Transfer your fees

Aussies can save on international transfer fees by using foreign exchange providers rather than banks, reports

AUSSIES loyal to their banks are wasting thousands of dollars when transferring money overseas, a new report has revealed.

The study, by Money Transfer Comparison found some major lenders offer rates up to 5 per cent worse than the real interbank rate for overseas transfers, making them up to five times more expensive than average money transfer providers.

This means for every $100,000 an Australian sends abroad, they could potentially save up to $4700 by using a foreign exchange provider instead of their bank.

There is significant demand for sending money overseas from Australia, according to Money Transfer Comparison editor Mark Di Vincere.

“According to a survey by Commonwealth Bank, around 2.4 million Australians transfer money abroad each year, with 480,000 sending more than $2000 over the year,” Mr Di Vincere said. “Australian private clients will transfer just over $3.1 billion in 2017.”

Clients using Money Transfer Comparison are looking to send $30,000 on average and 90 per cent send more than $10,000 over the course of the year, Mr Di Vincere said.

“We estimate at least 200,000 Australian clients will move $10,000 or more abroad over the year, with 50 per cent transferring $25,000 or more.”

Mr Di Vincere estimated Australians could save many millions of dollars in total by choosing the best value transfer options.

“Assuming 20 per cent ($620 million) of money transferred by Australians is done via foreign exchange companies with an average mark-up of 0.7 per cent and 80 per cent ($2.48bn) is transferred via banks, 75 per cent of which is transacted at a 5 per cent margin and 25 per cent at a 1.25 per cent margin for those who have premium accounts, the total in transfer fees would be $105 million,” he said. “Australians could easily make a saving of $65 million annually and this is a conservative estimate.”

Mr Di

Vincere said it was unsurprisi ng more

Australian s were turning to non-bank providers.

“Users are looking up HiFX, Moneycorp, World First, OFX and Transferwise,” he said.

“Generally speaking, I don’t believe banks do right by their clients … banks are in it for the money. Their responsibility is towards their shareholders … if they can make more money off you, they would do so without hesitation. At a certain point in time, banks will realise they are losing good business to foreign exchange providers and drop their margins.”

That time may already have arrived, with Commonwealth Bank announcing a cut to transfer fees last week, dropping a standard $22 fee for all international money transfers down to $6 for online transfers of $1000 and less and $12 for amounts higher than $1000.

“More than three quarters of our customers go online to send money overseas,” CBA executive general manager Clive van Horen said. “As such, we’ve reviewed the international fee structure and made a change that better reflects how our customers bank with us.”

Research is the key to understanding the costs involved with international money transfers, according to Simon Millard, country director Australia at Western Union.

“Many Australians are unaware of the fees and costs involved,” Mr Millard said. “When transferring from bank account to bank account, there is often a fee charged by the receiving bank. However, when transferring with a provider such as Western Union, there are no hidden fees on either side of the transaction.”