Thursday, August 14, 2008

Xoom In!!!

A few months back, Gladys, a Filipino friend here in Austin emailed me asking how I was sending money to the Philippines. I told her about the Bank of the Philippine Islands Express Remittance Corporation (BPI or BPI ERC, in short). While writing my response though, I was faced with the incomplete logic of my reasoning. That's when I decided to try Xoom - and it convinced me to change services.

First, about BPI ERC services... This is what my response to her extolling its virtues:

I use the remittance procedure. BPI here is not a bank, so they accept the money as remittances and not as deposits.

I noticed that they recently went back to $7 per remittance -maybe because the PHP has appreciated vs the USD recently. I think there are a couple of cheaper alternatives but I did not look into them further because I set up the distribution of the money in the Philippines either by transferring funds or filling an remittance card online.

What I mean is I send 1 amount for $7 into BPI Express Remittance Corp into my account in the Philippines. Then, through online banking monthly (for free :)!), I split the amount to various accounts - other BPI accounts or for those who have no BPI accounts, we set up BPI remittance cards (they call it EMO card but I forgot what the acronym stands for). This way, everything is traceable - which we need because some of the amount we send there, we declare for deductions in our US tax return.

If the person/s you are sending to do not have BPI accounts or they do not need that, I remember reading that you can do a delivery to the person as well. But you'll have to research that since I have no experience on it.

Meanwhile, here are some tips:
1. Wells Fargo or Washington Mutual have accounts that provides free money orders, cashiers checks, etc. I like that because instead of me withdrawing cash and then having to go buy money order somewhere else (2 steps), I can just directly ask them to give me a money order (1 step). Also, it's safer that way since I do not have to carry cash.

2. At first, I was sending the check and form to BPI SF through USPS Registered mail (~ $10). After a few tries of that, I just sent them first class ($0.41). What I just needed to do was as much as possible, drop them directly at the USPS drop boxes (instead of leaving them for the postman to pick up).

3. The remittance takes about 1 week. So you have to factor that in vs when you want the money available.

Also, if you need it faster, there are other alternatives - I have heard of xoom and western union but have not tried them. I have tried wiring through Washington Mutual since I don't have to pay for the outgoing wire fee ($25) and I only have to pay for the receiving wire charged by BPI ($25). I know that Wells Fargo has a new "product" similar to this but not sure if it is available here in Austin ( I got the flier in the LA Philippines Consulate Office).

Then I tried Xoom (and with just one look, my heart went boom! as in the song...) Seriously, here are my reasons why I changed over to Xoom:
Use Xoom to Send Money to the Philippines

1. Xoom's remittance fee is not significantly different from BPI ERC. BPI ERC charges $7 while Xoom charged as low as $3.50 to as high as $60.

For our purposes though, we were only paying a maximum of $7.99 which is very reasonable compared to BPI ERC's $7.

Take note that the middle row is for Value Service (where Xoom will debit from your checking account; which means the funds should be available and this is basically a cash transaction) while the right row is for Standard Service (where Xoom will debit from your credit card; which means in case you do not have available funds yet, you can use this service). I would say use only the Standard Service in extreme cases of emergency because it is very expensive and it also means you don't have sufficient funds - so should you be remitting money in the first place?

Also, in comparison to Western Union that I mentioned in my email response, it seems that Xoom was much much cheaper compared to Western Union for the cash transactions.

2. Remittance time is faster for Xoom
(within 24 hours) vs BPI ERC's 1-2 weeks due to the mailing.

The first time you send through Xoom, your source account (bank checking account) will be validated first. Xoom will tell you that the validation will take time (I think like a week). Mine took just a weekend to be validated.

The next time I sent through Xoom, it knew me/my account already, so there were no long forms need to be filled out. Once I hit the SEND button, it actually takes about 15 hours for Xoom to transfer to my recipient account!

3. Convenient processing for Xoom (online) vs BPI ERC (need to get a money order, fill out a form, mail it, etc.)

This is a no-brainer. I don't have to make a trip to town to do these - go to the bank for the money order, fill out the form, put in an envelope, put a stamp on the envelope, snail mail it - which could easily be half-day. I do the process online in less than 5 minutes!

