Sending money overseas shouldn’t mean losing a big chunk of it to fees. Yet, many people are surprised by how much banks and other providers charge. Those hidden fees can really add up and impact the amount you pay for the transfer. The cost of international money transfers varies depending on the method and provider you choose.
Let’s take a closer look at what you’re really paying and explore smarter ways to transfer money internationally.
Summary:
• Money transfer fees: how much does an international bank transfer cost?
• Why can there be extra costs to transfer money overseas?
• How can an online money transfer company help save you money?
• Compare Australian banks international transfer fees
• Why are banks typically more expensive to transfer money internationally?
• What factors impact the cost of international bank transfer fees?
• How do OFX keep their fees so low?
• How to avoid international transfer fees?
• Why choose OFX for international money transfers?
Money transfer fees: how much does an international bank transfer cost?
Generally, Australian banks charge a currency conversion or exchange rate fee of between 3% to 4% of the total transfer amount1. This percentage might seem small at first glance, but it can add up quickly, especially for large transfers.
Currency conversion fees are charges applied when you exchange one currency for another, typically in international transactions.
These examples show how that 3%-4% fee can add up:
- If you’re sending AU$1,000, a 4% markup will add AU$40 to your overall transfer costs
- If you’re sending AU$5,000, a 4% markup will add AU$200 to your overall transfer costs
- If you’re sending AU$10,000, a 4% markup will add AU$400 to your overall transfer costs
Save on fees when sending money overseas with OFX
Why can there be extra costs to transfer money overseas?
On top of that 3%-4%, banks often have additional fees which can push the total cost even higher. So let’s break down what these fees are really made up of.
Bank transfer fees are typically split into a few categories, below are the most common:
- Upfront transfer fees
In addition to the exchange rate markup, banks often charge a flat fee for processing international transfers. This fee can range from AU$10 to AU$303,4, depending on the bank and the destination country.
- Exchange rate margin markup
The exchange rate offered by banks is often marked up, meaning it’s less favourable than the mid-market rate you might see on Google or financial news sites. This markup can range between 3%-4%2, making it one of the most significant hidden costs when transferring money internationally.
- Intermediary bank fees
When you transfer money internationally, especially through the SWIFT network, your money may pass through one or more intermediary banks before reaching the recipient. Each of these banks can deduct a fee, often between AU$10 and AU$201, which can reduce the amount your recipient ultimately receives.
- Recipient bank fees
The recipient’s bank might also charge a fee to process the incoming funds. This fee is typically between AU$10 and AU$302, depending on the bank and country.
How can an online money transfer company help save you money?
We’ve shown you the costs but let us show you how OFX can help save you money on each of the fees.
1. The fee to send the money.
Sending money overseas with your bank will often incur a fee of up to AU$35.
- How OFX saves you money
Receive fee-free transfers when you send more than AU$10,000 (or any foreign currency equivalent). For transfers under AU$10,000, we charge a flat fee of AU$15. Occasionally, third-party banks may deduct a fee from your transfer before paying your recipient. This fee may vary and OFX receives no portion of it.
2. The margin taken by the money transfer provider.
Banks often charge a margin of up to 5% above the daily interbank exchange rate.
So when your bank tells you that you’ll spend AU$1 for every .644 USD, a simple Google search may reveal that the real daily exchange rate is closer to .672 USD. That means that on an AU$10,000 transfer into USD, you may lose around AU$274 by using your bank.
At OFX, margin means the difference between the wholesale foreign exchange market (i.e. the Market Rate), and the rate that is quoted to you (i.e. the Customer Rate).11
- How OFX saves you money
Business
At OFX, we offer fast and secure money transfers at competitive exchange rates. Currently, we have a special business introductory offer of 0.45% FX margin on major currencies (AUD, CAD, EUR, GBP, HKD, NZD, SGD and USD). *Terms and conditions apply.
Personal
If you’re a new personal client, enjoy extra savings on your first transfer. Take advantage of our great introductory rate across 7 currencies (AUD, USD, SGD, GBP, NZD, EUR, CAD) on your first personal transfer. *Terms and conditions apply.
