Xoom: Moving Money in Colombia Before You Get Your Bank Account

I’m a new resident to Cali and it’s an awesome place. It’s great to live here. One of the difficulties I’m finding is doing anything financially here while I go through the visa process.

Let me explain. I’m still on my tourist visa as you will be when you first get here. As an American, you (and I) can stay here in Colombia for 90 days. With a visit to the immigration office, before those 90 days are up, you can get an extension of another 90 days. You can stay here in Colombia for 6 months without having to do much of anything unless you want to live here and build a life or a business here. Then you need a cedula. By the way, our friends at Cali Capital can help you with your visa if you need it.

Cedula=Access

Until you have permanent resident status, you will need a cedula extranjería (CE) or Foreigner ID, and no, your passport isn’t good enough. Without the CE, you are locked out of the banking system entirely. Since the whole financial services universe in Colombia is ~8 big banks, this means it is difficult to do ANYTHING. Try

• renting an apartment for a year or
• opening up an account with Claro for a cell phone or
• getting an account to pay for power and water

without a local bank account and you will see that is a big hindrance. Paying service providers is tough too since a bank to bank transfer or use of the PSE, the Colombian ACH system, are the 2 most common ways to pay other people.

But I did learn about a way to move money around and pay local providers even though I don’t have a local bank account yet. It’s a service called Xoom and it’s awesome.

What is XOOM?

Xoom is a service owned by Paypal but runs separately, meaning you can’t use your Paypal account to pay for anything with Xoom.  Xoom works in many countries, not just Colombia, but I’ve used it a handful of times. It’s fast, inexpensive, reliable and convenient. They have a phone app you can use to send and receive funds as well. You can pay from your bank account for $4.99 or debit card for $4.99 or pay by credit card for $10.99 per transfer. So I only paid $4.99 to transfer $735.

And if you want to sign up, click here for a personal invitation and we both receive Amazon gift cards if you sign up and send at least $400 somewhere. Here are some of its best features.

Feature 1: Net Proceeds

When it comes to sending money, Xoom has one outstanding common sense feature you don’t always see in a money transfer service. They ask upfront how much in pesos (COP) you want the recipient to receive.  This is what it looks like

As you can see, it’s very simple and streamlined, yet the receiving amount is the important amount. That’s how much my bill was. You can also see that you can pay bills or reload your phone from the desktop app. It’s convenient.

Feature 2: Direct Deposit

Simulating the bank to bank transfer that is so common for payments here, you can send your funds to one of 20 different banks or financial companies. These include Giros y Finanzas, which is a money transfer company that also does currency exchange, Efecty, and Western Union here.

This feature is so great and is the one I use most often to pay others. After all, who wouldn’t want the money just deposited right into their account and they get an email notifying them the money is there. Direct deposit allows you to pay in the way most Colombians want to get paid.

Feature 3: Cash Pickup

Going one step further than bank to bank transfer, you can set up a cash pickup at any Bancolombia or Davivienda bank location or any Carulla or Exito store. Xoom sends funds to over 2300 locations in Colombia, according to this screenshot below.

These 3 excellent features of Xoom make it worthwhile, but there is one instance where you really shouldn’t use it……

Don’t Use Xoom for Real Estate or Business Investment Proceeds

As a final note, it’s important to know that while you can send as much as $100.000 USD through Xoom, it’s not the most efficient solution for larger transactions due to both the exchange rate offered and some time limits applied. You can see their amount and time limits here.

It’s worth noting that if you’re planning to just withdraw the equivalent of a few hundred dollars, then Banco Pichincha has at least two locations in Cali where you can take out $1 million COP per transaction. The one’s I’ve verified are located here and here.

If you’re planning to move greater amounts to Colombia before opening a bank account, then I’d recommend to do it by Alianza Valores which Patrick will tell you all about in an upcoming post. For those of you that need help moving money now, please contact him here for instructions: patrick@caliadventurer.com

If You Have No Local Bank Account, Xoom is a Must Have

When you live in Colombia, you need to learn how to workaround sometimes antiquated rules. You are also going to need a local bank account. There are just no 2 ways around it.

While you will need a local bank account to open accounts for water and cell phone and to rent an apartment, you can pay some of these bills or move dollars (or Euros or GBP or CAD) around to take advantage of currency differences. Use those dollars to pay the bills with the Pay Bill feature. This is something I’m going to look into with more detail once I get my bank account opened. But until then, Xoom is a tremendous service and a lifesaver here in Cali if you need to pay people for services.

And remember, please reach out in the comments or email me if you’d like a personal invitation to use Xoom and an Amazon gift card in return for trying it or click this link.