International transactions: Exchange rate dishonesty

Choice should investigate who is offering the lowest currency transfer fees… because it’s almost impossible for customers to work it out:

Banks, financial institutions and other financial services providers never provide the true cost of a transaction to a customer. Most mislead customers by claiming that no fees exist or that only modest fees exist. The main fee they leave out is the exchange rate. The banks quote an internal bank exchange rate which is currently 4c lower than the market exchange rate. This means you have an extra ~6% fee on every transaction. Add to this an ~$30 bank fee at each end… and the true cost can exceed 10%… particularly on smaller transactions.

The fees are excessive and lack transparency.

Anybody who has a business, travels or spends time overseas may have to transfer large amounts of money from country to country. That means most of us? So this is hardly a small issue.

There seem to be at least two providers who are disclosing their true fees… and have truly low transfer costs:

A good story explaining how Transferwise works:

It would be useful if Choice did some research in this area… and suggested some reform in the area of disclosure.



While this piece highlights the costs involved in a currency exchange it doesn’t compare currency transfer services where the fees can be much more reasonable.

It does mention OFx which has one of the lowest fees available… but does not tell us what fees if any exist.


Similar problem with this article on money transfers.

They point out what the problem is and list some of the lower cost services available… but don’t list the exact costs making hard to do any comparisons.

While the OFx service is fee free over $2,000… it’s got a ~1% margin on the exchange rate.which is a hidden cost to consumers and ought to be declared.


Thanks for raising these issues, @MC1 and for posting the links to the CHOICE articles on the topic! They look like useful articles for those wanting to get to know the issues with International Money Transfers, but it looks like it is a space that warrants a closer look.

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I just confirmed with OFx that they have about a 1% margin on the exchange rate.

Thus Transferwise seems the cheapest and most transparent.

All Choice needs to do is bring their various articles up to date adding new methods of transferring cash and stating exactly what the costs are. Then the articles become much more useful as a tool for comparison?


I complained about the lack of transparency of financial institutions to the ACCC as they have targeted the Palace cinemas for a relatively minor issue while failing to address much more substantial issues in the banking industry:

Many thanks for the input regarding money transfers. You’re right - the articles are in need of an update and that’s on the cards, though it should be noted that exchange rates and fees change often and, at the end of the day, the differences between the non-bank transfer services we cover in these stories amount to a few dollars here, a few dollars there. But the main point is still valid - use a non-bank transfer service and never a bank for an overseas transfer. OxForex’s (now OFX) margin, as an example, is a fraction of what the banks charge. But of course a margin always applies because these services are never free.

ACCC referred me to ASIC as it’s a financial matter.


Even a 1% charge is $100 on a $10,000 transfer…

That’s more than a few dollars?

However the problem is that the financial institutions and service providers are making it unnecessarily difficult to do these comparisons.

If you don’t know what the rates are (because they don’t tell you what they are) you can’t pick the lowest one?

Finding out by reading third party comparisons doesn’t work very well because it’s hard to find these comparisons. The real costs should be declared by the service provider.


Agreed. I was referring to fees with the “few dollars” comment, not the exchange rate, but I should have been more clear. When we tested Currency Fair, OzForex (now OFX) and World First with an actual money transfer, all three were within a few dollars of each other including fees and the exchange rate - and all three beat the banks by a long shot. With the non-bank services mentioned (and of course there are others), you can see exactly how much you’re going to get in the exchange before agreeing to the deal - so you can test a transfer on all three sites without committing to it (last time we checked) and see who comes out on top. It’ll never be as good as what you would get with the offical mid-market (or bank to bank) rate, but you won’t get that unless you’re a bank exchanging millions of dollars.

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Hi Andy,

Transferwise is using the mid market rate:

Thus… yes you can get the mid market rate.

The stated fees are the only true cost in the Transferwise transaction.

That’s why there’s a problem with all the other offers (especially from the banks). Getting one rate but offering customers a much lower rate (often claiming there are no fees) is just another way to extract a large margin?

It’s a cost to the customer that should be declared otherwise the transaction is not transparent? The ACCC just fined a cinema for a very small non-transparent cost to the customer. Why aren’t the banks required to make the same disclosures? The amounts involved are HUGE!!!

It shouldn’t be necessary for the customer to have to calculate the true cost from the mid market rate?


