The Best Newcomer Bank Accounts for Remittances

For many newcomers to Canada, there’s an expectation to help our loved ones back home as we migrate to our new home. As we earn our paycheques, we want to share our blessings and show them we still care, despite being far away.

While many of us also send care packages to our loved ones, the most common way we help people back home is by sending remittances.

There are so many ways to send remittances from Canada that figuring out where to start can be confusing.

Through this article, we’ll explore how remittances work in Canada, and we’ll check out some bank accounts that make the process hassle-free.

What Are Remittances and How Do They Work?

Broadly speaking, remittances are a way to send money electronically from one party to another.

Practically speaking, remittances are most frequently used by people abroad to send money to their home country. After all, for many people, helping their loved ones back home is one of their key motivations for seeking greener pastures.

In Canada, most remittances are done electronically, though you might still find remittance agents that accept cash. Luckily, even if you send cash, modern-day technology allows the funds to reach your recipient quickly.

Remittances work through agreements among agents, especially the sending agent (e.g., a bank) and a paying agent (e.g., a remittance centre). The former receives the funds from you, while the latter pays the recipient.

These agents and their intermediaries have agreed on how to handle remittances electronically (especially when it comes to paying one another), so that you and the recipient can have a seamless experience.

Remittance agents mainly make their money through two types of fees: sending fees and receiving fees.

Sending fees are set by the sending agent to cover the cost of the remittance process. They can be a flat fee, or they can be a percentage based on the amount to be sent.

In some cases, sending fees are waived, since the sending agent will make their money through the exchange rate margin, or “spread.”

One important thing to keep in mind when sending remittances is that the exchange rate you see on the internet, which is known as the mid-market rate, most likely won’t be the rate applied to the money you send. Instead, banks and other financial companies often add hidden fees onto that rate to fund…