International money transfer comparison site FXcompared.com has released the latest findings from its International Money Transfer Index (IMTI), which tracks and monitors data on banking costs for currency transactions in the UK.
While FXcompared.com did find that banks have been lowering their costs in recent months in the face of rising competition from online money transfer services, they remain several times more expensive than those independent services.
Some of the findings of the latest survey include:
- UK banks’ costs down by as much as 22% compared to December 2015…
- … however banks are still charging three times more than money transfer companies, and
- Bank charges on £1,000 transfers are near double those on £10,000 transfers.
Bank charges levied on international money transfers have seen a sharp fall since the inception of FXcompared’s International Money Transfer Index, yet they still offer very poor value for individuals and businesses moving money overseas.
On its first anniversary, the IMTI shows that UK banks are charging customers 4.8% on transactions of £1,000 when taking into account both fees and their currency spread. This is down from 6.1% in the IMTI data for December 2015 – a fall of almost 22% – but is still three times the 1.6% charged by non-bank money transfer providers for the equivalent transaction.
In monetary terms, someone using a bank to make this transfer rather than a non-bank money transfer provider is losing £32 on each transaction at this level made via a bank, and if this transaction is made monthly that means a loss of £384 a year.
On a £10,000 transaction, the banks charge 2.8% including fees and spread, down from 3.5% in the December 2015 data – a fall of nearly 20% – with currency brokers charging just 0.9%, such that banks are still charging more than three times as much as a broker. On this transaction, you would pay an extra £190 by using a bank, giving a total loss of £2,280 over the year if these transactions are made every month.
Daniel Webber, co-founder and Managing Director of FXcompared, said:
It is good to see the bank fees are coming down, but there is still a very big difference between what you pay to a bank for moving money overseas compared to what you would pay a broker.
The data is clear that you are literally paying a bank three times more for the same transaction, yet people are still losing out significantly by thinking the bank is the better bet. Individuals and companies can save significant amounts by using a broker instead, and it seems that the message is starting to get through.
We cannot say for sure, but it is likely the reason we have seen such a sharp drop in the amounts banks are charging is down to competition from currency brokers, because when we look at other data sets across the first full year of the IMTI, there is no direct correlation between currency movements and costs to suggest otherwise.
The IMTI was specifically designed for individuals and businesses who want to understand the costs of transferring money overseas. It is also of value to banks, non-bank money transfer
providers, corporates, consultancies and other companies who operate in the international payments space.
Gary Pitt, head of marketing and Currencies Direct, said:
Currencies Direct have been driving for greater transparency within the money transfer industry and welcomes the International Money Transfer Index compiled by FXcompared Intelligence. Over the last year they have created an industry standard, giving people the information they need to make the right decision when transferring money overseas.