Just a word of caution, but these services often advertise the mid-market rate on the home page but then apply a customer rate with a margin built in when you actually make a transfer - otherwise they wouldn’t be making a profit. It’s a tactic we pointed to in the earlier story. The good news, as mentioned, is that the final deal is transparent before you commit to it (unlike the banks) - or at least it was when we tested the three services mentioned. Update is on the schedule.

The services make a profit either by charging a fee or by having a margin on the exchange.

It doesn’t matter which method they use as long as their charges are transparent to the customer so they can be easily compared.

OFx didn’t list it’s margin anywhere on the web site… although they did say it was about 1% on the phone.

Only Transferwise fully disclosed all it’s fees without having to specially ask what their mid market exchange margin was (they don’t have one).

The transferwise fees are lower than the OFx offering because there is no extra margin on exchange.

PS. ASIC rang back and say they think the complaint has merit.

I have some US assets and discovered early on that if I send $USD to an Australian bank and have the $USD converted to $AUD here, I end up with about 5% fewer $AUD than by having the $USD exchanged to $AUD in the USA and sent as $AUD. Likewise Australian issued credit cards usually have noticeably worse xrates on $USD transactions than US issued cards on $AUD transactions. According to government, nothing to see, just good honest business practices, next…

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ACCC (business regulator) fines businesses for failing to be transparent on fairly small amounts of money.

ASIC (financial regulator) is dealing with billions of dollars… and fails to act to improve transparency?

Banks and financial institutions have it good?

We should complain long and loudly?

Maybe they’ll give us some of our money back?


Failure to disclose in forex inter bank dealings… yet they’re doing the same thing to customers when they quote one exchange rate but trade at a different one?

One is subject to legal action… the other is not?

Wonder why not?


It’s time to revisit this topic. I have just been paid €4000 for some work done in the EU. This landed in my Bankwest account with a little more than 5% lost because of “third party” fees. I can’t find out what this means or why.
Is the use of other transfer methods, such as, the way around this? Is there a way of getting Australian banks to catch up with practices nearly everywhere else in the world on the issue of international transfer fees?

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I wonder if one has a low fee credit card, if it is possible and better to upload the currency onto a credit or travel card rather than using a foreign exchange organisation?

Choice has covered travel cards in the past…

but it appears that the exchange fees for these msy not be better than EFTs.

You did very well if you only lost 5%.

If you were transferring from Australia to the EU you probably would have lost 10%.

Transferwise is the best way to avoid most of these fees. They are the only transfer company to fully disclose all fees… and have the lowest fees.

The main hidden fee is the exchange rate. Most companies quote you a faux exchange rate… not the real one. The faux exchange rate is typically 4c lower than the real rate in Australia. That makes it around 6% (based on 0.66 USD). They describe it as the bank exchange rate.

P.S. Transferwise now have a debit card option which is supposed to specifically address issues of spending money in foreign countries. If that works as well as their other services then it’s probably a very useful way of moving money?

Unless there is more to the story the problem is the payment was for work done and would be equivalent to receiving pay from an employer or at a stretch, payment for a product. The company making the payment is not at fault. The question is about what appears to be about 200 euros in fees.

Companies generally are not happy to use alternatives, only pay what is owed in a straightforward manner to withstand audits.

A salient question: did the ‘employer/contracting company’ in the EU lodge the payment to your Bankwest account, or did you do it through an account you held in the EU?

According to the Bankwest website they charge $AUD10 for an incoming SWIFT transfer. Outgoing fees can be charged by the originating financial institution, but are normally in the $USD25-50 range for a wire.

To provide you some data points that are not precisely relevant but informative, I receive an international pension sent from Citibank Europe to my ING account. It is deposited in $AUD and appears as a direct deposit. The xrate is done on the EU side. I have no further fees for that.

I recently transferred some $USD to the same account. The US side charged $USD25 for an outgoing SWIFT wire and the currency exchange from $USD to $AUD was done at the originating financial institution in the US. ING did not charge anything for the $AUD deposit BUT is clear that if incoming funds are not in $AUD they use a third party to convert the currency and the fees can be excessive. (their advice put into my words)

Bankwest may be similar. Worth ringing them to ask.

As for exchange rates, our banks offer the worst exchange rates possible. They are almost always significantly more favourable when currency is exchanged ‘there’ rather than ‘here’. Usually at least 5% moving $USD to $AUD bank to bank!

If you have an EU account and have your euros deposited to it, and then send the money here, you will usually be much better off using XE or OFX or similar, or at least have the originating bank send your money in $AUD not euros.

edit: if you had your euros in cash, travel cards or other similar options purchased on the EU side are definitely applicable.