Xoom, an alternative to Western Union (WU) and MoneyGram (MGI), first entered the money transfer scene in 2001. Acquired by PayPal in 2015, the international transfer service allows customers to send money online to 158 countries across the globe, including Italy, Germany, France, Australia, the Philippines, India, Canada, the United Kingdom, Mexico, Argentina, and Brazil.  

Xoom, which is headquartered in San Francisco, enables customers to send this money using their mobile phone, tablet, or computer.

How Does It Work?

Customers can transfer money to friends and family by completing the following five steps on Xoom.com:

  1. Sign up for a free account.
  2. Select money transfer options, including the recipient’s name and country, amount and delivery method (bank deposit, cash pickup, or door-to-door delivery).
  3. Enter the recipient’s information, including his/her full name, address, bank name, and account number.
  4. Enter payment information. Customers can choose to pay from their checking account, debit, or credit card. (Xoom does not accept cash as a funding source.)
  5. Review the details and confirm the transfer.

Once they have a Xoom account, customers can log on and quickly send money to friends and family from their mobile phone, tablet, or computer. When you transfer money through Xoom, your recipient can receive the transfer in either local currency or U.S. dollars.

How Much Does It Cost?

Xoom’s service fees vary depending on your country, the country to which you are transferring money, your funding source, the payout currency, and the overall transfer amount. You’ll pay the lowest fees if you transfer money through a U.S. bank account; however, the transaction may take up to four business days for Xoom to receive funds from your bank. If you pay with a credit or debit card, the fees are slightly higher, but transaction processing is faster.

The majority of Xoom’s transactions are sent to Mexico and the Philippines, funded from a bank account and disbursed in local currency. For those transactions, the customer pays a flat fee of $4.99.

Xoom offers a fee and exchange rate calculator to help customers figure out the total price of the transfer as well as the amount their recipient will receive (based on exchange rates.)

Let’s say you want to send $500 to a friend in Ireland. According to the Xoom calculator, it would cost you a total of $4.99 to send the money from your bank account. Alternatively, if you wanted to pay with a credit or debit card, you would pay a total of $15.49 in fees.

The fees are much lower for some countries. For example, if you wanted to send $500 to a family member in Chad, it would cost you a total of $2.99, whether you paid with a credit/debit card or directly from your account.

Advantages and Disadvantages

The major advantage to Xoom is price. The service claims to offer lower prices on international money transfers than Western Union and MoneyGram. Xoom makes its money from transaction fees, as well as the foreign exchange fees charged when the money is received in a currency other than U.S. dollars.

According to Xoom’s website, its transfer service is also extremely secure. Xoom says it uses a 128-bit data security encryption to protect all information sent between the customer’s web browser and its website. The company is certified and accredited by third-party privacy organizations and regulated by both state and federal U.S. government agencies.

Xoom also offers a money-back guarantee. If for any reason your money is not received by your recipient, it will refund your transaction in full.

So what about the disadvantages? Some critics complain that Xoom often plays it too safe, resulting in extra hassle for the customer and lengthy processing times. The service has received numerous complaints on the Consumer Affairs website in which customers report that their money was held for too long, Xoom’s agents asked too many “unrelated questions” and, in some cases, Xoom requested additional proof or information, such as bank statements.

Of course, taking these additional measures (and refusing to accept cash as a funding source) are good ways to avoid money-laundering schemes and terrorism financing.

Xoom itself was the victim of a massive fraud scheme. In January 2015, the company announced that $30.8 million was fraudulently transferred to overseas accounts through employee impersonation and fraudulent requests targeting its finance department. No customer money transfers were affected directly. In the time since, however, Xoom was acquired by PayPal, improving its security, and it has not encountered any such fraudulent activities since then.

The Bottom Line

For customers looking to send money to friends and family across the globe, Xoom can be an affordable alternative to other international money transfer services. The company also assures customer safety and offers a money-back guarantee.