Transferring money to Israel is a necessity. However, it can be tricky: many Israelis face difficulties sending remittances to Israeli banks. Some of them, particularly those who return to Israel after relocating, must transfer funds from their foreign bank account to an Israeli one.
While Israeli banks have a hard time processing the amounts and are unwilling to accept money from many states, inbound transfers to Israel can be cheaper and more convenient than you think, assuming the country of provenance is eligible to be a client.
The necessity for cheap transfers increases as immigration here continues, even though at a slower pace due to recession fears. In 2021, 19,713 immigrants were reported. Last year the number grew, reaching 27,050 immigrants, most of whom are fleeing Russia due to war-related reasons.
If you're planning to send money to or from Israel or support financial literacy and want to make informed financial decisions, this article will help you.
Foreign investments and immigration in Israel continue
Foreign direct investment (FDI) in 2021 was approximately US$29.6 billion, compared to the previous year when it totaled US$24.3 billion. In the first quarter of 2022, the present scope of foreign investment in Israel is estimated to be about US$6 billion. This level of foreign investment activity emphasizes the need for currency transfers to Israel to be easier and cheaper, and money transfer services support this level of foreign investment activity.
Investors still do business in Israel despite past events, like the aftershock of the global COVID-19 crisis and this Middle East country's political instability. This happens because conducting business here is easy, and the country has no general FDI legislation or approval regime.
Immigrants, too, keep coming to Israel. Here are the countries of origin of expats, listed from the largest sender to the nations that have sent the fewest emigrants:
- Former Soviet Union (10,500)
- USA/Canada (4,400)
- France (3,500)
- Ethiopia (1,636)
- Argentina (900)
- The United Kingdom (600)
- South Africa (550).
Moving money to Israel through banks can be difficult and expensive
Before making Aliyah, you should check your bank's policy and make the necessary arrangements to send money after giving your approval through fax or phone. For example, many banks in the United Kingdom, the United States, and Canada require you to be physically present at your bank's local office to send money abroad if prior arrangements have yet to be made.
Note: You will often need to demonstrate your funds' origin for them to be wired and released into an Israeli bank account. You may be required to produce bank statements, your social security card, tax returns, and/or a letter from an accountant or attorney demonstrating the origin.
Also, some of the fees in the pre-Aliyah stage may be negotiable. For instance, some banks may provide discounts on international wires if you make them online, while others may cut prices if you set up a recurring wire.
Depending on the bank, you will be charged a fee of around 0.33% of the transaction amount upon receipt of the funds in your account. Some fees are unavoidable; banks in the U.S., for instance, charge an average of $46 per international transfer. Take into consideration intermediary and domestic receiving fees in Israel. Net wire costs between the United States and Israel average around $70. Lastly, banks aren't bound by the West Bank's official rate and can set their own exchange rate.
Foreign exchange companies seem to be a safe option
Some banks are reluctant to accept transfers from foreign accounts.
On the other hand, nonbanks, like money transfer companies, allow you to transfer money to and from Israel, and even cheaper. And luckily, there are ways to compare transfer fees to and from this Asian country to choose the best option.
That being said, foreign exchange companies targeting E.U., USA, U.K., Australian clients and potentially clients from other nations provide a viable alternative to banks.
Sending money to Israel from Russia is in high demand
In the first 100 days of the war in Ukraine, the Israelis who escaped Russia put approximately $300 million in Israeli banks. Banks processed a similar amount, but it's nothing compared to the amounts that immigrants fleeing Russia are trying to bring in, because we talk of billions of Israeli New Shekels from business owners.
As start-ups knock on Israel's doors, the Bank of Israel needs a uniform policy to benefit from the wave of immigrants, their business projects, and the money they're trying to transfer to this Middle East country.
Even though money transfer services are helpful when used by eligible countries, in this case, they're useless. In Israel, money transfer companies share the same strict regulations as banks, so sending ILS from Russia is impossible.
Transferring foreign money between accounts is possible
Transferring money between different accounts in different countries and currencies is possible. Moreover, there's also a multi-currency account product you can easily use online, like Wise Account.
You can receive, send, hold, and spend money through your Wise multi-currency account. You can have 50+ currencies and convert them at the current exchange rate anytime. You can obtain account details for certain coins to receive money from everywhere globally. You'll pay a modest currency conversion fee, which for major currencies may be as little as 0.41% of the transaction value.
What to consider when transferring USD to ILS and GBP to ILS
The best way to transfer money to Israel from the United States and the United Kingdom is determined by your personal preferences and payment details. Here are some things to consider:
- The shekel rates. Check which service offers the best shekel rate before transferring, especially if you're sending vast amounts of money.
- How you want to pay. Depending on the service, you may choose from various payment options, like cards or bank transfers.
- How quickly you want the funds to arrive in Israel. Bank transfers can take many days, even though certain specialist transactions are instant.
- What currency you choose. You may have a USD- or EUR-denominated bank account. Remember that you can transfer money in the same currency instead of exchanging it for the Shekel, as that could be expensive.
- How your recipient wants to get the money. Different providers have different payout options.
You can't use Venmo because it's only for U.S. residents, but you can use PayPal to transfer money to Israel. Pay attention to the fact that it can be potentially costly, as moving money through this means costs about 5% for the currency exchange, besides withdrawal and payment fees.
Do you want to transfer money from Israel internationally? Remember that each of the five significant Israeli banks supports international fund transfers. The United States, the European Union, and the United Kingdom are the most prevalent destinations for Israeli money.
Bank transfer costs vs money transfer service costs
What's the actual price of an international wire transfer? It depends on several aspects:
- Where you send the money from
- The place where the money ends up
- The chosen provider.
Money transfer services can charge as little as approximately 0.2%, but only for very high amounts of money and at the right time.
Banks can accept similarly low balances, but only for high-net-worth (HNW) accounts. Otherwise, they're higher. To be a high-net-worth individual (HNWI), you must own liquid assets worth a minimum of $1 million. However, international money transfers with banks are costly all over the world.
For example, international money transfer fees with banks in the U.K. can have an average exchange rate markup of 2% and cost an average of £215 per £10,000 transfer.
Summing up
The number of immigrants in Israel is rising (especially due to war-related reasons), even though the pace is slow because of recession-related fears. Convenient ways to transfer money to this country are necessary, and effective processes would bring benefits as business owners come knocking at Israel's doors with great start-ups.
Banks are popular for shekel transfers out of the country. However, they could be more helpful when it comes to sending money to Israel. Additionally, the transfer can be difficult, and fees can be high. As seen above, some states (including Russia) don't make eligible clients.
Inbound transfers to Israel can be cheaper and more convenient, and foreign exchange companies can provide a good alternative. However, they share the same regulations as banks.
Now that you are more familiar with transferring money to Israel, what choice will you make?