How to get your money back into SA as an expat
If you’ve moved abroad, it doesn’t mean that all your business in South Africa has necessarily come to an end. You might be supporting a loved one back home or you might have other obligations that still require you to have usable capital in the country, but you now make your capital in a foreign country. How do go about sending money back to SA and what do people here have to do to legally receive it.
Though this article will not focus on possible taxation implications, it is important to note that just because you emigrated from the country and earn a salary abroad, does not mean you are exempt from paying taxes in South Africa. You will need to change your tax status from resident to non-resident. That is a whole can of worms on its own for which you will need the advice and support of a taxation expert. If you have emigrated, however, and you have to make payments, be they irregular once-off payments or every month, what options do you have, and what is the best one?
The bank
Banks usually offer international money transfer services. This often seems to be the most reliable option, especially if you are using the bank that you or a loved one has been banking with for years. The reality, however, is that a bank often charges for this service in ways we do not expect. Just about any professional forex service will change this fee, their level of transparency about it is often the issue.
When you exchange money, there is a true exchange rate, what you see on Reuters for example, and then there is the final exchange amount that you actually receive. The difference is the spread. If the true exchange rate for 1 USD, for example, is 10 ZAR, you might only get 9.60 ZAR at the end of the day. This is because the bank charges a 4% spread fee. This spread fee is not static and can change from transaction to transaction. The bank is an appropriate service to use for irregular, once-off payments or for regular payments that you need to make to South Africa.
Foreign exchange services
Foreign exchange services have been around for a long time and are a trustworthy alternative to banks. An exchange service can have exchange agreements with various banks and as they make large transactions every day, they can often provide you with better exchange rates than if you were to approach the bank yourself.
You will still need to pay your foreign exchange for the services rendered, and this payment could be according to a variable spread much like the banks, a fixed spread, or a commission. It is important to clarify this with your foreign exchange service before committing to a transaction through them. Foreign exchange services are appropriate to use for irregular, once-off payments or for regular payments that you need to make to South Africa.
These services are often faster and more secure as their agreement is usually with a corresponding bank in your home and foreign country. Currency Assist, for example, has agreements with Investec, Rand Merchant Bank, Mercantile Bank, and Bidvest Bank. We believe in being completely transparent so we have a fixed spread, which is usually lower than what you could get at the bank. The fixed spread does not change, and you always know exactly what fees you are paying.
Personal arrangements
Another option available to expats is personal agreements with private individuals. These agreements are completely dependent on those involved. It could be that another expat is coming back to South Africa for a visit, and you have a once-off exchange you would like to do. In this case, you might pool your cash amount with the other individual to exchange it all together and proportionally split the costs. Individuals could also provide services similar to those of professional foreign exchange companies, but these individuals do not necessarily have the same agreements with banks, cannot fix the same spread, and cannot provide the same assurances. If you do make use of this type of option, it could be appropriate for a once-off exchange, but for regular transactions, a more structured service and agreement with a provider is ideal.