Australians waste $3.1 billion annually on fake exchange rates

Posted: 23 August 2017 5:00 am News

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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

Min. Transfer Amount Transfer Speed Online Transfer Fee Rate Amount Received Description CTA Details
AUD 1 1 day AUD 52.00 0.665 USD
6,614
SingX offers the real exchange rate every time you make a transfer and can help you send money across the world. Go to site Show details
AUD 2,000 1 day AUD 0.00 0.662 USD
6,622
TorFX guarantees to match any competitor's exchange rate. Conditions apply.
Send money overseas in 30+ currencies with competitive rates for transfer amounts over $2,000.
Go to site Show details
AUD 2,000 1 day AUD 0.00 0.662 USD
6,622
SendFX guarantees to match any competitor's exchange rate. T&Cs apply.
Fee-free transfers in 30+ currencies to over 200 countries.
Go to site Show details
AUD 2,000 1 day AUD 0.00 0.662 USD
6,622
Better exchange rates for Finder customers.
Send 60+ currencies at competitive rates and no fees. If you find a better eligible quote, WorldFirst will beat it.
Go to site Show details
GBP 3,000 1 day AUD 0.00 0.662 USD
6,622
Global Reach will match any competitor's exchange rates. Conditions apply.
Get no fees for both business and personal transfers when you send your money overseas with Global Reach.
Go to site Show details
AUD 250 1 - 2 days AUD 0.00 0.662 USD
6,622
$0 transfer fees for Finder customers.
No-maximum limit transfers with competitive exchange rates for 100+ currencies. No transfer fee over AUD$10,000.
Go to site Show details
USD 0 1 - 2 days AUD 2.99 0.658 USD
6,573
Quick, affordable transfers around the world. Remitly also has an express option that can transfer your money in minutes for a higher fee. The cheaper option takes several days. Go to site Show details
AUD 1 1 day AUD 0.00 0.662 USD
6,615
Get fast transfers with no fees and a range of foreign currency tools. Go to site Show details
AUD 5 1 - 2 days EUR 3.00 0.658 USD
6,581
Special offer: Zero fees on your first 10 transfers.
Get bank-beating exchange rates and fast transfer times on 15+ popular currencies.
Go to site Show details
AUD 1 Within an hour AUD 3.99 0.657 USD
6,566
Use promo code 3FREE to send your first 3 transfers with no fee.
An online money transfer service with cash pickup, bank account to bank account and airtime transfers available.
Go to site Show details
AUD 200 1 day AUD 0.00 0.66 USD
6,595
Low minimum transfer amount of just AU$200, with no set-up fees or transfer fees. Go to site Show details

Compare up to 4 providers


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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