Credit Card Rewards - August 22nd
Supermarket rewards programs are big business – and they're popular! And Woolworths is revamping its customer shopping rewards program again. The news of the revamp was broken by Australian Business Traveller via a leaked staff memo, …– Read more
International Money Transfers - July 29th
While the Australian dollar (AUD) suffered significant falls against the US dollar over 2014 and 2015, in 2016 it has experienced a mini resurgence. At the end of January, the dollar was trading at around 71 …– Read more
International Money Transfers - July 1st
Whether you're loading a travel money card up for an overseas holiday or making an international money transfer of a large sum to an overseas bank account, exchange rates are the most important part of …– Read more
An international money transfer is when you send money from your bank account in Australia to the bank account of someone you know in a different country.
International money transfers are popular for both large and small amounts. The World Bank estimates that remittances growth will slow slightly in 2015, with $586 billion in total to be sent, of which $440 billion will be sent to developing nations. The total sent is expected to rise to $610 billion in 2016 and $636 billion in 2017.
When making a money transfer, you will usually need to know the other person’s full name, address, account number, and Branch Number or Bank Identifier Code (SWIFT BIC or IBAN).
To find out whether your Australian dollars will equate to much in the local currency of the country to which you’re transferring money, check our list of 10 currencies the Australian dollar has risen against in 2015.
According to the government’s Study In Australia website, Australia is the world’s third most popular destination for international students. And no wonder! We have more than 1,100 tertiary education institutions, with over 22,000 courses to choose from, and our university system ranking is ninth in the world, ahead of Japan, New Zealand, and Germany.
There were 543,123 international students enrolled in July 2015 on a student visa, according to the Department of Education and Training (International Education Australia). This data shows we’re becoming more popular, with a 10% increase in the number of enrolments since July 2014.
Useful resources for students:
There are two types of overseas workers: Australians working in a different country, and people from other countries working in Australia.
Australians are getting more and more used to FIFO jobs (fly in, fly out) that require them to work in a different country to Australia. This can mean sending money back home to pay your expenses back at home while you’re away working hard.
Working in Australia is a popular option for people from other countries. The Department of Immigration states that 38,130 people from other countries were granted a skilled temporary worker visa (subclass 457) to come work in Australia in 2014-2015. The top five countries to be granted the most working visas in 2014-2015 were:
No matter where someone is from, if they are working somewhere other than home they will occasionally need to send money back home, either for their families or to pay ongoing expenses like a mortgage. This type of international money transfer is called a “remittance”.
In 2014, Australians sent $2.29 billion overseas in the form of remittances, according to the World Bank.
Useful resources for overseas workers:
Remittances are also sent home from international migrants living and working in a country apart from their family. In 2014, there were 180 million international migrants living and working away from home and regularly sending small amounts of money back to the family that helped them secure a better future. When it comes to developing nations, remittances provide $413 billion per year to help some of the poorest communities in the world – three times the amount of foreign aid from governments.
Unfortunately, many developing nations allow a monopoly for international money transfer providers, so that they can charge massive fees on these small amounts of money. CANSTAR recommends that small remittances should have lower fees globally.
Many Australians decide to move overseas temporarily, for a few years or so. In 2010, the ABS found that 80% of those who left Australia permanently (planning not to return) returned to Australia without 12 months of leaving.
Coming home can mean leaving behind investments and savings in another country. This usually requires either regularly transferring funds overseas to pay account fees, or closing the overseas accounts and transferring the funds back into Australian accounts.
Useful resources for returning expats:
According to the Australian Bureau of Statistics, in 2014-2015, 9.2 million Australian residents left Australia for a temporary overseas holiday and came back within 12 months. When family members travel, especially if they are still young students, there is always the risk that they might run into trouble – or run out of funds. A fast and efficient money transfer service can become essential!
As for family and friends who live overseas, the idea of organising to send a Christmas or wedding gift internationally can be quite daunting. It might be easier to send them some money so they can get something they really want.
Useful resources for those with family travelling:
As commerce goes global, businesses may find an increasing number of their transactions are being conducted overseas. For example, retailers may need to buy goods from another country to sell here without actually visiting that country.
Useful resources for businesses:
The exchange rate is the ratio at which the Australian dollar will buy a different currency, which determines the value of our currency and theirs by comparison. For example, the exchange rate from AUD to USD at the time of writing is around 70 cents to the dollar.
If you’re not familiar with the common abbreviation codes used to refer to different countries’ currencies, you should take a look at our list for Australia’s top 10 destinations:
The table below outlines the cost of exchanging $100,000 at the highest exchange rate and at the lowest exchange rate of the international money transfer products researched in our 2015 report, as at August 2015. As you can see, the exchange rate can vary significantly between providers.
|Currency||Highest Quoted Rate (Selling Rate)||Lowest Quoted Rate (Selling Rate)||Difference on a $100,000 transfer|
|The exchange rates for the 15 institutions in our star ratings are captured over 4 weeks and then averaged over the prescribed period (3 August 2015 to 28 August 2015 in this case).|
The main fees to be aware of include the following:
Overall, the global average cost to send an amount of $200 has remained around 8%, according to the World Bank. The highest average cost of 12% was found in Sub-Saharan Africa.
The minimum, maximum and average fees we found in our latest star ratings are outlined below. The maximum fee you could pay is twice as much as the minimum! Thankfully though, there are many providers that do not charge fees for cancellations, amendments, or enquiries.
|Transfer fee||Cancellation fee||Amendment fee||Enquiry fee|
Hot tip: A little bit of homework goes a long way when it comes to exchange rates and transfer fees, so you should compare your shortlist of institutions using our ratings before picking one. Every institution costs something, but you can make sure that more of your money goes where it should – to your recipient, not your institution.
