I have written a number of articles in relation to transferring money to Australia. In particular how you should use an online currency exchange service or online money transfer company, rather than using the bank – Why I don’t use my bank for international money transfers.
In this article, I set about using actual quotes in comparing different currency exchange options to see which service provider provided the best deal. The results were surprising for me, and showed that there was up to a 5% difference on the final converted amount on transfers around A$8000 (representing A$400 difference between companies) and up to a 10% difference on small transfers around A$150.
What was compared?
In this study I looked at the competitiveness of six different companies that could be typically used to transfer money internationally and between currencies. I used three different transfer amounts (6000 euro, 1000 euro and 100 euro), 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).
I am the first to admit, that this study is not particularly scientific, and may not represent the relative competitiveness of these companies all the time, or when converting between different currencies. These results represent the quotes for converting Euro’s to Australian Dollars from six different currency exchange providers. The quotes were received between 9am and 9.15am Central European time on Monday 7 March 2016. The results are summarised below.
Summary of Results For Transferring Money To Australia
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.
|COMPANY||AUD FROM 6000 EURO||AUD FROM 1000 EURO||AUD FROM 100 EURO|
Conclusions From Results
There are a number of important insights from the table above with regards to transferring money to Australia.
- The new online currency exchange companies (Ozforex, Currency Fair, Transferwise, HiFx) provided significantly better exchange rates than Westpac and Paypal (particularly 1000 euro and above)
- Currency Fair offered the best exchange rate for reasonably large transfers (1000 euro and 6000 euro), but was less competitive at the 100 euro transfer due to it charging a A$4 transfer fee to Australian bank accounts (note this fee varies for different currencies).
- Using Currency Fair for a 6000 euro transfer to Australia would result in you receiving nearly A$350 more than if you had used Westpac.
- Transferwise and HiFx were very competitive with Currency Fair when transferring significant volumes of money (ie. 6000 euro)
- Having used Ozforex for the past couple of years, I was disappointed to see the results for UkForex / Ozforex starting to languish behind the other three currency exchange companies, however you would still receive A$265 more than if you had transferred your money directly to Westpac and had Westpac convert the money on your behalf.
- Due to paypal’s fee structure, Paypal provides a competitive currency exchange service when dealing in small amounts. (Something to think about when purchasing goods in different currencies over the internet).
Interestingly, after doing this study myself, I found 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.
The table below (from the which.co.uk study) compares how many euros you could send to a bank account in France with £10,000 via 16 online providers. They gathered indicative exchange rates four times from each provider over the course of three weeks between 14 October and 4 November 2015, and took an average. All rates were collected on the same day each week, within a two-hour window. The transfer fees were deducted from the amount of currency being sent.
Other Considerations When Transferring Money To Australia
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).
- Supported Currencies & Countries
- Depending on the financial regulations in the country you live, it may or may not be possible to open an account with some of the companies mentioned. Currency Fair and Transferwise are reasonably young companies and only support customers in a limited number of regions and a limited number of currencies. At time of writing, you could only open an account with CurrencyFair and Transferwise if you were living in Europe or the UK, however they are rapidly expanding their footprints. Ozforex is now a well established company supporting customers in many more countries (including Middle East, Asia, and North America) with many more currencies.
- SINGAPORE RESIDENTS : Many Australians living in Singapore have had difficulty identifying online companies that can transfer their money to Australia. While I know Ozforex and Transferwise are in the process (at time of writing) of establishing this service, HiFx advise me they do offer this service. Please let me know your experience.
- Is the money transfer company reputable and regulated?
- If using a money transfer company 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 I am sure I will get the hang of it.
- 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 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.
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 9am and 9.15am Central Europe Time on Monday 7 March 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 amout 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 : The information contained on this website is intended only as general commentary and does not purport to be comprehensive. No warranty is provided as to the accuracy. It should not be regarded as tax, financial, or legal advice. Remember, the value of an investment can go down as well as up, and you should seek professional advice that considers your personal situation and country of residence before taking action. Referral commissions may be payable for some services mentioned on this website.