Complete Guide: Sending Money to Nepal from Japan

Introduction

Sending money (remittances) from Japan to Nepal is a common need for many, whether supporting family, paying for education, or investing in property. The flow of remittances between these two countries is significant, and finding the most efficient and cost-effective method is crucial. Choosing the wrong method can result in losing a substantial portion of your hard-earned money to fees and unfavorable exchange rates. This guide provides a comprehensive overview of your options.

Importance of Finding the Best Transfer Method

The difference between a good and a bad transfer method can be hundreds or even thousands of yen per transaction. Factors like fluctuating exchange rates, hidden fees, and varying processing times all contribute to the final cost. This guide will help you navigate these complexities and choose the best option for your specific needs.

Popular Money Transfer Methods

There are several ways to send money from Japan to Nepal:

• Bank Transfers (Traditional): You can send money directly from your Japanese bank account to a recipient's bank account in Nepal. This is often perceived as the most secure method, but it can be slower and more expensive due to higher fees and less competitive exchange rates. Major Japanese banks like MUFG Bank, Mizuho Bank, and SMBC offer international transfer services.
• Online Money Transfer Services: Specialized online platforms (like Wise (formerly TransferWise), WorldRemit, Remitly, and others) often offer significantly better exchange rates and lower fees than traditional banks. They typically have user-friendly websites and mobile apps, making the process convenient. These services often use a mid-market rate (the rate you see on Google) or a rate very close to it, and they are transparent about their fees.
• Peer-to-Peer (P2P) Platforms: While less common for international transfers, P2P platforms could theoretically connect you directly with someone in Nepal who needs Japanese Yen, allowing you to bypass traditional intermediaries. However, finding a reliable platform and ensuring security can be challenging. Due diligence is extremely important with this method.
• Cash Pickup Services: Services like Western Union and MoneyGram allow you to send money that the recipient can pick up in cash at designated locations in Nepal. This is useful for recipients who don't have bank accounts, but the fees can be higher, and the exchange rates are often less favorable than online services.

Factors to Consider When Sending Money

Before choosing a method, consider these factors:

• Exchange Rates: This is the rate at which your Japanese Yen (JPY) will be converted to Nepalese Rupees (NPR). Even small differences in the exchange rate can have a significant impact on the amount your recipient receives. Always compare the offered rate to the mid-market rate.
• Transfer Fees: These are the charges for the service. Fees can be a flat fee, a percentage of the amount sent, or a combination of both. Some services may advertise "no fees" but make their profit by offering a less favorable exchange rate.
• Processing Times: How quickly does the money need to arrive? Bank transfers can take several business days, while online services and cash pickup services are often much faster, sometimes even instantaneous.
• Security and Reliability: Choose a reputable and licensed provider to ensure your money is safe. Look for companies with strong security measures and good customer reviews. Check if they are regulated by the relevant financial authorities in Japan (Financial Services Agency - FSA).
• Limits: Each provider may have daily, weekly and monthly limits.
• Payment and receiving method: Decide how you will pay for the transfer and how the recipient will receive the funds.

Step-by-Step Guide to Sending Money

1. Choose a Transfer Method: Based on your priorities (speed, cost, convenience), select the method that best suits your needs.

2. Compare Providers: Don't settle for the first option you see. Use online comparison tools (like RatesRemit or others) to compare exchange rates, fees, and processing times from different providers.

3. Gather Necessary Information: You'll typically need:

   • Your recipient's full name (as it appears on their ID)
   • Recipient's address and contact information
   • Recipient's bank name and address (if sending to a bank account)
   • Recipient's bank account number and SWIFT/BIC code
   • Your own identification (passport, residence card, etc.)
   • Your My Number (for larger transactions, due to Japanese regulations)

4. Initiate the Transfer: Follow the instructions provided by your chosen service. You'll typically need to create an account, enter the recipient's details, and specify the amount you want to send.

5. Track the Transfer: Most providers offer tracking tools so you can monitor the progress of your transfer and know when it has been received.

Best Money Transfer Services for Nepal

Here are some popular and generally well-regarded services (Note: This is not an exhaustive list, and you should always do your own research):

1. Wise (formerly TransferWise): Known for its transparent fees and mid-market exchange rates. Often a very cost-effective option. Good for bank-to-bank transfers.

