Australia is recognised as the third most expensive G20 country for international money transfers. Yet new research has found that nearly two-thirds (60%) of Aussie businesses don’t check exchange rates or shop around for the best rates and lowest fees before making international payments, yet half (52%) get ‘fee shock’ after the transaction.
The findings were derived from a survey of a panel of 250 Aussie business owners and senior decision makers, commissioned by Money Transfer Comparison, a comparison service that helps Aussie businesses source the best rate in international money transfers.
What were the findings of the survey?
According to the research findings, 60% don’t seek better rates; 1 in 3 don’t check rates when making payments or transfers. The Money Transfer Comparison survey found that more than a third (36%) of businesses don’t check the exchange rate or try to find better rates before making an international payment or transfer, and an additional 24% said that while they do check the exchange rate, they don’t shop around for lower fees or rates.
Businesses with more than 50 employees are more likely to hunt down better exchange rates on money transfers, with 58% of large businesses and 57% of medium-sized businesses indicating that they check rates and look for better deals. This compares with 44% of SMBs (11-50 employees) and 35% of micro businesses (1-10 employees).
Despite falling to a 30-year low of $0.61 against the US dollar in October 2022, the Aussie dollar has slowly strengthened, fluctuating between USD$0.69-0.71 this year to date. Major banks predict a strengthening of our dollar through 2023: NAB said the dollar will reach an estimated $0.74 USD by June this year, while Westpac predicted the same increase by Dec.
The respondents were also asked whether they have ever been caught out by higher-than-expected exchange rates and fees after making an overseas payment or money transfer. Over half (52%) said the rate was higher than anticipated when making some payments.
Interestingly, despite a higher proportion failing to check exchange rates and shop around, smaller businesses were less inclined to be blindsided by unexpectedly high rates and fees.
Just 37% of micro businesses surveyed admitted they were surprised to have paid a higher-than-expected rate on some money transfers and overseas payments, compared with 76% of small businesses surveyed and 77% of medium-to-large businesses.
What is the executive take on the research findings?
Alon Rajic, Founder and Managing Director at Money Transfer Comparison, says that the optimistic rise may help bolster the performance of Australian businesses in the foreign market, as long as they remember to shop around. “I was surprised to see that a large proportion of businesses in our research aren’t doing their due diligence and checking exchange rates and fees before making overseas payments,” Alon Rajic commented.
“While the performance of the Aussie dollar against the USD is predicted to improve, exchange rates have been volatile, particularly due to the global economic slowdown.”
“Comparing exchange rates and fees across providers can not only benefit larger businesses operating on a global scale, but also smaller businesses that may be using overseas suppliers and manufacturers. In fact, the ACCC estimates Aussies could save up to AUD$500 on payments of around USD$7000, by comparing rates across providers.”
“Businesses would also be wise to consider ways to reduce costs and waste in other areas, such as re-negotiating contracts with suppliers, contractors and manufacturers.”
“Unfortunately, many business owners may not be aware that exchange rates and fees vary significantly across banks and fintech platforms – this is why comparing providers is a vital action to take before transferring money overseas,” Alon Rajic further commented.
“For instance, fees for international money transfers through Commonwealth Bank can range from $6 to $30, depending on whether internet, app, phone banking or a physical branch is used, while fees through ANZ can range from $0 to $32 for transactions under $10,000 sent to some countries, like Papua New Guinea, depending on the platform used.”
The full survey results can be found here.
