Santiago, a Colombian engineer living in Barcelona, balances his professional life with his family responsibilities in Colombia. His days are divided between his job at a technology company and caring for his distant family. Thousands of kilometers away from his hometown of Medellín, Santiago still looks after the well-being of his parents and siblings, who rely on his financial support for their daily needs.
For Santiago, sending money to Colombia is more than just a financial transaction; it’s a vital link connecting his new life in Europe to his family roots. Every euro he earns is carefully allocated to cover medical expenses, tuition fees, and the cost of living for his family. Like Santiago, many Colombian expatriates face the same challenge, seeking the most efficient and secure ways to financially support their loved ones back home.
Money transfers are crucial for the survival of Santiago’s family, and he is not alone in this situation. Today, nearly 3 million Colombians living in the United Kingdom, Europe, or the United States share similar daily challenges.
This article is designed to provide a comprehensive guide, not only to understand the legal and tax aspects related to these transactions but also to choose the most suitable transfer method for your specific needs, whether for education or healthcare. We will explore the fastest, least expensive, and most appropriate options for sending or receiving money in Colombia.
What are the different ways to send and receive money in Colombia?
1 – Traditional Banks
Traditional banking services are among the reliable and secure options for sending and receiving money in Colombia.
Advantages:
- Security and Trust: Banks are regulated by financial oversight bodies, offering a high level of security and protection for your funds.
- Complementary Services: In addition to money transfers, banks offer a range of financial services, such as investment advice, loans, and credit facilities.
- Direct International Transfers: You can send money directly from your bank account to an account in Colombia, simplifying the process without the need for intermediaries.
Disadvantages:
- High Costs: Transfer fees and exchange rates applied can be particularly high. Additional costs can accumulate, especially for frequent transfers or large amounts.
- Slower Process: The processing of international transfers can take several business days, which is not ideal for emergency dispatches such as healthcare needs.
- Complexity and Documentary Requirements: Sending funds abroad through banks may require comprehensive documentation and administrative formalities, making the process sometimes cumbersome.
- Requirement of a Bank Account: This requirement can be a major obstacle, especially in Colombia where a significant portion of the population does not have access to traditional banking services. This financial barrier limits access to money transfers for those who may need it most.
2 – Online Services and Apps
Online services such as Wise (formerly TransferWise), WorldRemit, PayPal, Venmo, and Cash App have revolutionized the way we send and receive money globally.
They offer a convenient and often more economical alternative to traditional money transfer methods, suited for our digital era.
Later in this article, you will discover our ranking of the fastest and least expensive ways to send or receive money in Colombia.
Advantages:
- Speed and Ease of Use: These platforms allow for rapid money transfers, often instantaneously, with a simple online operation or via a mobile app. Their intuitive user interface makes the process accessible to everyone.
- Cost-effective: The fees charged by these services are generally lower than those of traditional banks, especially for international transactions. They also offer competitive exchange rates, which can result in significant savings.
Disadvantages:
- Need for an Account on the Same Platform: To receive money through these services, the recipient often needs to have an account. This can be a barrier for people who are not accustomed to using such services or who do not have access to technological means in Colombia. Sometimes, to withdraw, you are limited to the banks or services that your loved ones can access.
- Lack of Personalization for Specific Needs: These services are not specifically designed for needs such as healthcare access. They do not provide the same assurance that each cent transferred will be used for medical purposes or to improve the well-being of loved ones.
- Lack of Transparency and Tracking: While these platforms offer some transparency regarding fees and the transfer process, they do not provide a detailed mechanism to track how funds are specifically used once received. This is crucial for donors who wish to ensure that their financial support is directly allocated to specific needs, such as healthcare for their loved ones.
- Geographical Limitations: Often, these apps are designed to function primarily in one country or a specific region, which poses a problem for immigrants wanting to financially support their loved ones in Colombia.
- Data Security: Although these apps take measures to protect users’ financial information, concerns about the security of personal data remain.
