Is it more expensive to send money from the UK to Australia, or the other way around?
Is it cheaper to send Dollars, Euros, or Pounds?
And how does sending via a commercial bank compare cost-wise to using a non-bank money transfer firm?
To answer these questions and to provide greater transparency to the whole process, international money transfer firm FXcompared has launched the International Money Transfer Index (or IMTI), the first index to track the cost of money transfer at international banks and at non-bank money transfer providers.
The IMTI has eight months of data tracking the cost of money transfer at banks in the UK, the US, Canada and Australia and represents the average cost for a customer for different transaction sizes (for example, £1,000 and £10,000 in the UK). It also shows the fluctuation in banks’ rates month-to-month.
Some of the key findings from the initial launch of the index include:
- UK banks offer better international money transfer rates than their counterparts in the US and Australia. UK customers save, for example, about 36 per cent on a £10,000 transaction compared to sending the equivalent amount in Australia.
- UK banks charge an average of 3.6% on a £10,000 transaction compared to an average of just 0.9% per cent charged by non-bank providers.
- The top 20 non-bank money transfer providers based in the UK now account for over £40 billion of foreign exchange per year, saving customers over £900 million annually based on FXcompared’s estimates.
According to FXcompared managing director, Daniel Webber:
The FXcompared IMTI will provide greater transparency for a fast-changing, growing industry that is experiencing big technology shifts as non-bank providers become more prominent. As the international money transfer market continues to change, this type of data will support the market’s development and help banks, non-bank providers and customers better understand the industry and make more informed decisions about moving money overseas.
The data shows that when UK customers transfer £10,000 abroad, the cost of using a bank is on average 3.6% of the transaction, while the cost of using a typical non-bank provider is on average just 0.9%. This means that for every £10,000 transferred internationally, UK customers are typically receiving just £9,640 worth of their foreign currency when using a bank, compared to £9,910 when using a non-bank provider.
However, by comparing UK banks with their international counterparts, the IMTI highlights that UK customers save more on international money transfers than those in the US and Australia. UK banks charge an average of 3.6% on a £10,000 transaction compared to the 3.7% charged by US banks and 5.8% by Australian financial institutions.
The IMTI also shows that banks’ rates fluctuate from month-to-month. In August in the UK, for example, the cost of sending £10,000 was 2.3%, moving to an eight month high of 4.2% in October and then back down to 3.6% in November.
FXcompared plans to update the IMTI each month, with the data for £1,000 and £10,000 transactions to be released publicly on a quarterly basis.