   • Pros: Excellent exchange rates, low and transparent fees, fast transfers.
   • Cons: May not offer cash pickup options.

2. WorldRemit: Offers a variety of delivery options, including bank transfer, cash pickup, and mobile money. Often has competitive rates and promotions.

   • Pros: Multiple delivery options, good for sending to mobile wallets.
   • Cons: Exchange rates may not always be as good as Wise.

3. Remitly: Another popular online service with competitive rates and fast transfers. Often offers different delivery speeds with varying fees.

   • Pros: Fast transfers, good for urgent needs.
   • Cons: Fees can vary depending on the delivery speed.

4. SBI Remit: A popular option within Japan.

   • Pros: Multiple delivery options, including cash pickup.
   • Cons: Exchange rates are not very transparent, fees might be higher.

5. Western Union/MoneyGram: Widely available for cash pickup.

   • Pros: Convenient for recipients without bank accounts, extensive network of agent locations.
   • Cons: Higher fees and less favorable exchange rates compared to online services.

Tips for Getting the Best Exchange Rates

• Timing your transfer: Exchange rates fluctuate constantly. If you're not in a rush, monitor the rates and try to send money when the JPY is strong relative to the NPR. However, predicting currency movements is difficult, so don't delay unnecessarily if you need to send money urgently.
• Using forward contracts: Some providers offer "forward contracts," which allow you to lock in an exchange rate for a future transfer. This can protect you from unfavorable rate fluctuations, but it also means you might miss out if the rate improves. This is generally more relevant for larger, planned transfers.
• Avoiding hidden fees: Read the fine print carefully. Some providers may advertise low fees but make up for it with a poor exchange rate. Always compare the total cost of the transfer, including both fees and the exchange rate.

Legal and Tax Considerations

• Reporting requirements for large transfers: In Japan, financial institutions are required to report international money transfers exceeding a certain threshold (typically 1 million JPY) to the authorities. This is a standard procedure to prevent money laundering and other financial crimes. Be prepared to provide information about the source of funds and the purpose of the transfer.
• Tax implications in Japan and Nepal: Remittances are generally not considered taxable income for the recipient in Nepal. However, if you are sending a very large amount, it's best to consult with a tax advisor in both Japan and Nepal to ensure you are compliant with all applicable laws. There might be gift tax implications in Japan depending on the amount and the relationship with the recipient.

Common Pitfalls and How to Avoid Them

• Hidden fees: As mentioned above, always look beyond advertised fees and compare the total cost.
• Unfavorable exchange rates: Don't assume all providers offer the same exchange rate. Shop around and compare.
• Delayed transfers: Check the estimated processing time before sending money, especially if it's urgent.
• Incorrect Recipient Information: Double check the recipient's details as any mistake can delay the transfer.
• Scams: Be careful of unsolicited requests for money transfers, especially from unknown individuals.

Frequently Asked Questions

1. What is the cheapest way to send money to Nepal from Japan?
   Generally, online money transfer services like Wise offer the most competitive rates and lowest fees.

2. How long does it take to send money to Nepal?
   It varies depending on the provider and method. Online services can be as fast as a few minutes, while bank transfers can take several business days.

3. Do I need a My Number to send money?
   Yes, you will likely need your My Number, especially for larger transactions, to comply with Japanese regulations.

4. Can I send money to a mobile wallet in Nepal?
   Yes, some services like WorldRemit support sending money to mobile wallets in Nepal.

5. What is the limit for sending money to Nepal?
   Limits vary by provider and are subject to Japanese regulations. Check with your chosen provider for their specific limits.

6. Is it safe to send money online?
   Yes, if you use a reputable and licensed provider with strong security measures.

7. What is the mid-market rate?
   It is the midpoint between the "buy" and "sell" rates for a currency pair on the global market. It's often considered the fairest rate.

Conclusion

Sending money from Japan to Nepal doesn't have to be complicated or expensive. By understanding your options, comparing providers, and being aware of potential pitfalls, you can ensure your money reaches your recipient safely and efficiently. Always use comparison tools to get the best rates and fees for your specific needs. Remember to consult with financial and legal professionals for personalized advice, especially for large transactions.