The Great Conversion Con: consumers across Europe misled on transfer charges

Flora Coleman

You have €1,000 which you want to convert into GBP (£). You are given an exchange rate of 0.8671 GBP (£) to the Euro (€). There is an upfront fee of €9,50 applied to the transaction on top of the amount you wish to convert. The amount received in GBP will be £867.10. How much did you pay for the transaction?

Does this sound like a maths quiz? In fact, it’s what we all have to figure out when converting currency whether we’re on holiday or paying a supplier overseas. But it’s impossible to come up with the right answer because it’s missing a crucial piece for the solution: the mid-market rate. A piece of info that the banks rarely provide. Without that, we don’t realise there’s a charge in the exchange rate the banks give us.

The majority of European consumers are being misled on costs of money transfer

It probably won’t come as a surprise that, when we asked people across Europe to identify charges in an example of a bank transaction just like the one above, six out of seven people didn’t realise that they weren’t given enough information to be able to calculate the charge they would have to pay.


More worryingly, consumers were clearly not aware about how banks price these transactions : two-thirds of Europeans said they didn’t think the bank had put a “mark-up” on the rate or were simply not aware of what the mid-market rate was.

Current legal requirements are not enough to provide clarity to consumers

Europe-wide legislation, the second Payment Services Directive requires that consumers should know ‘the real costs and charges’. But the way in which this legislation is being written into laws in all of the member states means that banks and brokers can still hide charges in bad exchange rates.

There is no legal requirement on providers to show a rate comparison in the transaction nor to disclose the amount of the rate mark-up. This means that only a small minority of European consumers are able to accurately calculate the total cost of a transaction.

What is Wise doing?

We want the European Commission to act to protect consumers’ rights. Here’s our White Paper on the subject but in brief, we think they should:

  • Conduct an EU-wide screening of websites (a "sweep") by consumer protection authorities in different countries to find out whether EU laws are being respected
  • If the laws are not being respected, the EU should take appropriate enforcement measures
  • Improve transparency by extending the existing regulation, issuing guidance that requires providers to disclose any charges levied in the rate as part of the costs and charges disclosure under PSD2 and extending the Cross-Border Payments regulation No 924/2009 to include non-Eurozone currencies, including a requirement to disclose any exchange rate mark-up as a charge

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 Wise Payments 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.

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