Are you wanting to get the best exchange rate when you convert british pounds to Australian dollars? In this article we review a number of options to identify how you can ensure you get the maximum amount of Australian dollars when transferring your British pounds back to Australia.
In this study we identified that there was over a 300 AUD difference (for a 5000 GBP transfer) in the amount of Australian dollars we would receive between a bank and the best currency exchange service.
What was compared?
In this study we looked at the competitiveness of six different companies that could be typically used to transfer money internationally and between currencies. I used four different transfer amounts (100 GBP, 1000 GBP, 5000 GBP, and 10,000 GBP), and obtained the quotes as a logged in user of each of the services (except for Westpac – see notes at the end of the article).
The quotes provided below may not represent the relative competitiveness of these companies all the time, or when converting between different currencies. These results represent the quotes to convert British Pounds to Australian Dollars from six different currency exchange providers obtained between 16:00 and 16:30 Central Europe Time on 19 August 2016. The results are summarised below.
Summary of Results To Convert British Pounds to Australian Dollars
The numbers in the table are the amount of Australian dollars you would receive in your Australian bank account from a 6000 euro, 1000 euro, and 100 euro transfer respectively.
AUD from 100GBP
AUD from 1000GBP
AUD from 5000GBP
AUD from 10,00GBP
Conclusions From Results
There are a number of important insights from the table above with regards to transferring money to Australia.
- All of the online currency exchange companies (excluding TorFx) provided significantly better exchange rates than Westpac (when converting 1000 British pounds or more). For transfers of 10,000 pounds, all the online currency exchange companies (excluding TorFx) were within 100AUD of each other when you convert british pounds to Australian dollars, and all more than 500 AUD higher than using a company like Westpac. This is consistent with the results we have obtained from other studies looking at converting Euros to AUD and UAE Dirhams to AUD.
- Currency Fair offered the best exchange rate if you want to convert British pounds to Australian dollars in large quantities (eg. 5000GBP and 10,000GBP), but was less competitive at the 100 GBP transfer due to it charging a A$4 transfer fee to Australian bank accounts (note this fee varies for different currencies).
- If you had 5000 Briitsh pounds and used Currency Fair to convert British pounds to Australian dollars, it would result in you receiving nearly $320 AUD more than if you had used Westpac.
- UKforex (Ozforex / OFX), Transferwise and HiFx are generally competitive with Currency Fair when you want to convert British pounds to Australian Dollars over most transfer values.
These results are also consistent with a study undertaken by www.which.co.uk comparing 16 different companies at the end of 2015. In their study, Currency Fair, Transferwise, and HiFx resulted in the best outcome when transferring British pounds into Euro’s, and Transferwise and Currency Fair were the best when transferring money between British Pounds and US Dollars. Ozforex / Ukforex did not appear to be included in their study.
The results are also consistent with my studies for converting Euros to Australian Dollars and UAE Dirhams to Australian Dollars.
Other Considerations When You Convert British Pounds to Australian Dollars
Exchange rate and fees aren’t the only thing to consider when transferring money to Australia. Some of the other considerations include :
- Ability to lock in an exchange rate at the time of booking transfer.
- With Currency Fair, you need to have your funds with Currency Fair at the time of booking a transfer to lock in the exchange rate. Ozforex locks in the exchange rate for you prior to you transferring your foreign currency to them. While with Transferwise and HiFx your quote continues to fluctuate until they receive your foreign currency funds in their bank account. And with Westpac, if you transfer a foreign currency from your foreign bank account directly to Westpac, then Westpac will convert the currency to Australian dollars at the prevalent exchange rate when they receive your funds (which could 2-4 days or more after you initiate the transfer).
- Ability to provide more advanced currency risk management services such as forward contracts
- Ukforex / Ozforex offers some good currency risk management services including the ability to lock in an exchange rate for a transfer on a future date. This is particularly valuable if you plan to convert a large amount of money (eg. if you buy or sell a house). Companies like Currency Fair and Transferwise do not offer this capability at this stage.
- Is the money transfer company reputable and regulated?
