Consumers still relying on banks to send money overseas
Only one in 20 Australian consumers are using online money transfer providers to send money abroad.
According to new research by international payments provider FlashFX, half of all Australian consumers are still using their bank to send money overseas, despite loosing out in fees and poor exchange rates. In comparison, only one in 20 consumers opt for a non-bank or online money transfer service.
The survey of 1200 Australians found that 41% of consumers don't even know that there are online money transfer options outside of the big banks. Even more concerning, 38% said they are comfortable using traditional services like the banks regardless if there are better options available. Security and convenience were cited as the leading two reasons why consumers are happy to stay with their bank.
Unfortunately, this inertia is costing Australians over $3 billion annually due to poor exchange rates and transaction fees, according to research by TransferWise in August. TransferWise's study also found that 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.
Chief enabling officer at FlashFX Nicolas Steiger says Australian consumers don't realise just how much they're loosing out in fees by using their bank. "It’s the devil you know and trust. Unlike Australian energy prices where consumers see the rising cost directly translated from the hip pocket, bank fees and exchange rate margins are hidden and people don’t know how much it’s costing them."
"There’s a general perception that you have no control and choice. You take what you are given. Pay the fees and you don’t question it. Only increased competition and broader awareness of non-bank options will enlighten consumers. I am looking to a future where consumers realise they can be in control," said Steiger.
Interestingly, the FlashFX research revealed that Australian millennials are the most likely age group across all generations to choose a bank first when sending money internationally, and are the least likely to use a non-bank online provider. They are also among the most active in the nation with sending money abroad buying things from overseas online.
"It’s surprising the high frequency of international payments Australians send. If people acted on their apparent sensitivity to price and were less trusting of the banks, they could save over $150 on three transactions a year choosing a non-bank service. People who use comparison sites or try a few providers will usually save a substantial amount of money," said Steiger.
If you're planning to send money overseas this Christmas, compare online money transfer providers instead of using your bank to save on fees and benefit from more competitive exchange rates.