3. The fee to receive the payment.
Some banks may charge your recipient a fee to receive money from overseas.
- How OFX saves you money
At OFX, we do our best to minimise these fees by sending your money using our global network of 115 local bank accounts. Generally, banks often don’t charge these fees for local transfers, so whenever possible, OFX uses our local account to make your transfer.
How OFX reduces fees on recipient transfer
It works like this: you pay into our local account in your home country, and we pay out from our local account in your recipient’s country, so your recipient typically doesn’t have to pay receiving fees.
Unfortunately, these fees vary from bank to bank, and they also depend on what kind of account your recipient has, which is why we can’t guarantee that you won’t pay a receiving fee when you make a transfer with us. But at least you know that we’re doing our best to deliver value for our clients.
Compare Australian banks international transfer fees
Let’s have a look at the big 4 banks and what fees they charge for personal users spending from bank accounts for international transfers:
| ANZ | ANZ typically charges around AU$18 for an international transfer, plus any additional exchange rate markups. They will also cover the correspondent bank fee for transfers sent in a foreign currency via ANZ internet banking and ANZ phone banking for selected currencies/countries5. |
| Commbank | Commonwealth bank charges up to around AU$30 per transfer out and AU$11 per transfer in, with the total cost also being influenced by the exchange rate offered, and international bank fees6. |
| NAB | NAB’s fees are usually around AU$30 per transfer out with the total cost also being influenced by the exchange rate offered and international bank fees.7 |
| Westpac | Westpac charges up to AU$32 for international transfers in branch, depending on the destination country and the currency involved. Westpac also offers foreign currency transfers without Westpac fees, via online banking or the Westpac app8. |
Why are banks typically more expensive to transfer money internationally?
Banks have a few different hoops to jump through when it comes to international transfers.
Service limitations
Banks tend to focus on domestic financial management ahead of international, which means they can find themselves with technological limitations.9 This could result in them needing to charge higher fees to make a transfer9.
Legacy issues
One of the most common charges for international transfers using banks relates to the use of legacy systems which involves multiple intermediary banks, each adding their own fees. Additionally, banks generally add a markup on the exchange rate, increasing the overall cost of the transfer3.
Bricks and mortar
Banks generally have higher overhead costs than specialised money transfer services as they have to pay and support their network of branches.
I think most people just assume the bank will be the best place to go to transfer money overseas, but the fees alone can really chop into that exchange rate.
– Jarrad Butler, an OFX client
What factors impact the cost of international bank transfer fees?
Several factors influence the overall cost of transferring money internationally:
Delivery speed
Faster transfers often come with higher fees. Some providers charge extra for expedited services, so if time isn’t critical, you might save by choosing a standard option.
Currency and countries
The cost of your transfer can vary depending on the currencies involved and the countries to which you’re sending money. Transfers of less common or exotic currencies might incur higher fees. For larger transfers you may get a better rate, so if you’re thinking about sending multiple transfers it may be worth sending as a lump sum to save on fees.
Payment provider
Choosing the right payment provider is crucial. Specialist providers like OFX often offer better exchange rates3 and lower fees than traditional banks. This makes OFX a more cost-effective option for international money transfers.
How do OFX keep their fees so low?
OFX uses a network of 115 bank accounts worldwide, where we hold currency reserves.
When you send a transfer at the rate you’ve locked in with one of our foreign exchange specialists, most of the time your money will go into a local account in your home country and stay there.
We then pay your recipient from our reserves in the destination country. That’s why your money arrives quickly.
- We don’t pay fees to send money to our own accounts
- It allows us to pass those savings onto you.
- We can stay open during times of high currency volatility
- This system often allows us to process same day transfers 24/7
- Our operations are online and over the phone saving overhead costs
- Your transfer is automated whenever possible, saving on staffing costs and expediting processing.9
How to avoid international transfer fees
There are cheaper ways to send money overseas. To avoid excessive fees, compare exchange rates from different providers and opt for transparency.
Compare exchange rates
Before making a transfer, compare the exchange rates offered by different providers.
At OFX, we can offer you better rates – closer to the mid-market rate, which can save you money.
