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People walk past an advertisement for Alipay in a subway station in Shanghai on Oct. 12, 2021.HECTOR RETAMAL/Getty Images

International money transfers are one of the most common things that readers ask about at Enoch Omololu’s personal finance blog Savvy New Canadians, which is geared toward newcomers.

Mr. Omololu, who is based in Winnipeg, says the immediate concerns for new immigrants are to transfer their savings from their home country and to send money back home to support their families.

There are dozens of options out there, such as legacy companies that have been around for decades such as Western Union WU-N and newer players including OFX OZFRY and Wise.

Simplii, a no-fee Canadian bank that operates as a division of Canadian Imperial Bank of Commerce CM-T, announced its own new transfer product this month that will allow Canadians to instantly send money to people with Alipay, a digital wallet system with 1.3 billion users that is mainly used in China and supported as a payment method in 40 countries and regions. The no-fee transfers will take minutes to complete, and Simplii says the move is part of its strategy to become the go-to bank for newcomers to Canada.

CIBC points out that the remittance industry in Canada is huge: The company said Canadians send nearly twice as much money abroad as Americans on a per capita basis, and nearly four times more than Europeans. It added the remittance market is only expected to grow as Canada sets ambitious immigration targets.

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Jimmy Dinh, managing director for direct financial services for CIBC Capital Markets, said in a press release that 90 per cent of China’s population uses Alipay, making it an ideal method to transfer money.

“Our clients will appreciate the convenience and savings of having this service offered by their bank,” said Mr. Dinh.

Hugo O’Doherty, director of partnerships with immigration agency Moving2Canada, said he generally tells clients to transfer with Wise, which offers competitive exchange rates and a flat fee. But Simplii’s ability to instantly send transfers caught his eye. Most banks usually take at least a business day to send transfers, while other online transfer companies generally offer next-day service even on weekends.

Mr. Omololu said the new transfer service is another compelling reason for immigrants to consider banking with Simplii, a company that he says is already very popular with his readers because of its no-fee chequing accounts. (He said immigrants are always shocked that the Big Six banks charge daily banking fees.) He also recommends Simplii because newcomers are able to do all of their daily banking, saving and investing under one platform.

He added Simplii was already a convenient provider for regular money transfers before their Alipay partnership, because their existing transfer services allow people to pull money directly from a Simplii line of credit or credit card.

However, both Mr. O’Doherty and Mr. Omololu say people should pay close attention any time a company advertises having no fees.

“They may say they’re giving you free transfers, but you’re paying with a mark-up on the exchange rate,” said Mr. Omololu.

He said Simplii’s exchange rate generally mirrors that of CIBC, which is not always competitive when compared with other remittance providers.

On April 6, CIBC was offering transfers to Chinese yuan with a rate of $1 to five yuan. That compares to Wise, which offered 5.09 yuan per Canadian dollar, plus a small fee depending on the size of the transfer. The market rate on that day was 5.10 per Canadian dollar.

If you were to send $1,000, the receiver would get roughly 5,004 yuan. With Wise they’d receive 5,021.65 yuan. By converting those figures back to Canadian dollars at market rate means Wise is roughly $3 cheaper.

It’s a small amount, but Mr. Omololu said the difference could add up for people who consistently send money abroad. He would direct consumers to Wise if they send large amounts of money abroad.

For other consumers, Mr. O’Doherty said the convenience of instant transfers could be worth it.

Mr. Omololu said consumers should always be comparing the exchange rate they’re being offered by a company to actual exchange rates on Google. It’s the only way to get an idea of exactly how much you’re being charged by different companies.

Mr. O’Doherty also said Simplii’s Alipay offering will not change the money transfer landscape much because of the limited scope of that digital wallet, which is still mainly used in only China.

Digital wallets are common in other parts of the world, however, such as many African countries. He said any company that can further create partnerships with more digital wallets could compel more consumers to use their services.

“Whoever can do this in other markets is going to make a big splash,” said Mr. O’Doherty.

Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.

Follow Salmaan Farooqui on Twitter: @salmaanfarooquiOpens in a new window

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