Sending money home is one of the most common activities for Nigerians living abroad. Whether you're supporting family, paying for school fees, maintaining property, or investing back home, understanding how to transfer money efficiently can save you significant amounts over time. This guide compares the best remittance options and provides strategies to maximize the value of your transfers.
Nigeria is one of the largest remittance recipients globally, with billions of dollars flowing in annually from the diaspora. Yet many Nigerians abroad lose money unnecessarily through poor exchange rates and hidden fees. Let's fix that.
Understanding the True Cost of Remittances
The cost of sending money includes two components:
1. Transfer Fees
The explicit fee charged by the service. This can be a flat fee (e.g., £2.99 per transfer) or a percentage of the amount sent (e.g., 1.5% of the transfer).
2. Exchange Rate Margin
This is where many services make their real profit. They offer an exchange rate that's worse than the mid-market rate (the "real" rate you see on Google or XE.com). The difference is their margin.
For example:
- Mid-market rate: £1 = ₦1,900
- Service's rate: £1 = ₦1,850
- Margin: ₦50 per pound (2.6% hidden cost)
A service advertising "zero fees" might have worse exchange rates that cost you more overall. Always compare the total amount received, not just the fees.
Popular Remittance Services
Wise (formerly TransferWise)
Overview: Known for transparent pricing and mid-market rates.
Pros:
- Uses the mid-market exchange rate
- Transparent, low percentage-based fees (typically 0.5-1%)
- Fast transfers (often within minutes to hours)
- Excellent app and user experience
- Holds money in multiple currencies with Wise account
Cons:
- May have limits on transfer amounts
- Requires bank account in Nigeria (no cash pickup)
Best for: Regular senders who want best value and have recipients with bank accounts.
WorldRemit
Overview: Popular service with multiple delivery options in Nigeria.
Pros:
- Multiple delivery options (bank transfer, mobile money, cash pickup)
- Competitive rates for smaller amounts
- Fast delivery
- Airtime top-up option
Cons:
- Exchange rate margin can be higher than Wise
- Fees vary by amount and delivery method
Best for: Those who need flexibility in delivery methods.
Remitly
Overview: Offers express and economy transfer options.
Pros:
- Express option for very fast transfers
- Regular promotions for new users
- Cash pickup available
- Good mobile app
Cons:
- Express transfers have higher fees
- Exchange rates vary
Best for: Urgent transfers or occasional senders who can use promotions.
Western Union
Overview: Established name with extensive network.
Pros:
- Huge network of cash pickup locations in Nigeria
- Brand recognition and trust
- Works even without bank accounts
Cons:
- Higher fees than digital-first services
- Exchange rates often less favorable
- Cash pickup can involve queues
Best for: Recipients without bank accounts in areas with Western Union agents.
MoneyGram
Overview: Similar to Western Union with extensive network.
Pros:
- Wide cash pickup network
- Also offers bank deposits and mobile wallet options
Cons:
- Fees and rates less competitive than online-first services
Best for: Cash pickup needs.
Sendwave
Overview: Mobile-focused service for Africa.
Pros:
- No transfer fees (revenue from exchange rate margin)
- Very simple mobile app
- Fast transfers
Cons:
- Exchange rate includes margin
- Limited to mobile/bank delivery
Best for: Mobile-savvy users who prefer simplicity.
LemFi (formerly Lemonade Finance)
Overview: African diaspora-focused fintech.
Pros:
- Competitive rates for African remittances
- Multicurrency accounts
- Virtual cards
- Understanding of African banking needs
Cons:
- Newer company, less established
- Limited features compared to larger banks
Best for: Nigerians who want a more integrated financial solution.
How to Compare Services
Use Comparison Tools
Websites like Monito.com, CompareRemit.com, and SaveOnSend.com compare multiple services' total costs including both fees and exchange rates.
Calculate Total Received
For any transfer, calculate the actual amount your recipient will receive:
Amount Sent - Fees = Net Amount × Exchange Rate = Naira Received
The service with the highest Naira received (after recipient gets the money) is the best deal.
Check Rate Lock Duration
Some services lock the rate when you initiate the transfer; others lock it only when payment is confirmed. With volatile exchange rates, this matters.
Strategies to Maximize Value
1. Send Larger Amounts Less Frequently
If fees are flat, sending larger amounts less often is more cost-effective than frequent small transfers.
2. Compare Before Every Transfer
The best service varies by amount, timing, and current promotions. Don't assume last time's best option is still best.
3. Use Promotions
Many services offer first-transfer bonuses, referral bonuses, or promotional rates. Take advantage of these.
4. Consider Timing
Exchange rates fluctuate. If your transfer isn't urgent, you might wait for a better rate. Apps like Wise allow you to set rate alerts.
5. Verify Recipient Details
Wrong account numbers cause delays and potential loss of funds. Double-check details before confirming.
6. Avoid Bank-to-Bank for Small Amounts
Traditional bank wire transfers (SWIFT) have high fees ($25-50+) that make them unsuitable for smaller amounts.
Receiving Money in Nigeria
Bank Accounts
Most transfers go to Nigerian bank accounts. Ensure the recipient:
- Has an active account
- Account is in their name as it appears on remittance
- Provides correct account number and bank name
Domiciliary Accounts
If you want to receive money in foreign currency (USD, GBP, EUR), the recipient needs a domiciliary account. This can be useful if they'll need foreign currency later, but involves forex regulations.
Cash Pickup
For recipients without bank accounts, cash pickup services (Western Union, MoneyGram, WorldRemit) allow them to collect money at agent locations. They'll need valid ID.
Mobile Wallets
Services like Paga and OPay allow mobile wallet delivery in Nigeria, though adoption varies.
CBN Regulations and Compliance
The Central Bank of Nigeria regulates foreign exchange. Key things to know:
- International Money Transfer Operators (IMTOs) must be licensed
- Naira settlement is at official rates (though parallel market exists)
- Large transfers may require documentation of source of funds
- Recipients should receive fair exchange rates
Always use licensed, reputable services to avoid compliance issues.
Tax Implications
In Your Country of Residence
Remittances are generally not taxable to you as the sender (you're sending your after-tax money). However, very large gifts might have tax implications in some jurisdictions. Consult a tax advisor for large amounts.
In Nigeria
Generally, remittances received in Nigeria are not subject to income tax (they're considered gifts). However, if money is being sent as payment for services rendered in Nigeria, different rules apply.
Common Mistakes to Avoid
1. Not Verifying Recipient Details
Sending to wrong account is difficult to reverse. Triple-check details.
2. Using Your Bank
Traditional bank wire transfers are usually the most expensive option. Use specialized remittance services instead.
3. Not Comparing Total Cost
Don't just look at fees—compare the total amount received.
4. Ignoring Promotions
First-time user bonuses and referral credits can significantly reduce costs.
5. Sending Through Unofficial Channels
While parallel market rates are tempting, unofficial transfers carry risks including fraud and legal issues.
Conclusion
Sending money to Nigeria doesn't have to be expensive. By understanding the true cost of transfers (fees plus exchange rate margin), comparing services for each transfer, and using strategies like timing and promotions, you can maximize the value your family receives.
The remittance market is competitive, with new services continually improving options for the Nigerian diaspora. Stay informed about your options, and your hard-earned money will go further.
Happy sending!