When it comes to sending money internationally, currency exchange fees are everywhere! Whether it’s a difference in exchange rates, a fixed fee, or a commission, these costs can quickly add up. We’ve broken down exactly what fees you and the recipient of your money transfer can expect to be charged, and give you an idea of how much you’re likely to pay.
If you want an immediate comparison of how much you could save using a specialist currency provider, head over to our money transfer comparison tool now.
Here Are All the Ways You Can Be Charged a Currency Exchange Fee
It’s useful to understand how all of this fits together. Here are all the ways you’re charged by banks, PayPal, and currency exchange specialists. In all of our examples below, we’ve compared two popular Australian banks (ANZ and CommBank), PayPal, and two popular specialist currency exchange providers (OFX and World First).
1. A Difference Between the “Base” Exchange Rate and the Exchange Rate You Get
This is the most hidden of all the fees — simply put, a provider gives you a less favourable exchange rate than they can get themselves, and makes a profit on the difference.
The “best” exchange rate available at any moment in time is known as the “Mid-market, Interbank” rate. It’s the exchange rate that banks and other big financial firms use when determining how much one currency is worth in another. That’s the rate they can trade at.
Then, there’s the “Retail” rate that’s charged to you. This differs between providers, and can make a big difference to how much your money is worth to the recipient, once its been exchanged. Here’s how some providers stack up when it comes to the exchange rate fee.
Comparing Exchange Rate Fees – AUD to USD
|Provider||Base Rate||ANZ Bank||CommBank||PayPal||OFX||World First|
|Base Exchange Rate||0.7558||0.7558||0.7558||0.7558||0.7558||0.7558|
|Retail Exchange Rate||n/a||0.7308||0.7227||0.7293||0.7520||0.7519|
|Cost if transferring $1,000 AUD||n/a||-$33.08||-$43.79||-$35.06||-$5.03||-$5.16|
|Cost if transferring $10,000 AUD||n/a||-$330.78||-$437.95||-$350.62||-$50.28||-$51.60|
|All amounts are correct as of December 2017|
2. Fixed Fees and Commissions Charged for Making a Transfer
In addition to the currency exchange difference, many providers also charge a fixed fee or commission for making transfers. These fees can vary depending on if you make the transfer via an online service, over the phone, or in person. Here are some example fees:
ANZ Bank International Money Transfer Fees
Internet banking — $18 per transfer for most transfers, reduced to $12 per transfer if you’re sending more than $10,000 AUD.
In branch, over the phone, or via a foreign exchange center — $32 per transfer.
More details on transferring money through ANZ Bank.
CommBank International Money Transfer Fees
Internet banking — $12 for sending money online via NetBank or through the CommBank app or $6 for amounts under $1,000.
In branch — $30 for sending money from a branch.
More information on sending money overseas via CommBank.
PayPal Fixed Fees and Commissions
PayPal doesn’t generally charge fixed fees for transferring money. Instead, they charge a commission based on how you’re funding your transfer.
You might pay a small fee (of 2.4% + $0.30) if: You’re transferring money within the same country and you make the payment from your Australian bank account that is not linked to your Paypal account. This includes debit and credit cards.
You will pay a moderate fee of around 1% if: You’re transferring money between countries and you use money from your PayPal account or a direct debit from a bank account linked to your Paypal account.
You will pay a higher fee (of 3.9% – 7.4% plus a fixed fee) if: You’re transferring money between countries and you use a debit or credit card to fund your transfer.
More on PayPal’s fees here.
OFX International Money Transfer Fees
For lower amounts, OFX typically charges around $15 depending on where you are sending money to.
For larger amounts, there is no transfer fee from OFX to send money internationally.
Find out all about OFX here.
World First Fixed Fees
World First is fee free for transfers over US $10,000 or US $10 for transfers under that amount.
Learn how to transfer money using World First.
3. Sending and Receiving Bank Fees
The banks can also charge other fees depending on how you decide to send your transfer, and how the receiver gets their money. For example:
- ANZ Bank charges between $35 and $50 for paying foreign currency drafts or bank cheques into your ANZ account.
- ANZ Bank charges up to $35 for receiving telegraphic transfers of funds from overseas.
- CommBank charges $11 for receiving an international transfer.
The problem is, every bank around the world is different in how much they charge someone to receive money transfers. We recommend that your recipient checks with their bank to see how much they are likely to be charged.
In most cases, recipient fees will be charged regardless of how you choose to transfer money. These recipient charges are outside the control of the currency exchange service you choose to use.
How to Find the Cheapest Way to Transfer Money Overseas
Compare The Total Cost
The total cost of the transfer comes down to 2 things:
1. Transfer Fees
Every Australian bank and money transfer company will charge you a different fee to send money overseas. Usually it’s between $10 and $32.
2. Exchange Rate Margin
There is no “standard” exchange rate. Each bank will offer you a different exchange rate based on the currency you want to send overseas and the amount you need to send.
The Main Factors that Influence the Currency Conversion Fees You Pay
The fees charged by providers like your bank, PayPal, or specialist currency exchange services do vary widely. Here are the main areas that influence how much you will end up paying.
The Money Transfer Service You Decide to Use
There are three main ways to send money internationally — via your bank, through PayPal, or by using a specialist money transfer provider like TransferWise, OFX, or World First. You will almost always pay more if you use your bank or PayPal, than if you were to use a dedicated currency exchange service.
The Country and Currency You’re Sending Money To
It costs more to send money to some countries and currencies than others. This is generally reflected in a less favourable exchange rate to transfer funds to certain destinations or currencies.
The Amount You Are Transferring
You will generally get better exchange rates and lower fees if you’re transferring larger amounts. It costs less to send $10,000 AUD to the US compared to sending $1,000 or $100 AUD. You will pay lower fees if you complete one or two larger transfers than multiple small ones.
How You Fund Your Transfer
Some money transfer providers, especially PayPal, charge you more if you decide to fund your transfer in a particular way. Generally, funding a transfer via a bank draft, direct transfer, or direct debit is the cheapest option. If you pay for your transfer via a debit or credit card, you may be charged a higher fee.
How You Arrange Your Transfer
Some providers charge more for a transfer if you arrange for it in person (in a bank branch) or over the phone (by calling a service center). For the lowest fees, you should almost always use an online money transfer portal.
How You Send Money to the Recipient
It’s not just you who will pay fees when sending money. Depending on how the recipient receives their funds (e.g. directly deposited into their bank account, picking up in person, getting an international bankers draft), they may have to pay additional fees levied by their bank or currency exchange provider.
Hints and Tips to Keep Your Currency Exchange Fees as Low as Possible
Here are our recommendations on how to keep your costs down, and make sure your recipient gets as much of your hard-earned money as they can.
- Avoid using your bank or PayPal to transfer money overseas — their fees are higher and their currency exchange rates are worse.
- Try to use a specialist currency exchange service like OFX, World First, TorFX, HiFX, or Transferwise. You will get more favorable rates and lower fees.
- Where possible, fund your transfer via a bank transfer, direct debit, or debit card. Generally, you will pay lower fees than if you use a credit card.
- Speak to your bank and the recipient’s bank top understand the fees they will charge for sending and receiving money.
- Check how you can save money using our money transfer comparison tool — it lists all of the popular providers and how much money you will save by using each one.
Here at The Currency Shop, we want to give you the right information to save you money and help you make an informed choice for all your currency exchange needs. If you’ve still got questions we’re here to help, so feel free to give us a call on 1800 004 930.