3 – The Online Health Credit Solution
If you want to support your loved ones in Colombia, especially in the healthcare sector, health credits offer a solution that combines speed, security, and positive impact.
KimboCare was born from the lived experience of two African immigrants facing the challenges of supporting the health of their loved ones back in Africa while navigating their own lives in the United States and Europe, a story similar to Santiago’s, which we discussed in the introduction.
This story is not unique, but our response to this challenge is entirely so.
KimboCare was created to transform the way we care for our families from afar, whether in Colombia or other developing countries.
Now, you can purchase digital health credits so that your loved ones can access preventative and curative care services without needing a bank account or a digital currency platform.
This process is simple, direct, and can be carried out from anywhere, at any time. These credits will be immediately usable by patients who will be treated in medical facilities that are always verified and monitored by KimboCare.
Rather than simply sending money, often without assurance that it will be used for necessary healthcare or without being able to ensure the quality of the care received, health credits offer a transparent and secure solution.
This allows you to have real-time tracking of the medical services purchased with the health credits, ensuring that every penny truly contributes to the health and well-being of the recipient.
The commitment lies in empowering vulnerable populations, particularly women and children, to access quality healthcare, thus contributing to a longer and healthier life.
The utility of health credits also includes the protection of your data with advanced encryption protocols, offering you additional peace of mind as you contribute to the health of your loved ones.
The fastest ways to send or receive money in Colombia
To send or receive money quickly in Colombia, there are several options available, each with its own specifics, advantages, and limitations. It is crucial to choose the method that best suits your needs, considering speed, costs, and specific requirements.
Health Credits
By purchasing health credits, you can ensure that your financial support is used directly for quality healthcare services.
For urgent healthcare needs, prioritize services that offer instant or same-day transfers. Platforms like KimboCare directly inform the patient via SMS or a call.
Not only does this allow for an efficient and fast transfer of funds, but it also ensures that your money contributes to a vital cause: the health of your loved ones.
Purchasing health credits frees you from the uncertainties and delays often associated with traditional money transfers.
When you buy health credits for someone in Colombia, the recipient can access necessary care without delay, thanks to a network of reliable and verified medical partners.
Moreover, you benefit from complete transparency and real-time traceability of the medical services delivered, which is not always the case with other money transfer methods.
Online Services and Mobile Apps
Online services and mobile apps are often the fastest for money transfers.
Platforms like PayPal, Western Union, WorldRemit, and TransferWise (now Wise) enable almost instantaneous transfers.
However, it is important to note that these speeds can vary depending on the amount sent and the necessary security verifications.
Some platforms limit the amount you can send over a given period without additional verification, while others may require detailed information about the recipient for compliance reasons.
International Banks
International bank transfers can also be quick, especially if both parties use the same bank or banks with cooperation agreements.
Nevertheless, interbank transfers can be subject to delays due to stricter verification processes and the need to go through clearing systems.
Amount limits and specific requirements vary significantly from one bank to another. This is particularly important in Colombia, where most households face restrictions on their withdrawals.
The least expensive ways to send or receive money in Colombia
Sending or receiving money from a loved one involves adopting a strategic approach to minimize costs while ensuring the security and efficiency of transactions.
According to recent data from the World Bank on the price of money transfers, the costs associated with these transactions remain high.
On average, sending $200 costs 6.2% in the second quarter of 2023. This year, the cost of sending money has increased in most regions, except for the Middle East and North Africa where rates have slightly decreased.
Among the different transfer methods, banks turn out to be the most expensive option with an average cost of 12.1%.
They are followed by post offices, which charge 7%, while money transfer operators and mobile phone services present more moderate costs, at 5.3% and 4.1%, respectively.
Online services and mobile apps often offer more favorable rates due to their reduced cost structures.
Although PayPal is better known for online payments, Xoom, a service of PayPal, is optimized for international transfers, offering reasonable fees and competitive exchange rates.
