Bank-beating overseas money transfers

When it comes to sending money overseas, many people may default to using their bank. It's familiar, it's easy, and you probably already have an account set up. 

But what if we told you that using a dedicated international money transfer (IMT) service could save you a lot of money? In fact, it could be cheaper, faster, and more convenient than using your bank. 

Let’s dive into why turning to IMT services might be the smarter way to go.

You might think your bank’s transfer fees are standard, but chances are, you're paying more than you need to. Banks often add hefty markups on exchange rates, which means you’re losing money even before the transfer fee is applied.

• High fees. Banks typically charge both a fixed fee for sending money and a percentage of the transaction. These fees can quickly add up, especially for larger transfers.
• Poor exchange rates. Banks are known for offering less-than-competitive exchange rates. Even a small difference in rates can result in a significant loss of money, especially when transferring large amounts.
• Long transfer times. Bank transfers can take several days to complete, and sometimes, they get held up in processing. You can expect delays, particularly if you're transferring to a non-major currency.

Dedicated money transfer companies are designed to give you a better deal than traditional banks. Here’s how they stack up:

Cheaper fees and better exchange rates

Specialist IMT providers like Wise, OFX, and Revolut typically offer lower fees and much more competitive exchange rates than big banks. In some cases, their exchange rates are close to the mid-market rate (the one you see on Google or XE.com), with little to no markup. Here’s a breakdown of the savings:

• Lower fees. IMT companies often charge only a small, transparent fee, and sometimes none at all for certain transfers. In contrast, banks can charge a mix of fixed fees and percentage-based fees.
• Better exchange rates. A dedicated IMT provider’s exchange rate might be a few cents better than the bank’s, which can add up to significant savings. For example, if you’re transferring $10,000 AUD to USD, you could potentially save hundreds of dollars if the money transfer service you chose simply offered a better rate than your bank.

Faster transfers

Time is money. Traditional banks can take days to process an international transfer, and the process isn’t always transparent. In contrast, many IMT services offer transfers that can be completed within minutes or within the same day.

• Instant transfers for certain currencies. Many IMT providers offer the option to send money immediately, particularly when transferring to countries or currencies that are more commonly traded, such as the US dollar, Euro, or British pound.
• Track your transfer. IMT services typically provide real-time tracking of your transfer, so you always know where your money is.

Secure and hassle-free transfers

Security is a top priority for both banks and IMT services, but specialist providers are often more flexible when it comes to ensuring a smooth, hassle-free process.

• Robust security measures. Just like banks, IMT services are regulated and must adhere to strict security standards, such as encryption and fraud protection.
• Simpler process. The process of sending money with an IMT provider is often more user-friendly. Most services allow you to send money directly from your phone or computer, with fewer steps and less paperwork.

More flexible options

IMT services are built to cater to a wider range of transfer needs. Whether you’re sending a one-off payment, paying for overseas services, or making regular transfers, these services offer a variety of options that cater to different needs.

• Send money to anyone, anywhere. Many IMT providers offer the option to send money to someone’s bank account, or to mobile wallets and even cash pickup locations in certain countries.
• Multiple payment options. You can often pay using different methods, such as bank transfer, credit card, or even PayPal, depending on the provider.

Using your bank for overseas money transfers might feel convenient, but it’s often a more expensive and slower option compared to dedicated IMT providers. With low fees, competitive exchange rates, fast processing times, and flexible transfer options, switching to a dedicated international money transfer service may save you money and make the process far more efficient.

If you’re looking to save on international transfers and avoid the pitfalls of bank fees, it’s sensible to compare your options. Check out international money transfer winners from the Mozo Experts Choice Awards 2024.

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**ACCC 2019 Foreign Currency Conversion Services Inquiry