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Sending an international money transfer can be an expensive exercise. Thanks to hidden transaction charges and low exchange rates, even a small overseas transfer could leave a large hole in your bank balance.
That’s why it’s important to make sure you’re aware of all the fees and charges that apply to an international money transfer before parting with your funds. By comparing transfer providers and the services they offer, you can find an affordable and convenient way to transfer your money overseas.
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What are the costs associated with international money transfers?
There are two main expenses you need to worry about when sending an international money transfer:
The exchange rate
Banks and other money transfer providers make a profit on international transfers by charging a margin on top of the mid-market exchange rate. Exchange rates vary substantially between transfer providers and have a huge effect on the affordability of transfers, so it’s important to shop around for the best exchange rate.
The transaction fee
This is the fee your bank or money transfer company charges you for handling your international transaction. Fees charged range from zero up towards the $100 mark, depending on the provider you choose and the type of transfer. This is why comparing international money transfer fees is critical.
This article focuses on international money transfer transaction fees and how you can minimise them or avoid them altogether.
What factors affect international money transfer fees?
There are several factors that can have an effect on the fee that applies to your international money transfer. The first and most important factor is the transfer provider you choose. Each company has its own unique fee structure and you will need to consider this in conjunction with the exchange rates available to calculate how affordable that company’s transfer service is.
Other factors that influence the fee charged include:
The type of fee
While some companies charge a flat transaction fee, others charge a fee calculated as a percentage of your transfer amount. So, if the fee is 1% of the transfer amount, you’ll pay a lot more to send $5,000 overseas than you would to send $500.
The amount you send
The amount you send not only has an effect if the provider charges a percentage-based fee, but also if they offer a fee-free threshold. If you transfer more than a certain amount with a provider that offers this, you will not have to pay any transaction fees. For example, if you’re transferring more than AUD$10,000 with OFX, you will not have to pay a transfer fee.
The speed of the transfer
Some companies provide the option for you to send an urgent transfer, which can be particularly useful in emergency situations, but may result in an additional charge.
Where you are sending the money
Some providers will charge different fees based on where you are sending the money. Remember to consider this when estimating the cost of your transfer.
The type of transfer
Some companies such as Western Union and MoneyGram offer the convenience of international cash transfers, but you will usually need to pay more for this service than for online transfers.
How you submit the transfer
Another factor to consider is that some transfer providers charge different fees based on how you submit your transfer request: online, over the phone or in a branch. For example, sending an international money transfer via Commonwealth Bank costs $22 when submitted online via NetBank, or $30 when you lodge your transfer in a branch.
How you pay for the transfer
Some providers offer multiple ways for you to pay for your transfer, such as bank account, credit card or even cash. Different fees may apply to the different payment methods.
Any other options you select
Select online transfer companies also allow you to access flexible transfer options, such as scheduling recurring payments or placing a forward contract or limit order. Be aware that these options may also come with additional fees attached.
Finally, it’s also worth pointing out that some providers and banks will require that your beneficiary pay a charge in order to receive an international money transfer. Remember to consider this when weighing up your transfer options.
How much will I have to pay to send an international money transfer?
As you can see from the long list of factors above, the fees attached to your transfer could vary widely depending on your transaction. With this in mind, it’s important to compare a range of money transfer providers to see how much it will cost to send specific transfer amounts to specific destinations. This will give you a better idea of which company offers the best value for money.
However, based on the transfer fees charged by our panel of leading money transfer providers, the average fee for an online transfer is $6.66, but the fees vary substantially based on the provider and the type of transfer you send. For example, while companies like TorFX and OFX do not charge any fees for online transfers, you’ll need to pay $0 for transfer requests submitted over the phone
| Money Transfer Service | Online Transfer Fee |
|---|---|
| Exclusive: CurrencyFair International Money Transfers | $3 |
| TorFX International Money Transfers | $0 |
| Exclusive: OFX (Ozforex) International Money Transfers | $0 |
| HSBC Multi Currency Account | |
| Citibank Plus Everyday Account | $0 |
| Travelex International Payments | $15 |
| Wise International Money Transfers | |
| WorldRemit international money transfers | Varies according to transfer amount |
| ANZ International Money Transfer | $18 |
| AFEX international money transfers | $0 |
| Compass Global Markets International Money Transfers | $10 |
| Currency Solutions International Money Transfers | $10 |
| Western Union International Money Transfers | $5 |
| 1st Contact International Money Transfer | |
| CurrencyFair Business International Money Transfers | $3 |
| Moneycorp International Money Transfers | $5 |
When you consider the fees a company charges as well as the exchange rates it offers, you’ll be able to determine how cost-effective it will be to transfer money with that particular provider.
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How to choose a money transfer provider
Make sure you take the following factors into account when selecting a money transfer provider:
Transfer fees
Look at each company’s fee structure and determine whether or not it will suit you. If the company charges a percentage-based fee, could it be an affordable option for a small transfer amount? If you’re transferring a large amount, will you exceed the company’s fee-free threshold and avoid all charges?
Exchange rates
Fees are just one half of calculating the total cost of an international money transfer; exchange rates represent the other half. Look for companies that offer the best balance of high exchange rates and low fees.
Minimum transfer amounts
Many providers will impose a minimum transfer limit on each transaction, which can be restricting in many circumstances if you only want to send a small amount. Maximum limits may also apply with some providers.
Supported currencies
Some providers only offer support for a limited range of currencies, so make sure the company you choose offers the currency you want to send before you sign up for an account.
Processing speeds
Is speed a priority for your international money transfer? If so, compare processing times to see how long your beneficiary will have to wait before receiving the money.
Transfer options
Do you want to lock in a better exchange rate with a forward contract or limit order? Do you want the convenience of being able to schedule recurring payments? Check to see which providers offer these services, and also look what options are available for submitting transfers: online, via a smartphone app, in branch and/or over the phone.
Payment options
Depending on your circumstances, you might also wish to compare the methods available for payment. Some companies allow you to pay by bank transfer only, while others will allow you to use a credit or debit card and even cash.
Customer assistance
Finally, remember to check how easily you will be able to access customer support if you ever have a question or complaint.
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