Go for transparency
Choose a provider that is transparent about their fees. Avoid providers that offer “no-fee” transfers, as they often compensate with a less favourable exchange rate2.
Why choose OFX for international money transfers?
Beyond competitive rates and low to no fees, there are many perks of using OFX:
- making transfers on your schedule, not the bank’s
- setting a target exchange rate with a limit order so you won’t miss out if the market reaches your desired exchange
- locking in great exchange rates for future transfers up to 12 months in advance with a forward contract
- ability to send recurring transfers
- 24/7 help from our OFXperts
- get a customised rate for large or recurring transfers when you contact us
Transferring money internationally or to Australia?
Beat the banks with OFX
Transfer to over 170 countries online and save with OFX’s competitive rates. See how you can save here.
We’ve helped millions of people like Scott save money on transfer fees
After stressing about bank transfer fees to get his money back home, Scott, a travelling copywriter, decided to try OFX.
“One of the biggest rip-offs in banking is overseas currency transactions.” In fact, in this instance, using a money transfer service like OFX was “cheaper and faster” than doing it through his bank, saving Scott nearly NZ$7000.
“Just because you think banks are default, you think you have to use them to transfer money… People need to realise that banks don’t own the right to transfer money internationally. They’re not the only solution you have.”
And we help business owners like Eric save on fees too
Founder Eric Eigner started his online business as a side hustle in 2008. After steadily growing it for a few years, Eric made the decision in 2011 to run the business full-time.
Attracting international customers, Eric needed a business solution to pay and get paid in multiple currencies cheaply and efficiently.
“That’s when I discovered OFX in 2012, exchange rates were far more competitive, and I haven’t looked back since. The banks rip you off with the fees. The margins they charge on foreign currency are crazy. I don’t want to pay that much, especially for my volume. I’ve saved thousands and it just makes it easier for overseas customers to pay me.”
Money transfer fees FAQs
How much does it cost to send an international transfer?
Costs can vary but typically range from 3%-4% of the total transfer amount, depending on the provider and transfer amount4.
What you need to make an international bank transfer
You’ll need the recipient’s bank details, including the IBAN or SWIFT/BIC code, and information on the currency and amount to be transferred.
How long does an international bank transfer take?
Transfers typically take between 1 to 5 business days, depending on the method and provider.
What is the alternative to transferring money internationally with a bank?
Using an international money transfer specialist, such as OFX, can save you money. Specialist providers typically offer lower fees, better exchange rates, and faster transfer times than traditional banks4.
Disclaimer: This article was written in August 2024. The information is based on our online research and is correct as time of publication. The information provided is for educational purposes only and a reader should consider the specific requirements of their business when evaluating providers. If you would like to request updated information, please contact us at customer.service@ofx.com.
This information does not take into account your objectives, financial situation, or specific business needs.
References
- https://www.thecurrencyshop.com.au/guides/international-bank-transfer-fees
- https://www.savvy.com.au/international-money-transfers/fees/
- ttps://www.thecurrencyshop.com.au/guides/how-international-money-transfers-work-rates-fees-and-transfer-times
- https://www.finder.com.au/international-money-transfers
- https://www.anz.com.au/personal/travel-international/international-payments/#_content_anzcomau_en_reusable_personal_travelinternational_disclaimers_imt-zero-correspondent-bank-fees-countries
- https://www.commbank.com.au/international/fees-charges.html
- https://www.nab.com.au/personal/international-banking/transfer-money-overseas
- https://www.westpac.com.au/international-travel/international-transfers/
- https://www.ofx.com/en-au/blog/how-we-keep-our-rates-so-low/
- https://www.ofx.com/en-au/blog/what-is-a-swift-code/
- https://www.ofx.com/en-au/cheapest-way-to-send-money-internationally/
IMPORTANT: The contents of this blog do not constitute financial advice and are provided for general information purposes only without taking into account the investment objectives, financial situation and particular needs of any particular person. UKForex Limited (trading as “OFX”) and its affiliates make no recommendation as to the merits of any financial strategy or product referred to in the blog. OFX makes no warranty, express or implied, concerning the suitability, completeness, quality or exactness of the information and models provided in this blog.