Indeed, the exchange rate is a crucial factor in the total cost of an international money transfer. In Colombia, the official currency is the Colombian peso (COP), used for all local financial transactions.
When sending money to Colombia, it is crucial to ensure that the funds are converted into Colombian pesos, even though many transfer services allow sending in various currencies like the U.S. dollar, euro, British pound, or Canadian dollar.
It is advisable to confirm with the recipient the preferred currency for receiving funds, as some Colombian banking institutions only accept payments in local currency.
Be aware that currency conversion may incur additional fees. Therefore, it is essential to inquire about the costs associated with your transfer and explore the possibility of sending the money directly in pesos to avoid these surcharges.
The landscape of money transfers in Latin America is complex and can vary significantly from one country to another. For example, in Cuba, Western Union has suspended transfers in U.S. dollars following U.S. sanctions.
According to the World Bank, formal remittances in Latin America amount to nearly $96 billion.
However, traditional services like MoneyGram or Western Union may include high fees, offer unfavorable exchange rates, limit operating hours, prolong transfer delays, and impose restrictions on the daily exchangeable amounts.
Before choosing a service, compare transaction fees, applied exchange rates, and look for reviews to ensure reliability and security.
Opting for platforms that offer a transparent exchange rate as close as possible to the market rate without hidden fees can significantly reduce the costs of transferring money to Colombia.
Is It Possible to Transfer Money with Zero Fees?
Platforms like TransferWise (now Wise) and Remitly are known for their competitive costs and transparency.
While the offer of fee-free money transfers may seem attractive, it can often be misleading.
Money transfer companies need to generate revenue to operate, and if they do not impose explicit transfer fees, they may recover these costs in other ways.
This can include the application of less favorable exchange rates, meaning your money loses value en route, or the introduction of additional fees once you engage in the transfer process.
Therefore, it’s important to be vigilant about hidden fees, which can appear as additional service charges or indirect costs.
Carefully reading the terms of service can save you from unpleasant surprises.
In comparison, cryptocurrency transactions are often faster and cheaper than their traditional financial counterparts, with fewer steps to send money, at least for those who know how to leverage the platform, which is not necessarily the case for many Colombians.
When the purpose of your money transfer is specifically related to supporting the healthcare needs of your loved ones in Colombia, purchasing health credits presents itself as an innovative solution offering affordable costs.
It’s a guarantee for your loved ones to obtain the necessary healthcare, avoiding unnecessary fees or fluctuations in exchange rates.
You know precisely which care has been provided, when, and at what cost, ensuring that your contribution has the desired impact.
Furthermore, no money transfer is required, thus minimizing the risk of hidden fees.
Transferring funds to Colombia based on various Needs
Sending money to Colombia goes far beyond a simple transaction; it is a demonstration of support, love, and investment in the future of your loved ones.
Whether it’s promoting access to education or ensuring the health of the family, each Colombian peso sent carries the potential for change and empowerment, enabling your loved ones to pursue their dreams and build a better future for themselves and their communities.
Education and Employment
Investing in education is a priority for many families.
Money transfers aimed at covering tuition fees, books, equipment, and supplies can be made through banks or online transfer services that offer direct delivery options to educational institutions or specific bank accounts.
This direct approach minimizes intermediaries and ensures that the funds reach their intended purpose.
At the same time, unemployment significantly affects young people in Colombia, often exacerbated by economic crises like the most recent one in 2019 due to COVID-19, which disrupted the main job markets for Colombian migrants.
This is particularly the case for Juan, who, like many young Colombians, faced an oversaturated job market and repeated strikes in the educational system that delayed his academic journey, preventing him from obtaining his university degree.
Without stable employment, he depends on the funds transferred by his older brother, Diego, who works as a computer engineer in Miami.
Aware of Juan’s precarious situation and that of their family back in Colombia, Diego makes it a point to send money regularly.
Each month, he transfers about 400 dollars to his family.