There are a lot of different ways to send money internationally from Australia, as it is a growing and competitive industry. So what the pros and cons of different methods?
The vastness of the internet means there is more than one way to transfer money online:
You can get an International Money Order (IMO) from your bank or post office. It is similar to a bank cheque in that you post it overseas and it gets cashed at the other end by your recipient.
You should always ensure that the person you are transferring funds to is legitimate, especially if you don’t know them personally. It can be difficult, if not impossible, to recover funds sent overseas to a scammer. The government?s Scamwatch website has some tips on common scams to watch out for, such as scams saying you’ve come into an inheritance from an overseas estate or won a travel holiday as a prize. Also, check out our tips and traps of currency exchange.
The Australian system for sending money between countries is pretty good, but that’s not the case in every country. When it comes to remittances for international migrants sending their pay home to families in developing nations, there are many barriers in the way.
According to the World Bank, remittances that are small in amount can have great value by reducing the level and severity of poverty in a region. This leads to:
We know that around $400 billion in remittances are sent to developing countries each year – often from workers in other developing countries! These remittances provide three times the amount of global foreign aid declared by governments, and they do so much good in local communities.
The countries whose GDP was partly made up of remittances in 2013 included Tajikistan (52%), Kyrgyz Republic (31%), Nepal and Moldova (both 25%), Tonga (24%), and Samoa and Lesotho (both 23%).
Remittances act like insurance for poor countries. When times are hard for the family, workers send more, not less. For example, in Nepal, the percentage of poor people declined drastically even during a time of political and economic crisis, because of remittances sent from family members living in India. The poor in Nepal made up 42% of the population in 1995, but just 10 years later in 2005, that had lowered to 31%.
When natural disasters hit, remittances can get there before foreign aid does, such as in Somalia and Haiti. What’s more, those who send remittances don’t “forget” about the crisis their family is going through when the nightly news stops reporting on it. These remittances keep coming, a lifeline for a community that has been struck down.
Children benefit from fewer debilitating signs of poverty when their families receive remittances. Children who received remittances have been reported with higher birth weights and lower school dropout rates in Mexico, Sri Lanka, and El Salvador.
In many countries, it “costs big to send small”. And since remittances are typically small amounts – $200 per month or so – flat fees and charges can take a huge chunk out of much-needed money.
Globally, this fee amounted to 8% of the remittance in 2014. In Africa, the fee to send money between countries was well into the double digits.
Furthermore, many governments allow one international money transfer company to make an exclusive monopoly agreement with the post office, so that they are the only available option for sending money. So even if you wanted to shop around for a better exchange rate and cheaper fees, you couldn’t find one.
Remittances have decreased in their rate of growth in 2015 because of the weakened economies in Europe and Russia, according to the World Bank. Other regions to show slowing growth are the Middle East and North Africa, Sub-Saharan Africa, and South Asia. Meanwhile, remittances to Latin America and the Caribbean have been increasing after economic recovery.
There are cheaper options that could make a big difference around the world. For example, the U.S. Federal Reserve Bank started a program with Mexico where money transfer companies could send money to Mexico for a fixed cost of only 67 cents per transaction.
In his TED talk in 2014, international migrant Dilip Ratha recommended that governments and Reserve Banks worldwide take the following steps to reform the remittance industry:
Create a not-for-profit charity to create a global remittances platform, since this would increase foreign aid donations and make them more effective.
Here at CANSTAR, we compare institutions based on the features they offer and the cost charged to make a transfer, including fees and exchange rates. These ratings make it easy for you to make a shortlist of options for making an international money transfer by indicating which institutions provide better value.
So what do we look for?
The provider with the highest average exchange rate receives the top score in this category. We rate institutions for their exchange rates on the following currencies:
We’ve mentioned above the various costs in fees and charges for making an international money transfer. You can assume that the providers we’ve given a 5-star rating are a cheap option to send money overseas.
CANSTAR assesses the financial outcome of making an international money transfer through each provider – how much money gets to your recipient after the exchange rate and other fees and costs are charged? We assess each provider for two transaction scenarios:
CANSTAR only rates international money transfers provided by ADIs (institutions that are officially approved for banking in Australia). So you know that every institution on our list of ratings is a reputable source.
Apart from the basics, we also look at whether an institution provides:
Please note that these are a general explanation of the meaning of terms used in relation to international money transfers. Your provider may use different wording and you should read the terms and conditions of your product carefully to understand what fees and charges may apply. Refer to the product disclosure statement from your provider.
Account number: The identification number for your account, or for the account to which you are transferring money. When making a money transfer, you will usually need to know the other person’s full name, address, account number, and Branch Number or Bank Identifier Code (SWIFT BIC or IBAN).
ADI (Authorised Deposit-Taking Institution): An institution authorised and accredited to provide banking services and receive and manage deposits in customers’ accounts.
Balance: The amount of money remaining and able to be spent in your savings or transaction account at any point in time.
Conversion fee: Any fee charged to convert one currency into another before or after transferring.
Conversion rate: Also known as the exchange rate.
Exchange rate: The ratio at which one currency buys another, which determines the value of one country’s currency by comparison to another. For example, the exchange rate from AUD to USD at the time of writing is $0.73 to the dollar.
Foreign currency: The local currency of any country outside Australia.
GST: Goods and services tax charged on purchases made in Australia. Certain internet purchases may also be subject to GST.
Internet banking or online banking: Banking that is done via the internet on a computer or mobile device.
Transfer: To send money from one account to another.
Visa: A document from the government of a country that grants permission for a person to come to that country to holiday, live, work, or study.
The following international money transfer providers were included in our comparisons at the time of writing and details are correct as at that time. Please check the current terms and conditions of transfer providers.