Originally written by Justine Davies
Staggering amounts of money get transferred to and from different countries every year, and according to the World Bank, Aussies sent an estimated US$7.197 billion in 2018 alone – that’s over AU$10 billion at today’s exchange rates.
Total global remittances (money transfers) for 2018 were a whopping US$689 billion (over AU$1 trillion), which makes the amount sent by Aussies seem tiny by comparison.
How can exchange rates impact international money transfers?
International money transfers require exchanging currency, and when large sums of money are involved the exchange rate may end up making a significant difference to the value of your transfer. And of course, exchange rates can fluctuate both dramatically and frequently in any given period, based on factors such as monetary policy, trade wars, business confidence, and significant global events like the ongoing difficulties surrounding Brexit. But while less-than-favourable exchange rates are something you may need to accept if you need to send money internationally, what you do have a say in is how you transfer your money, and your decision may be influenced by a number of factors.
Ways to transfer money overseas
There are several different ways you can transfer money overseas, including by phone, online, in a branch or via mobile banking.
Most of the 19 international money transfer providers that Canstar rated in 2019 allow you to make transfers both online and at a branch. Transfers made via phone or on mobile were less common, as the table below shows.
|Arab Bank Australia||No||No||Yes||No|
|Bank of Melbourne||No||Yes||Yes||Yes|
|Bank of Sydney||No||Yes||Yes||Yes|
|Source: Canstar 2018 Online Share Trading Star Ratings Report|
What does it cost to transfer money overseas?
There are several costs associated with transferring money overseas. In addition to potential fees for sending and receiving money, the issue of exchange rates can also prove to be a significant one in terms of what an international money transfer costs you. Charging an above-market exchange rate is generally one of the main ways currency exchange and international money transfer providers make money; this generally means that any given international money transfer provider’s exchange rates will be less favourable than ‘true’ exchange rates, such as those published by the Reserve Bank of Australia (RBA).
This rate of disparity is a result of the margin that has been applied and built into the provider’s quoted exchange rate on top of the true exchange rate. This margin can vary considerably between international money transfer providers, so it can pay to shop around, particularly if you’re planning on transferring a large sum of money overseas.
Doing your research rarely hurts where money is involved, but a little bit of homework can be especially valuable when it comes to exchange rates and transfer fees. Comparing providers on the rates and fees they charge is a simple way to help you figure out what your best-value options are, because while providers tend to charge similar types of fees and commissions, comparing providers can help you make sure that the amount you pay is as low as possible. You can compare international money transfer providers with Canstar to see if you can find the best-value option for you.