This amount, although modest in his new country of residence, represents more than what Juan could hope to earn in Colombia, especially considering that the average income for low-wage workers is below $360 per month.
Thanks to these remittances, Juan can not only meet his daily needs but has also been able to participate in vocational training and actively search for a job without the immediate pressure of poverty.
Health
When it comes to taking care of those who are far away, the greatest concern is often ensuring that the aid sent truly achieves its intended purpose, especially in terms of health.
This concern is not unfounded, as finding a competent and reliable healthcare professional for loved ones in Colombia can turn a simple task into a real challenge, especially in emergency situations.
Weeks of searching to locate an adequate doctor, the stress of having to navigate a complex healthcare system remotely without guarantees of quality or effectiveness, and the fear of encountering additional “unofficial” fees are significant barriers to equitable access to healthcare.
We think, for instance, of the stories of Santiago and also of Sofia, a mother of three living in Bogotá.
Although Bogotá has a higher number of healthcare facilities compared to other regions, accessing quality care remains a challenge.
Disparities in the quality of care, inconsistency of applied standards, and variability in healthcare providers’ expertise exacerbate this issue.
As a result, residents like Sofia often face great uncertainty when seeking medical care.
When Sofia was faced with a complex chronic illness, she often found herself helpless due to the lack of information.
Details about her condition were difficult to obtain, and she perceived a reluctance among doctors to communicate clearly about the available treatment options, thereby enhancing the feelings of vulnerability and uncertainty experienced by her brother, Carlos.
Carlos had emigrated to Spain a few years ago and had long felt powerless about his sister’s illness back in Colombia.
However, everything changed when a friend living in New York told him about KimboCare.
This platform allows expatriates like him to directly pay for quality healthcare for their loved ones in their home country, while ensuring transparency and follow-up.
Intrigued and eager to support his sister more effectively, Carlos quickly signed up and began using the service for Sofia’s care.
Thanks to KimboCare, Sofia was able to undergo a series of medical exams necessary to accurately assess her health condition.
Not only were the results clearly communicated, but a detailed treatment plan was established, transforming her care experience.
She finally felt listened to and cared for, with monthly visits scheduled with her care team, ensuring regular and reassuring follow-up, an expense she could not have afforded otherwise.
This is where KimboCare makes a difference by allowing expatriates to directly pay for preventive and curative health services for their families in Colombia.
We offer you not just a platform; we offer you peace of mind, knowing that your financial support translates directly into quality healthcare.
Instead of just sending money, you can purchase health credits that will be used exclusively for medical care with reliable and verified local medical partners.
This method not only ensures that your funds are used as intended, but it also eliminates the stress and uncertainty associated with managing healthcare from a distance.
Moreover, KimboCare steps in as needed to coordinate communications with medical staff to ensure the best possible experience for your loved body.
Thus, you can easily identify reliable medical facilities and, importantly, follow the care and receive feedback directly from your loved ones.
Food
Ensuring that our loved ones in Colombia have access to adequate and nutritious food is essential, especially in regions where access to quality food can be hindered by economic constraints.
Money transfers play a crucial role in supporting the physical well-being of families, also contributing to their happiness and daily security.
Colombian cuisine, rich in flavors and traditions, reflects the cultural diversity of the country.
Basic ingredients such as corn, beans, and meats are used to prepare comforting dishes like arepa, sancocho, and bandeja paisa, which are more than just nourishment for the body; they also nourish the soul of the community.
For example, bandeja paisa, an emblematic dish from the Paisa region, combines rice, red beans, pork, egg, and avocado in a rich and nourishing ensemble that celebrates the fusion of local products and culinary techniques.
This dish, along with others like sancocho, a thick soup made of meat and vegetables, plays a central role in daily diets and offers comfort and a reminder of childhood flavors for those far from home.
Remittances from abroad enable families to procure these essential ingredients and maintain culinary traditions, even from a distance.
Each money transfer is thus a means to perpetuate traditions and support local communities, in addition to strengthening familial and cultural ties, which are essential for family cohesion and well-being.
