How to cut the costs on international transfers
MORE Australians are sending money overseas each year, but new research suggests many are being slapped with sizeable bank fees, due to being unaware of cheaper alternatives.
Galaxy research commissioned by Transferwise revealed that despite 1 million Aussies now living overseas and 25 per cent of our population being born overseas, most of us don’t understand the cost of sending money abroad.
Just 20 per cent of Australians understand that banks charge a transaction fee and a margin on the exchange rate. That margin costs Australian consumers and businesses an estimated $3.1 billion a year. Only 28 per cent of those who have actually sent money overseas understand the bank fee structure, while 18 per cent think there is just a transaction fee charged and 47 per cent have no idea how banks determine that margin.
“Recent research showed that one in three Australians have transferred money overseas,” Nick Lembo, Transferwise head of PR, APAC, said. “For years, banks and other providers have charged a lot of money for moving money internationally because they could.”
Transferwise has launched its Borderless account, a multicurrency account that comes with bank account details for the US, UK, EU and Australia, with the ability to hold 28 currencies. Fees are charged for currency conversions only. Transferwise PR manager AU/NZ Anhar Khanbhai immigrated from Kenya to Australia and regularly sends money home to family. She was a customer of the company before working there, after coming across it as a cheaper alternative to her bank.
“I now send money directly to my mum’s mobile in Kenya through the m-pesa mobile wallet integration and she gets the money in less than five minutes,” Ms Khanbhai said.
A separate Galaxy study for OFX found 37 per cent of Australians knew of non-bank institutions that could transfer money for a lower cost.
Meanwhile 36 per cent said they were always looking around for a better deal, while 33 per cent still use their bank for transfers.
OFX chief executive officer Skander Malcolm said it is important to realise there are other trustworthy options out there.
“People should know they have a choice and if you’re making regular transfers or moving large sums, it could be worth your while to investigate a couple of options,” Mr Malcolm said.
OFX customer Matt Gillespie set up a business in Japan last year and estimates he has saved “at least $50,000 over 18 months by using OFX compared to bank rates”.