Before you send your money packing, read what expert Martin Ross says about overseas remittance.

When it comes to sending money home to your native country, there are myriad options, but they fall into three broad categories. You can physically take the cash back, buy a money order or bankers draft, or make a telegraphic transfer. Each method has its merits and pitfalls and should be looked at in terms of handling charges, the time it takes for the funds to arrive and exchange rates. 

The self mail option
Quite simply, exchanging yen for cash in your home country is the worst way to get your money home. This method has always attracted the worse rate of exchange regardless of whether you convert your yen at an airport, hotel or bank. Each country may also have a foreign exchange law governing how much cash you are able to legally bring into a country through customs, and Japanese law restricts the amount of outgoing cash to JY5,000,000. This is not to mention the inherent risk in carrying larger than usual amounts of cash while traveling.

Merits: None.

Pitfalls: Horrible exchange rate and the possible safety concerns that arise when you carry large amounts of cash.

The snail mail option
There are two ways to mail your money home; via postal money orders or through a bankers draft. You can purchase a postal money order at a post office. After paying the yen equivalent of your transfer amount and handling charges, a postal money order is issued, which is then sent by mail by either the post office or you to a third party's postal address overseas. Handling charges start at JY1000, but go up in increments of JY500 according to the amount. You can also buy a bankers draft (i.e. bank cheque) at a local bank for about JY2500. Like a postal money order, you then send the draft by post to the third party; as a precaution against it being lost en route, send it by registered mail.

Merits: Both methods represent cheap options for smaller transferred amounts.

Pitfalls: Funds are not sent directly to a bank account and are at risk of being lost. You also have to forgo interest on the funds in the time it takes for them to be credited to your account after clearing formalities. According to the post office in Japan, it takes an average of 6-14 days, depending upon the address of the beneficiary and the condition of the postal operations involved. Funds going to Canada, for instance, may take up to 20 days. Post office handling charges are not a flat-based fee, but go up in increments of JY500 as the amount you send increases. Other eccentricities exist according to the destination; for example, if you purchase a money order to send to Australia, the post office will send it on your behalf, but they need to route it via the UK, where a AU$10 charge is levied. Postal money orders are not available for transfers to New Zealand.

The electronic mail option
Telegraphic transfer from a bank or the post office is the fastest way to transfer your money. At banks, your funds are subject to a TTS (temporary threshold shift) rate of exchange that most banks set at 10am. Typically, funds should be credited within zero to two business days. However, local banking practices and time zone differences may affect delivery time. The speed does cost you a little more, but competition has caused fees to come down considerably over the years. The prices range from JY2000 to around JY7000. The cheapest service is offered by Lloyds TSB Bank plc, Tokyo at JY2000. Citibank offers commission-free remittances to account holders, but it is conditional upon the customer maintaining an average account balance of JY1,000,000; otherwise it's JY4000. Shop around for the bank that will give you the rates you want. 

You can also use the post office to electronically remit funds to an overseas postal savings account. This is a bit slower at 2-4 days. Charges start at JY700, with a tiered charging scale, which goes up in increments of JY500 according to the amount you send. You also pay an extra JY1000 for the telegraphic transfer. You should inquire with the post office if you have a domestic giro account regarding transfer to a giro account of a foreign beneficiary.

Merits: Aside from the speed of delivery, it is also secure, fully traceable and you are able to get the funds to any account including you own. What this means is that you can take care of that outstanding VISA bill, purchase that hot stock and have your money start to earn interest in the shortest possible time. Another significant merit is convenience, as there are banks that allow you to pre-register regular beneficiaries and avoid going to a counter queue each time.

Pitfalls: When using a bank to make a telegraphic transfer, be aware that intermediary banks overseas may levy an additional charge. This will vary from bank to bank, so check with the remitting bank for any possible additional charges. Also, keep in mind that telegraphic transfers to postal giro accounts are restricted to a select group of 14 mainly European countries and your beneficiary must also have a postal giro account.

Important consideration: It is important to understand that each institution, bank or post office will set their own daily rate of exchange based upon a market rate. Some banks have better rates than others, so monitor their published rates before choosing your service provider.  Please see the table below for an example:

Exchange Rate Comparison
(November 27, 2000)

A final financial tip
Whether you use the post office or a bank, regulations require that you bring some identification with your name and address, i.e. an alien registration card or driver's license. Passports are not accepted on their own.