Australians waste $3.1 billion annually on fake exchange rates

Alison Banney 23 August 2017

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The banks are being called out for ripping consumers off via dodgy currency exchange rate mark-ups.

New research by TransferWise released today revealed poor exchange rates and pricey overseas card charges are costing Australians a whopping $3.1 billion a year. The international money transfer provider is calling on the banks to stop misleading consumers by adding such extreme mark-ups on the real exchange rate.

The real exchange rate, often referred to as the mid-market rate or the interbank rate, is the true currency exchange rate and is the rate used when banks buy and sell currency among each other. When banks and money transfer providers sell foreign currency to consumers, they hike up the exchange rate to make a profit on each transfer.

This mark-up varies greatly between providers. TransferWise offers consumers the real exchange rate and makes money via the transfer fee, while banks are notorious for offering poor rates in addition to hefty fees. The Big Four, particularly Westpac and Commonwealth Bank, are among the worst offenders.

As it's not often clear how much banks are marking up the real exchange rate, consumers often underestimate how much an international transfer through their bank will cost them. In fact, the research by TransferWise found that consumers transferring money internationally through their bank underestimate the real cost by 11 times.

Almost two-thirds (63%) of consumers don't understand the fees banks charge for sending money internationally, and 72% think banks make it hard to see how much they charge. Over the last five years, Australians have spent over $14.7 billion in fees on foreign currency transactions alone, not even including the exchange rate mark-ups.

It's not just consumers copping these costs, Australian businesses are losing out too. Small and medium businesses lost $146 million on exchange rate mark-ups when exporting goods and services overseas in 2016.

In light of the research, TransferWise co-founder and chairman Taavet Hinrikus is calling on the banks to give consumers the real exchange rate.

“Most banks tell their customers that they only pay a small upfront fee for international payments. But in reality customers pay much more. Huge hidden charges are taken in the form of the terrible exchange rates, often without the customer realising," said Hinrikus.

“These practices aren’t transparent and hide important decision-making information from customers. It’s time to take a stand. Aussies deserve a fair go and should get the real exchange rate when we make an international money transfer. Banks should end their deceptive practices and the Australian Government should make sure they don’t continue to rip off customers.”

If you need to send money overseas, take a look at our guide and compare international money transfer providers to avoid being slugged with poor exchange rates and hefty fees.

Check out some of your options below

Rates last updated February 25th, 2018
Name Product Min. Transfer Amount Transfer Speed Services Online Transfer Fee Rate Amount Received Description
TorFX International Money Transfers
AUD 200
1 day
Online, Phone, Agent
TorFX guarantee to beat any competitor's exchange rate for a transaction. Conditions apply.

Send money overseas in 45 currencies. Once registered, you'll be assigned an Account Manager who can provide support and guidance.
Exclusive: OFX (Ozforex) International Money Transfers
AUD 250
1 day
Online, Phone, Agent
Exclusive offer: Discounted exchange rates for your first and ongoing transactions. $0 transfer fee.
A higher exchange rate applies to non-finder customers. Send money in 45 currencies.
Exclusive: WorldFirst International Money Transfers
AUD 2,000
1 day
Online, Phone
Chinese New Year Offer - receive $20 credit in your account (T&C's apply)
Exclusive offer: $0 transfer fee and discounted exchange rates for your first trade.

A higher exchange rate applies to non-finder customers. Send money in more than 130 currencies.
FC Exchange International Money Transfers
AUD 3,000
1 day
Online, Phone, Bank Account to Bank Account
FC Exchange can save you money with its Best Exchange Rate Guarantee. Conditions apply.

No transfer fee when transferring more than £10,000 or equivalent. Send money in over 130 currencies.
XE International Money Transfers
AUD 0
1 day
Online, Phone, Bank Account to Bank Account
Enjoy fast, secure and fee-free international money transfers from global payments provider XE.
HiFX International Money Transfers
AUD 50
2 days
Online, Phone, Agent
Make your first transfer for free

Send money in more than 40 currencies.
Currency Online International Money Transfers
AUD 0
2 days
Online, Phone
Enjoy regular scheduled transfers, one off transfers and a range of currencies. Also enjoy your first transfer for free.
Moneycorp International Money Transfers
GBP 50
Same day
Online, Phone, Bank Account to Bank Account
The longest standing and largest full service specialist currency provider in the UK.
Foremost Currency Group
AUD 1,000
1 day
Online, Phone, Agent, Bank Account to Bank Account
Trade over 40 currencies with no transfer fees with Foremost Currency Group.
Compass Global Markets International Money Transfers
AUD 1,000
1 day
Online, Phone
Send money overseas in at least 140 currencies.
The ‘Rate’ and ‘Amount Received’ displayed are indicative rates that have been supplied by each brand or gathered by Finder.

Exchange rates are volatile and change often. As a result, the exchange rate listed on Finder may vary to the actual exchange rate quoted for the brand. Please confirm the actual exchange rate and mention “Finder” before you commit to a brand.

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