Did you notice the additional benefits that Xoom has? Faster, Better (more convenient), Cheap(er or equally cheap). That sounds familiar? Now where did I hear that? Oh, from my other life, my Intel life....

Of course, this review is not complete without mentioning the downside. There are 2 that I see:
1. Online transactions can be risky (as snail mailing it can be risky as well). Having Norton Firewall and Internet Security up and running is helpful. This is true for all online financial services.

2. Xoom's conversion rate is typically lower by about 80 centavos to a dollar. So, if you are sending $100, that could be PHP 80 less with Xoom.

For me, the benefits of Xoom exceeds these downsides. I have now used Xoom thrice already and so far, so good!

If you are ready to try Xoom, here are the 4 Steps to send money using them and my own tips:
Step 1: Select a country and enter an amount to send

On your first send, you will only be allowed to send $1000 due to Xoom's Consumer Protection Policy and US Federal Regulations. Then there is 60-day waiting period before the limit can be increased. You can see your current sending limit on the right side of the screen once you have logged into your account.

I first sent on May 23 and my limit was $1000. Today >60 days later, my limit has been bumped up to $2500.

Step 2: Choose how your recipient will receive funds

You can choose Cash Pick-up, Home Delivery or Direct to Bank Deposit.

I actually remit to my own BPI account. Then I make the online transfers from my BPI account to the various recipients (other BPI accounts or BPI EMO cards).

Xoom also has ties with many Philippine reputable banks and establishments; for example, Metrobank, Banco De Oro, Equitable PCI, Cebuana Lhuiller, One Network Bank, etc.

Xoom can deliver to persons as well (not just bank/accounts). So this is good for those whose recipients are in the smaller towns.

Step 3: Choose a payment method and confirm your money transfer

This is where you will choose whether you will pay from your checking account (Value Service) or from your credit card/PayPal (Standard Service).

Step 4: Notify your recipient that their money is on the way

You can add the email addresses of those who need to be notified. 3 email addresses are accepted.

To know even more than what I have mentioned above, check out the Xoom website.

Once you've opened an account, come back and leave me a comment so I'll know who have tried it out. Then, I will personally give you one more useful tip!

So go ahead and give Xoom a try!

UPDATE: Tin emailed me about 2 other possibilities and I investigated it some:
PNBRemit - Has lower fees if remitted to a PNB account or Global Filipino Card (GFC, which is like BPI's EMO card I mentioned earlier). If not, the fee is $10.

Paypal Philippines- This is not very clear but here's what I got from another blogger: If your Paypal is linked to a Philippine debit/credit card, the fee is $5. There is a UnionBank Eon card that does not incur any fees.

If you have experiences on any of these - Xoom, PNBRemit and Paypal - leave a comment here, please!


trashalou August 14, 2008 at 2:06 PM  

You sure have done some research into that. It is always useful to know ways of transferring money around the world. Thanks.

Also thanks for coming to visit at Trash Towers up here on the hill today.

Ge,  August 15, 2008 at 11:33 AM  

Thanks for your info, Tita Rela! Magaling ka talaga sa pag-reresearch and evaluation...another "remnant" from your "past Intel Life"?

You mentioned, tax declarations for the money you send to the Phils. Applicable lang ba 'yon sa Philippine Charitable Institutions or pati na rin sa "family charity fund/institution" :))

Rela Pantaleon-Manigsaca August 16, 2008 at 10:51 AM  

My understanding of the US tax laws is that we can only deduct 503(c) registered non-profit organizations in the US. So technically, most of the Philippine charitable organizations would not meet the criteria.

We did not claim these deductions for our 2003-2005 returns but in 2006 (independent accountant) and 2007 (TurboTax accountant), they let us use those deductions for as long as we have the paper trail.

The contributions to the Philippine charitable institutions could pass (but that is our own risk based on my understanding of the US tax laws), but not the "family charity funs/institution" (unless maybe you incorporate it and register it to make it legal, like maybe a foundation.)

Aiyaz Paniwala - Grieving customer,  October 25, 2009 at 5:02 PM  

Well you forgot to mention how they can cancel the transaction anytime and without warning after a "carful" review. Happens for no good reason.

And on top of that they have a limit on the ammount and number of transactions. XOOM's customer service is a pain in the ass to reach if you want to get anything additional from them.

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