Xoom (XOOM), a newer 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 over 70 countries across the globe – including Italy, Germany, France, Australia, the Philippines, India, Canada, the United Kingdom, Mexico, Argentina, and Brazil. 

In 2013, Xoom's 1 million+ active customers sent more than $5.5 billion to family and friends across the world. 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 or 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. Xoom launched its mobile site in November 2011; as of 2014, 55% of all Xoom transactions were sent through mobile devices.

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 to send any amount up to $2,999.

Xoom offers a fees and exchange rates 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 $504.99 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 $515.49.

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 $502.99, whether you paid with a credit/debit card or directly from your account.

Pros and Cons

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 cons? 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.

Despite all its security measures, Xoom itself was recently 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, but the incident caused Xoom’s shares to plummet by as much as 17% in extended trading.

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.