In sum, money transfers are much more than financial aid; they are a vital link that allows expatriates to ensure their loved ones continue to access rich and traditional foods, thus strengthening the bonds that unite families despite the distance.
Travel
For migrants in transit, staying on the move means more than just moving from point A to point B.
It is about survival, hope, and, all too often, reliance on aid sent from afar to cover living expenses, travel costs, and, in difficult cases, payments to smugglers.
These money transfers are true aids, enabling migrants to maintain their momentum forward, keeping their heads above water.
Safety Tips for Making Money Transfers to Colombia
In an ideal world, sending and receiving money across borders would be as simple and safe as making a phone call.
However, the reality of international money transfers can sometimes be complex, with risks of fraud and scams targeting the most vulnerable people.
- Verify and Validate Your Fund’s Destination
Ensure that the money you send reaches the person you intend to help.
This might seem obvious, but in urgent situations, mistakes can occur.
Double-check the recipient’s contact details and information before making any transfer.
We recommend opting for recognized and well-established money transfer services that offer you complete transparency on the journey of your funds throughout the process.
- Do Not Trust Overly Attractive Offers
Scammers often use the promise of extremely favorable exchange rates or zero transaction fees to lure their victims.
If an offer seems too good to be true, it probably is.
Similarly, a common scam tactic is to create a sense of urgency, such as a fake health problem of a loved one, to push you to send money quickly without verification.
- Never Share Your Personal Information
Be vigilant with your personal and financial data. Fraudsters may try to obtain them via phone, email, or social networks.
A legitimate company will never ask you to provide sensitive information through these channels.
It is better to turn to a solution where data is protected through advanced encryption protocols and you have access control.
- Ensure You Track Your Funds
Having a record of each money transfer can prove invaluable in case of any issues.
This information allows you to trace and dispute any suspicious transactions.
After sending money, check with your recipient to confirm receipt of the funds.
This simple step can help you quickly detect potential fraud.
The best assistance you can get for sending or receiving money in Colombia is from an agency that ensures every penny is invested in specific needs (such as health expenses), with zero risk of diversion by unreliable intermediaries.
An Overview of Money Transfer Laws in Colombia
Colombia, located in the northern part of South America, is a country rich in history and cultural diversity. Its economy, the fourth largest in Latin America, is strongly supported by sectors such as agriculture, mining, manufacturing, and especially services.
A crucial aspect of the Colombian economy is the significance of remittances from abroad.
These transfers, mainly from the United States and Spain (which account for 66.6% of the remittances), and other countries with significant Colombian communities, represent a vital source of income for many households.
Valle del Cauca, Cundinamarca, and Antioquia are the main receiving departments, accounting for 58.1%.
In 2023, Colombian households benefited from remittances amounting to US$10,091 million, marking a 7% increase from the US$9,428 million received in 2022.
This year has seen the share of remittances reach record levels since the beginning of the year. In terms of expenditure, health continues to represent the most significant share of the Colombian GDP, amounting to about 2.8%.
To put it in context, the income from remittances in 2023 is equivalent to 65% of the revenue generated by the export of oil and its derivatives, representing a fifth of the country’s GDP and total goods exports.
These funds are also more than sufficient to cover the nation’s trade deficit in goods.
The dynamics behind this growth in remittances include the increasing number of Colombian migrants and the economic conditions in their host countries.
It is currently estimated that there are 3.2 million Colombians living abroad, a 4.4% increase from 2022.
In Colombia, money transfers are regulated by the Banco de la República de Colombia, which is the country’s central bank. It ensures that cross-border financial transactions comply with anti-money laundering and counter-terrorism financing standards.
All money transfers must be made through authorized entities that include banks, money transfer companies, and some non-banking financial institutions.
These entities are required to report suspicious transactions and apply stringent controls to prevent illicit activities.
Colombia experiences steady, albeit moderate, economic growth and strives to maintain controlled inflation. Regarding digital currency, the country has adopted a cautious stance.
