New analysis compares Aussie bank fees with US, UK, Canada and NZ

Despite the current volatility across the global economy, international money transfers are continuing to rise and are expected to reach $244 trillion this year. Now, a new analysis comparing international money transfer costs through banks in Australia, UK, the US, Europe, Canada and New Zealand has found an average wire fee and exchange rate markup of 2.42%, costing customers from $214-470 on a $10,000 payment transfer.

What is the methodology of the analysis?

The analysis was carried out by Money Transfer Comparison, a global comparison website that compares sixty global money transfer services to find individuals and businesses the most suitable and cost effective service for their needs.

The Money Transfer Comparison analysis compared wire fees (advertised, as well as hidden) and applied foreign exchange mark-ups when transferring money to a selection of overseas markets from major banks in Australia, UK, the US, Europe, Canada and NZ. Each country analysis examined foreign exchange mark-ups for a different set of currency conversions.

How do Australian international transfer fees compare?

When compared with the UK, US, NZ, Canada and Europe, money transfer costs in Australia rank somewhere in the middle. Thankfully, Aussie legislative requirements mean our banks have the highest level of transparency around transfer fees & mark ups. Money Transfer compared fees & costs across ANZ, Macquarie Bank, Commonwealth Bank, NAB & Westpac.

While these banks apply relatively modest transfer fees, the foreign exchange margins they apply (3.5%, on average) are higher than those applied, on average, by US banks. This average is largely driven up by the Commonwealth Bank, which charges a hefty mark-up of up to 4.81%. Macquarie Bank offers the best value. For example, an exotic currency such as Pakistan attracts a 4.58% mark-up with Westpac, but just 2.3% with Macquarie Bank.

The analysis also found that when transferring money with the banks, online is cheaper (around $10) than in-branch or over the phone (around $30). ANZ and Macquarie are the best value for sending payments over $10,000, as they do not charge transfer fees.

With the UK

The analysis found the UK has the lowest transfer fees globally. The UK was one of the first countries to offer safe, secure and credible alternatives to banks for international money transfers, and therefore some major banks lowered their fees to stay competitive.

Money Transfer Comparison compared fees and costs across up to seven banks including Barclays, HSBC and Lloyds. Standard online wire transfer fees average £12.78 (AUD$22.85), while Aussie fees average at AUD$22. This is in stark comparison to US banks (see analysis below), which average of USD$41 (AUD$64.76) across six major US banks.

With the USA

The best option for customers looking to transfer money from the US is Bank of America, which charges no fees on payments sent in a foreign currency, and applies the lowest exchange markup of the banks across the analysis. Even so, bank exchange rates spreads are higher than those applied by independent US foreign exchange companies.

With the rest of the world

When looking at the rest of the world, New Zealand and Canada have some of the lowest bank transfer fees for international payments. For online transfers, NZ charges NZ$9 (AUD$8.05) and the Bank of New Zealand charges an even lower NZ$5 (AUD$4.47).

The lowest transfer fee across Canadian banks was Scotiabank at just CAD$1.99 (AUD$2.29). While banks in Singapore and Hong Kong showed to look after their personal customers better than western banks offering lower margins on exchange rates often under 1%.

The introduction of the Single Euro Payment Area (SEPA) has significantly lowered the cost of payments made across European countries between its 36 members states. Standard SEPA payment transfers are free with all but one European bank, CaixaBank, which charges a 0.4% variable fee on SEPA transfers above €3.9 (AUD$6.03).

However, transfer fees to the rest of the world outside of SEPA varied significantly. Banks in France have extortionately high fees but are capped to a maximum of €100 (AUD$154.49).

Will Aussie international transfers be strong in FY23?

Money Transfer Comparison’s own research found that three quarters (74%) of Aussies will maintain or increase international payments in FY23. Nearly two-thirds (61%) will be making overseas purchases for goods or services. A third (38%) plan to pay for overseas tours, accommodation and transport, and 28% will send money to family overseas.

Other new research by Money Transfer Comparison found that even if the Australian dollar were to continually decline over the next 12 months, 61% of Aussies will continue any planned overseas travel, purchases, investments and donations. Conversely, if the dollar rises, 82% of Australians would be motivated to spend overseas in these ways.