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The price of making an international payment can come as a surprise. You need to know both the fees for sending money, and the different additional charges you might run into along the way, such as exchange rate markups and third party costs. Doing some research before choosing a service provider is key to making sure you get a good deal.
OFX provide international payment services around the world, for private and business customers. If you’re thinking of using OFX for a transfer, you’ll want to know about their exchange rates, and how to estimate the fees you’ll pay. We have all that and more covered in this guide.
OFX was launched in Sydney in 2004, and offer services for individuals, businesses and online sellers looking to send money internationally. These days, OFX have offices around the world in Australia, Singapore, the UK, US and other key locations, offering support no matter where you are.
OFX are registered and regulated by the Australian Securities and Investments Commission.
Sending money with OFX is pretty straight forward. You’ll register as a customer and use the cost estimator to model the payment you want to make. When you’re happy, lock in your transfer and send your funds to OFX by BPay or by bank transfer. Your money will then be delivered to your recipient, usually within a couple of business days.
Before you commit to using OFX, make sure you familiarise yourself with the following fees¹:
|Upfront international transfer fee
|AUD15 for transfers of AUD10,000 or under No upfront fee for international payments over AUD10,000 in value
|Exchange rate margin
|The exchange rate you’re quoted by OFX includes a margin or markup on the mid-market exchange rate. More on this - and ways to avoid it - in the next section.
|Third party charges
|Depending on where you’re sending money ,and the currencies used, you may be charged additional fees connected to the SWIFT network. These can amount to AUD50 per transaction, and OFX may not be able to tell you in advance whether you’ll be charged.
We mention the SWIFT network above, as a potential cause of additional third party fees. The SWIFT network is a long established method of passing international payments from one account to another. It involves up to 3 different banks known as intermediaries, working in partnership to move your money to your recipient. This process can take some time, and may also mean that you run into extra charges levied by either intermediary banks, or the receiving bank.
One of the biggest headaches with SWIFT fees - aside from the cost itself - is that you may not know in advance that you’ll be charged. If you’re paying a fixed amount, to cover an invoice for example, this can be a problem, as your recipient may get less than you expect them to in the end. Here’s what OFX say about it in their Product Disclosure Statement²:
“We will try and notify you of these additional fees if we are aware of them, but we cannot always do so in advance. In our experience, receiving bank fees tend to be less than AUD$50 (or foreign currency equivalent), but this will depend on the relevant jurisdiction. You may therefore find, in some cases, that the total amount you expect to receive in your Recipient Account is slightly less because such fees have been deducted.”
It’s well worth checking if the payment you need to make is likely to be processed using SWIFT, and whether it’ll attract any extra fees because of this. Some providers, such as Wise, use a different approach to making international payments, and avoid the SWIFT network for most transfers. You may find that making a Wise payment, or getting yourself set up with a Wise borderless account is a good way to dodge SWIFT costs and save money overall. More on that later.
The exchange rate used is one of the most important factors in determining whether your international transfer is a good deal or not. A great rate can make your transfer cheaper, while a poor rate may mean you pay more than you need to for your transaction. It’s smart to compare the rates and fees on offer from a few companies, to see which is cheaper, before deciding which service to use.
OFX charge an upfront fee for their transfers, but may also add an exchange rate margin. That means they take an additional slice of profit from currency conversions. Here’s how the Product Disclosure Statement explains the margin used for foreign currency transactions²:
“The “Margin” (or “Profit”) refers to the difference between the rate we obtain from our own providers on the wholesale foreign exchange market (e.g.: the Interbank Rate or Market Rate) and the rate we quote you. The Margin will vary from currency to currency and from time to time. We will not usually be able to tell you what the Margin is, but you are always free to compare the exchange rate we quote you with other providers to ensure that we are offering you a competitive rate.”
Once you’ve registered with OFX you’ll be able to use their cost estimator to see what exchange rate is available for your particular payment. It’s helpful to know that there’s a currency converter tool on the OFX website, which shows the mid-market rate. However, this isn’t the rate you’ll actually receive for your transaction. The rate you get - known as your OFX customer rate - will depend on where you’re sending money, the transaction value, and also how often you transfer money with OFX³.
As OFX suggest, you can then compare this rate with the mid-market exchange rate to work out the margin that has been added.
It’s a good idea to compare the overall costs including the exchange rate margin, with other providers too. Check out the Wise borderless account, as a great way to make international payments using the mid-market rate with no margin added, and with just a low upfront fee.
All transfers with Wise** are quick, convenient and secure, and you can get yourself a borderless multi-currency account online with just a few simple steps. Hold money in any of over 40 currencies, and receive fee free payments using your own local bank details for major currencies like US dollars, UK pounds and euros. If you’re an online seller, travel a lot, or need to remit money anywhere in the world, this handy new account type could save you time and money.
When you’re deciding whether or not to use OFX for your international payment you need to look at the full range of costs you may need to pay:
- Exchange rate markup, which depends on your specific circumstances
- Upfront transaction fee of AUD15 for transfers under AUD10,000
- Potential third party costs, such as intermediary fees and recipient bank charges
OFX offer different exchange rates to each customer, based on the specific transaction and the frequency with which you trade. You’ll want to compare the rate you’re quoted with the mid-market exchange rate to make sure it’s a good deal. While you’re doing your research, don’t forget to look at alternatives to see what other banks and service providers may charge for your transfer. Look at a modern option like the Wise borderless account, to get low fee transfers from Wise, which always use the mid-market exchange rate with no markup. This could mean you pay less overall.
All sources accurate as of 23 April 2019.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
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