Most people start an offshore transfer by checking a rate online: if it looks “good enough”, they typically turn to their bank to transfer their funds.
When the funds land and the amount is noticeably lower than expected, they blame it on banking admin or processing fees. That’s only partially correct. In reality, the shortfall is usually owing to the gap between the rate they checked and the rate they actually received – plus the timing of the trade and, for larger amounts that require South African Revenue Service (SARS) clearance, how they handled the paperwork around the transfer.
Here are some common mistakes that customers in South Africa make when moving money abroad:
How banks settle on ‘your’ rate
Banks start with a wholesale market rate, add their own margin, then show you a price. The client sees only the final figure, not how much the bank has added to every unit of currency. On smaller transfers, that difference is annoying but easy to excuse. Move R100 000 at a 2% margin and you’ve given away R2 000; at R1 million, the same margin costs you R20 000, which is meaningful.
Most people never interrogate this and assume the “bank rate” is simply the market rate.
Harry Scherzer, CEO of Future Forex, says knowledge is power: “If you’re aware of these differences between the rates, you’re in a better position to ask before you commit.”
“If you can’t see the underlying rate and the spread, you’re effectively signing a blank cheque on pricing. Those numbers should be transparent so clients can make a rational and informed choice.”
Why timing matters
The rand can move a few percent in a short space of time, often on the back of politics, data or global sentiment. When it comes to international money transfers, a few percentage points can materially change what arrives on the other side, which is why many businesses plan around that – fixing rates for known future payments or setting clear trading levels.
Timing is everything, explains Scherzer. “We look at a client’s actual offshore obligations and manage the currency around those.”
How SDA and AITs trip people up
South African Reserve Bank guidelines allow residents over 18 to use a Single Discretionary Allowance (SDA) of up to R1 million per calendar year for most offshore transfers without SARS pre‑approval. Above that, they can transfer up to R10 million a year under an Approval of International Transfer (AIT), requiring an application and a tax‑compliance status PIN from SARS. Many people think this is a once-off transfer and don’t know that card swipes on overseas trips, online spend in foreign currency and small outward transfers also count towards the annual foreign exchange allowance.
Some mistakenly go through the full AIT process for modest amounts that still fall within the SDA. Others exceed the R1 million SDA across different banks in the same year and only discover it when a routine transfer is stopped and the bank insists on an AIT PIN and SARS clearance.
What’s causing the hold‑up?
To apply for an AIT, SARS expects a full supporting file: recent bank statements, a three‑year statement of assets and liabilities, proof of the source of funds and, where relevant, trust deeds and resolutions, loan agreements, capital gains tax workings, wills and liquidation and distribution accounts. SARS rejects or delays applications if statements are older than 14 days, if proof of source does not line up, or if trust and company documents contradict the transfer request. If you have ceased South African tax residency, SARS adds further checks. Officials expect a Non‑Resident Confirmation Letter, detailed deemed‑disposal calculations and a clear explanation of the local income or capital you want to move. Transfers from South African rentals, trust distributions, share disposals and inheritances all fall into this net and can stall if your documentation is not in order.
Choosing the right channel
You can move money offshore through a retail app, a private bank or a forex specialist; all operate under the same SARB and SARS rules, but handle pricing, timing and compliance differently.
Scherzer explains: “By the time you hit ‘send’, most of the important decisions are already baked in.” Retail apps are usually designed for speed and standardisation, applying fixed retail spreads across high volumes of transactions. Specialist providers, however, typically facilitate larger transfers and take a more tailored approach – giving careful attention to the spread, the timing of your transaction, and hands-on support with compliance documentation.
For South Africans moving significant sums offshore, choosing the right transfer channel is your first investment decision. The pricing you accept, the timing of your transfer, and the efficiency of the compliance process all determine the value that ultimately reaches the other side. Execution isn’t secondary – it’s foundational.