While cryptocurrencies are not regulated as legal tender, their use for money transfers is beginning to gain popularity among the tech-savvy population.
However, the Banco de la República de Colombia does not recognize them as an official payment method, which raises discussions about their future integration into the Colombian financial system.
Taxation Applicable to Sending or Receiving Money in Colombia
In Colombia, money sent from abroad by individuals to their families can be subject to tax if it is intended for personal use.
This means that remittances received to help cover daily, medical, or educational expenses are taxable depending on the amount of the transfer.
When sending money to Colombia, there is a high chance that you will be taxed 15%, which would reduce the total amount received by the loved ones. This rate is 20% when sending money from Colombia.
Money transfers to Colombia must also consider the legal limits imposed by the Colombian government.
It is crucial to declare to the DIAN (Dirección de Impuestos y Aduanas Nacionales), the Colombian tax authority, any significant transfer that could be considered an investment or a capital contribution.
Money transfers exceeding a certain threshold must be justified and documented to avoid potential tax implications, such as gift or investment duties.
These limits vary depending on the type of transaction and the institution handling it. For example, all electronic transfers must be declared and are limited to a maximum amount of $50,000 per transfer.
Money transfers to Colombia also require that all information provided by the sender be accurate and up-to-date to ensure that the funds are received on time.
At KimboCare, we emphasize the importance of being well-informed about these aspects, as it not only helps ensure hassle-free money transfers but also supports our mission to ensure equitable and affordable access to services, like healthcare, for those in need in Colombia.
FAQ
How can I send money to Colombia in the safest way possible?
To ensure the safety of your money transfer to Colombia, choose recognized services with robust security protocols. Always check user reviews and ensure the service is regulated by competent financial authorities.
If you want to send money to cover health expenses, opt for recognized services with robust security protocols. Our platform ensures that each financial partner meets high security standards, ensuring that your funds reach your loved and safely.
Are money transfers to Colombia taxed?
In Colombia, money sent from abroad by individuals to their families can be subject to tax if it is intended for personal use.
This means that remittances received to help cover daily, medical, or educational expenses are taxable depending on the amount of the transfer.
When sending money to Colombia, there is a high chance that you will be taxed at 15%, which would reduce the total amount received by your loved ones. This rate is 20% when sending money from Colombia.
All electronic transfers must be declared and are limited to a maximum amount of $50,000 per transfer.
How long does a money transfer to Colombia take?
The transfer time can vary depending on the service used. Electronic transfers can be instant or take a few hours, while traditional methods such as bank transfers may take several business days.
For urgent health needs, prioritize services that offer instant or same-day transfers. Some platforms like KimboCare directly inform the patient via SMS or a call.
What are the typical fees associated with sending money to Colombia?
Fees vary widely depending on the service chosen, the amount sent, and the payment method. Some services charge a percentage of the transferred amount, while others apply fixed fees. Look for options offering full transparency on fees to avoid surprises.
Are there any limits on the amount of money I can send to Colombia?
Yes, most money transfer services impose limits, which can vary depending on the chosen transfer method and the regulations of the service. It’s also important to note that your recipients may face bank withdrawal limits on the ground. It is essential to check these limits before making a transfer, especially if you plan to send large sums for needs such as covering medical expenses.
How can I ensure I get the best exchange rate when sending money to Colombia?
Compare the exchange rates offered by different services before making your transfer. Some services allow you to lock in a favorable exchange rate in advance or offer more competitive rates for larger amounts. Be aware of hidden fees that can affect the final amount received!
How can my loved ones in Colombia receive money?
Recipients in Colombia can receive money via direct deposits into their bank accounts, cash withdrawals at local service points, or even, for some services, home delivery. Make sure to choose a reception method that best suits your recipient in terms of convenience and safety.
Regarding health credits, each credit purchased can then be offered to your loved ones for access to quality care in accredited medical facilities.