What do Aussie banks charge for an international transfer?

Banks are all the same, right? Well, not quite. When it comes to international money transfers (IMTs), they can differ quite a lot, with contrasting fees and exchange rates, and different sorts of services on offer as well. So if you’re looking to move some money overseas, whether for a business transaction or to pay family or friends, read on to find out what you need to know.

What are the different ways to transfer money overseas?

In this article, the focus is mainly on banks, and how you can use them to make an international money transfer. But that’s not the only method by any means. Here’s a fuller list of the different ways you can send money abroad.

• Banks. Most Australian banks are only too happy to let their customers make an international money transfer. But in part, that’s because they profit quite a lot when they do. More on this shortly.
• Payment service providers. To get round the traditionally high fees that banks charge, more and more people are turning to specialist international transfer providers.Wise is one such service, which prides itself on only ever charging the mid-market exchange rate, meaning that your money won’t be marked up when it’s converted into the destination currency. There’s a little more about Wise later on too.
• Cash or cheque. Despite the many technological advances in recent years, the post - snail mail, as it’s known these days - still persists. Sending your money overseas in an envelope - either in cash, or, more securely, a cheque - isn’t necessarily the most reliable or the best value option. But it is still an option.

What does an international money transfer cost?

For more information about fees, exchange rate and transfer time for a specific bank, please click on the bank name. This will forward you to an article about that specific bank.

As you can see from the table above, there are several different types of fee that you might end up being charged, when you make an IMT through a bank.

Transfer fees

These are the primary fees charged by the bank. They can vary substantially from bank to bank - or even between different types of accounts with the same bank. This might often look like it’s the only fee you’re charged. But it probably won’t be. It might not even be the biggest one.

Also, some banks occasionally offer ‘zero fees’. That often just means zero transfer fee. There’ll probably still be the fees listed below.

Intermediary bank fees

These are hard to find out about, and potentially a real pain. The vast majority of international money transfers are made using the SWIFT network - a worldwide system of interlinked banks that is not always as swift as its name suggests. When your money travels from your bank to the recipient’s, it can pass through several completely different banks - ‘intermediary’ or ‘correspondent’ banks - on its way.

The big problem with this is that each of these banks can charge its own fee. Without actually telling you, or even your bank. That’s right: the recipient will simply receive less of the money than you or they will have expected. So: what will your international transfer really cost? Although it’s a good idea to ask your bank about this before you make the transfer, they might not even know exactly how high these fees will be

Recipient bank fees

Another fee that’s out of your bank’s hands is the fee charged by the recipient’s bank. Some banks are in the unpleasant habit of charging their customers for receiving money. There’s not much you can do about this yourself, but do check with the recipient - if they have multiple bank accounts, it could be worth them checking which one charges the lowest fee.

The exchange rate: another hidden fee

We’re not accustomed to thinking of the exchange rate as a fee. But we should be. Especially when the banks are involved.

Have you heard of the mid-market exchange rate? It’s an average of all the exchange rates currently in use for any two currencies - it tells you how much your Australian dollars are really worth at the moment in US dollars, for example, or euros. This is the rate you’ll find on online currency converters like Google or XE. And it’s this rate that the banks tend to use when they trade between themselves.

But it isn’t the rate the banks use when they deal with their actual customers. Then, they mark the rate up, so that they can effectively pocket the difference. It’s very unusual for banks or other transfer providers to offer the real mid-market exchange rate - Wise is a rare exception.

That’s why you should always check what exchange rate you’re being offered by your bank when you look to convert your money, and compare their rate to the one you see on an online currency converter - the exchange rate can make a big difference to the real cost of your transfer. Just as big a difference, in fact, as the fixed fees you’re actually told about.

How can you save money on your international transfer?

Once you’ve taken all that into consideration, you might quite understandably want to look at ways to reduce your bill. Here are some pointers.

Make sure you get the real exchange rate

Check with your bank (or other provider) what exchange rate they’re planning to offer you. And be prepared to shop around if what you’re offered is too far away from the real mid-market rate.

Use a currency converter

Go to an online currency converter like Google, XE or Wise to find out what your money’s really worth in a foreign currency. Keep this figure in your mind - too far away from it, and you’re losing out.

Compare prices

Get as detailed an estimate as you can from your bank, and from any other services you might want to use. Comparethese estimates to what you’ve found from your currency converter. Don’t say we didn’t warn you.

Open a foreign currency account

If you often find yourself making or receiving foreign payments, it’s well worth taking a look at Wise’s borderless multi-currency account. Free to set up, and with no monthly fee, a borderless account lets you keep money in over 40 currencies, and use virtual account details in Australian and US dollars, euros and pounds sterling - so you can send and receive money like a local in any of those 4 currencies. With consumer debit cards coming in the future as well, a borderless account could be a seriously useful way for you to save money on getting your money abroad.

However you choose to make your IMT, make sure you have the full picture before you commit yourself. Raise an eyebrow if your bank’s telling you about ‘zero fees’ or competitive exchange rates - do your research, and get a price for your transfer you’re truly happy with.

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.