more than $55.03. If the total transaction cost is lower, then option 2 will become the cost-effective option.
Example
Danny is spending (M) $100 on a money transfer from the United States to his family in Ghana. Danny found the following options from the money transfer apps.
Option 1: Exchange rate (R1) is $1 to GHC16.06, transfer fee (F1) is $4.00, delivery in minutes.
Option 2: Exchange rate (R2) is $1 to GHC15.71, transfer fee (F2) is $0.00, delivery in 4 days.
Which is the cost-effective option?
Option 1 is the cost-effective option if,
F1 R1 - F2 R2
R1 - R2 > ______________ (1)
M
otherwise option 2 is the cost-effective option.
Plugging in the numbers,
(4.00)(16.06) - (0.00)(15.71)
16.06 - 15.71 > _________________________
100
0.35 > 0.6424 , which is invalid.
Thus, option 1 fails. Option 2 gives the higher value to the receiver with lower cost to the sender.
Alternately, let's use
F1 R1 - F2 R2
M > ______________ (2)
R1 - R2
(4.00)(16.06) - (0.00)(15.71)
M > ________________________
16.06 - 15.71
M > 183.54
Thus, option 1 will be the cost-effective option only if Danny's total transaction cost is more than $183.54.
Note that any effects of the delivery times are not considered in the calculations.
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Disclosure
Our money transfer calculators and tools are intended for informational purposes only, for all stakeholders. Our tools and opinions have been developed from our own non professional research, experience and understanding of the international money transfer system. We are not certified or licensed financial advisors or finance professionals in any jurisdiction, and we do not intend to be percieved as such. We are not a money transfer or FOREX company in any jurisdiction. We are an affiliate marketer and aggregator of money transfer data available in the public domain. This website receives some of its funding from third-party advertizing. For further information, please review our disclaimer.
