What Travelers Need To Know Before They Wire Money

More travelers than ever are wiring money — to vacation rental owners, tour operators, and each other.

It doesn’t always work.

Jermaine Amado, a photographer based in Denver, recently recently booked an excursion for an excursion in Colombia. The tour operator agreed to accept a money transfer from PayPal.

When he initiated the transfer, PayPal blocked him. It turns out Colombian accounts were restricted — according to locals, because of fear of money laundering. “I didn’t get to go on the excursion,” he says.

That’s lesson one about traveling and sending money: Some restrictions apply.

I’ve had trouble using PayPal in Qatar and the United Arab Emirates. And on a recent trip to Turkey, I found that I couldn’t use PayPal at all.

Now more than ever, wiring money is fraught with challenges. Consider the recent problems with Zelle scams. Criminals routinely dupe travelers through the peer-to-peer payment app. A class action suit against Bank of America claims the financial institution downplayed a “huge” security risk of linking Zelle to its customers’ bank accounts. And the Consumer Financial Protection Bureau (CFPB) is about to release new guidance that would require banks to reverse fraudulent transfers made through Zelle.

Strictly speaking, wiring money is the act of sending money from one bank account to another through Swift or Fedwire. But most consumers have adopted a much broader definition of wiring money, including services like Zelle and PayPal. According to experts, there are things to know in advance, whether you’re going to send a wire transfer through your bank or use an app like Zelle or PayPal.

When do travelers wire money?

Many travelers use wire transfers to send money abroad. That’s because more businesses are raising the price of their product to cover the credit card fees. In places like Africa, that could add 5% to 6% to the cost of a tour. Edward Lyimo, the owner of African luxury safari tour company Pristine Trails Adventures & Safaris, offers a pay-by-wire option for customers.

“We often have many clients who choose this option when booking their East African adventure,” he says.

But there’s some paperwork involved. For a traditional wire transfer, travelers need to have specific account information from the tour provider. The information must include the beneficiaries’ account number, account name, a SWIFT code or IBAN number, and the tour provider’s physical address, among other things. It’s not as easy as paying by credit card.

Kari DePhillips says the fastest and least expensive way for her to send money is through Wise (formerly TransferWise). “However, the funds sent via this method do not offer you the same level of protection that other services do,” says DePhillips, who runs a digital marketing agency. In other words, it’s like giving someone cash. Once it’s gone, it may be impossible to get it back.

What can go wrong when you send money?

Esther Kiss, who runs a marketing agency in Palm City, Fla., says traditional wire transfers are expensive. Her bank charged her $45 for a recent international wire transfer. (These fees are almost entirely unwarranted, since the bank’s cost to send money is almost zero.)

“Unlike credit card transactions, it’s not easy to get your money back if something goes wrong,” she says. “I speak from personal experience.”

Kiss recently sent money from her Wells Fargo account to a bank in Hungary. The business wouldn’t accept a credit card or PayPal, so a wire transfer was the only choice. Wells Fargo promptly debited her account.

“Two weeks later, the business emailed me asking where the payment was,” she recalls. “I showed them the confirmation I got from Wells Fargo. But as it turns out, they never received it. Their bank insisted the wire was not initiated, and mine had already debited my account.”

So what happened? Turns out an intermediary bank that had worked with Wells Fargo had the money.

“Yet, this intermediary bank refused to release or return the funds,” she says. “It took several more phone calls and arguments with Wells Fargo’s customer service to actually get my money and the transaction fee credited back to me.”

She ended up sending the money through PayPal to a friend in Hungary, who made the payment.

What to know before you wire money

Experts say that while wiring or transferring money is safe, you should know who is on the receiving end. “It’s important to know exactly where the money is going,” says Chuck Czajka, founder of Macro Money Concepts in Stuart, Fla. “There are a lot of scam artists, and unfortunately, they have used wire transfers to scam people out of their money.”

No kidding. I almost fell for the PayPal invoice scam recently. And few years ago, my advocacy organization had an epidemic of scams on vacation rental sites. Criminals would post bogus listings that looked too good to be true. When travelers tried to book through the secure platform, the scammers offered an even deeper discount if they would wire the money. Many did, sending thousands of dollars for the bogus vacation rentals.

Today’s money transfer scams have moved to Facebook, where scammers offer nonexistent products that consumers pay for with wired money.

How do you make sure you’re dealing with someone reputable? Make sure you know the person.

“This fraud can be avoided entirely by refusing to do wire transfers with strangers,” says Gates Little, who runs a financial services company. “If you have a history with the owner of the property and feel they are trustworthy, that will involve less risk.”

But he cautions that you are still not protected if something goes wrong with the booking, whether you trust the person or not.

“If someone is asking you to book outside of the app to avoid fees or because they are in a hurry, you should be suspicious,” he says. “The fees on platforms like Airbnb are a much easier pill to swallow than your entire vacation fund disappearing irreversibly.”

How to protect yourself when you’re sending money

Chiranth Nataraj, CEO of the travel insurance company VisitorGuard.com, recalls how one of his clients wired a rent payment to a vacation rental a few years ago.

“Our client was unable to recover the money from his bank, despite providing all the details of the recipient’s bank account number to the fraud department of the bank,” he recalls.

Unfortunately, travel insurance doesn’t cover any of these fraudulent transfers, he says.

But you’re not out of options.

A little-known rule called Regulation E protects U.S. consumers from fraudulent money transfers. It defines an unauthorized electronic fund transfer as a transfer from an account initiated by someone without authority to initiate the transfer and from which you receive no benefit. A dispute process works a lot like a credit card chargeback. Contact your bank to initiate a dispute under Regulation E.

If that doesn’t work, you can file a complaint with the Consumer Financial Protection Bureau.

Banks are only now beginning to understand their responsibility to help customers under Regulation E. Until then, Nataraj recommends paying by credit card. The dispute process for credit cards is much more established.

Sending money by traditional wire transfer or through an app like PayPal, Venmo or Zelle is becoming more common for travelers. And with credit card fees increasing and merchants looking for an easy way to reduce their costs, money transfers will only become more common in the future.

So there are risks with money transfers, but if you take a few basic precautions, there’s less chance you’ll lose money. Also, there are some rules that can help you get your money back. Make sure you know them before you push the button on your next money transfer.