- If using a money transfer company to convert british pounds to Australian dollars it is important to check that the company is reputable, is being regulated by an appropriate government authority, and has a requirement to hold client funds separately from the business funds? All of the companies mentioned in this article are regulated by competent financial authorities in the country they are based in (Transferwise & HiFx in the UK, Ozforex in Australia, and Currency Fair in Ireland). I have included more information about each of the companies on my expat resources page.
- How often and How much you transfer
- Currency Fair and Transferwise work on a percentage margin basis (regardless of the size of the transfer) plus a small transfer fee. As a result with these companies, the effective exchange rate remains constant regardless of the size of the transfer. Companies like Ozforex will quote more competitive exchange rates the larger your transfer. Some of the providers will seek to match exchange rate quotes, and if you are transferring a significant amount of money (eg. following the sale of a house) then you can negotiate the exchange rate directly with the company.
- Speed of Transfer
- How quickly your money gets from A to B is important. In my experience transfers with the companies mentioned above all happen within a 2-3 days, and generally faster than using a bank transfer.
- User Friendliness of their Website and Processes
- Now that I have used these companies services I must admit I prefer the user experience with Ozforex. I did find Transferwise and Currency Fair’s websites a little confusing initially but after using them for a period you will get used to them.
- Ability to lock in an exchange rate at the time of booking transfer.
Opening an Account and Completing a Trade
With all the online money transfer companies mentioned in this article, it is free to open and maintain an account. The process is reasonably straight forward and differs slightly between company depending on their local regulator’s requirements. The steps involved are generally as follows :
- Select open account or create account on the relevant website
- Provide basic personal information (name, address, and currencies you want to transfer). Your account will then be created, and you will be able to get real-time transfer quotes.
- In most instances you won’t be able to actually transfer any money until you complete an identification verification. This generally involves providing a scanned copy of your passport (or similar identification), and a scanned copy of utility bill (or similar) to verify your address. Once the company has reviewed these documents you are free to trade.
- When booking a trade you will be asked to nominate the bank account you wish the exchanged money to be transferred into. When the transfer is booked (and sometimes before depending on the company) you will then transfer the money you wish to exchange into the currency broker’s account (of the same currency). Once the currency broker receives your funds they will initiate a funds transfer of the exchanged money into your nominated account.
Get an even better deal with Currency Fair and Ozforex. Use the links in this article and you will receive one fee-free currency transfer from Currency Fair and two fee-free currency transfers from Ozforex.
More Exchange Rates
Share Your Experience
- What has your experience been transferring money to Australia? Which companies would you recommend? Do you have a number of accounts and check which company offers the best deal before transferring?
- Keep an eye out for some upcoming posts on the process I went through to open an account with the companies mentioned in this post and what my experience has been in using these companies.
- For more information on the companies mentioned in this article go to my expat resources page here.
Notes on Results Data
- Quotes obtained between 16:00 and 16:30 Central Europe Time on 19 August 2016.
- Other than where clarified further below, the results were obtained as a logged in account holder of each of the service providers.
- Some of the results may be slightly better than existing account holders due to entitlements to free transfers as a new account holder.
- Some of the results may not include all fees and charges. The author has deducted a A$4.00 transfer fee for transferring money to Australia from the price quoted by Currency Fair, as this is deducted after obtaining a quote.
- Westpac exchange rates based on the results using their online currency converter. It was unclear whether the amount quoted included all fees and charges.
- The results do not take into account any other benefits or limitations using each service, including how fast the funds will be transferred into your account in Australia, whether the exchange rate is locked in at the time of booking, and whether you need to have funds held by the currency exchange service provider at the time of booking transfer.
- This set of data was obtained at a specific point in time, using a specific set of currencies and may not be representative of the competitiveness of the currency exchange providers at all times or in different currencies or quantities when transferring money to Australia.
Disclaimer : This information is for educational purposes only and does not constitute financial or taxation advice. As this information is not advice and has been prepared without taking into account your objectives, financial situation or needs you should, before acting on this information, consider its appropriateness for your circumstances. Independent advice should be obtained from an Australian financial services licensee before making investment decisions, and a registered (tax) financial advisor/accountant in relation to taxation decisions. To the extent permitted by law, we exclude all liability for any loss or damage arising in any way.