Money Insider: How sending cash overseas is getting much cheaper

Transferring money overseas is a market that has been dominated for years by global banking institutions and established players including Western Union and MoneyGram.

There have been frequent customer gripes that the service is too slow and exchange rates used and fees levied make the transactions too expensive.

Fortunately the market place is changing. In the past 18 months we've seen some enterprising new entrants, with the likes of Azimo and CurrencyFair offering much cheaper money transfer options.

Overseas workers, retired expats, international students and foreign property owners are just a few of the groups that have benefited, and can now transact more cheaply thanks to this fresh competition.

Azimo recognised that migrants and UK expats send billions of pounds overseas each year, and has developed an online service which enables you to send money to 125 countries throughout the world.

The service gives the customer a range of options including payment direct to bank accounts, to mobile phones or for cash collection at more than 150,000 global locations.

The minimum transfer value is £50, and users can send up to £900 without need for ID verification. Lower overheads mean that transfers via Azimo will be charged at between 1 per cent and 2 per cent, compared with existing bank and wire services that frequently charge between 4 and 8 per cent. As a result, Azimo claims you could save up to £30 on a £300 transfer.

Another relative newcomer is CurrencyFair, an online, peer-to-peer market place which matches currency-exchange demands. It cuts out the hefty bank margins and results in customers having access to exchange rates very close to the wholesale rate.

Even though banks often offer "free" international money transfers or 0 per cent commission, the loading on the exchange rate is often a stealth charge and used to make a tidy profit on these transactions.

These new companies have lower overheads than the bigger players, and are able to pass on further cost savings by offering a direct service and cutting out some of the middlemen.

In much the same way that peer-to-peer lending is starting to nibble away at the UK savings and borrowing market, these new money-transfer options will appeal to price-conscious consumers looking to embrace new technology to obtain a cheaper deal when sending money overseas.

Santander student account could be just the ticket

The battle to win a decent share of the student-banking market has started early this year, with Santander unveiling details of its latest account package last Monday.

It's usually around mid-July when the new crop of student deals are announced, but Santander has been quick off the mark with an offer that may appeal to many teenagers heading off to university for the first time this autumn.

The new student account comes with an interest-free overdraft facility of up to £2,000, although looking at what was available from the other banks last year, interest-free borrowing limits of up to £3,000 were available, so that's worth bearing in mind.

However, the incentive that Santander is offering to new students could well be the deal clincher for many of the 2013 fresher intake. All new accounts opened since 24 June are eligible for a free, four-year 16-25 railcard, a sweetener that could prove a real money-saver to those students intending to use the railways to get to and from college.

The railcard will save students a third on their rail fares and an average of more than £170 per year, according to the Association of Train Operating Companies.

I'll take a more in-depth look at student bank accounts in a few weeks, once all the banks have shown their hands.

Andrew Hagger is an independent personal finance analyst from moneycomms.co.uk

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