Bank charges levied on international money transfers have seen a sharp fall since the inception of the International Money Transfer Index™ (IMTI™) from intelligence and comparison service FXcompared.com, yet they still offer very poor value for individuals and businesses moving money overseas.
On its first anniversary, the unique IMTI™ – which has now become recognised as the industry standard in monitoring banking costs for currency transactions - shows that UK banks are charging customers 4.8% on transactions of £1,000 when taking into account both fees and their currency spread.
This is down from 6.1% in the IMTI data for December 2015 - a fall of almost 22% - but is still three times the 1.6% charged by non-bank money transfer providers for the equivalent transaction.
In monetary terms, someone using a bank to make this transfer rather than a non-bank money transfer provider is losing £32 on each transaction at this level made via a bank, and if this transaction is made monthly that means a loss of £384 a year.
On a £10,000 transaction, the banks charge 2.8% including fees and spread, down from 3.5% in the December 2015 data - a fall of nearly 20% - with currency brokers charging just 0.9%, so banks are still charging more than three times as much as a broker.
On this transaction, you would pay an extra £190 by using a bank, giving a total loss of £2,280 over the year if these transactions are made every month.
Daniel Webber, co-founder and Managing Director of FXcompared, said:
“It is good to see the bank fees are coming down, but there is still a very big difference between what you pay to a bank for moving money overseas compared to what you would pay a broker.
“The data is clear that you are literally paying a bank three times more for the same transaction, yet people are still losing out significantly by thinking the bank is the better bet. Individuals and companies can save significant amounts by using a broker instead, and it seems that the message is starting to get through.
“We cannot say for sure, but it is likely the reason we have seen such a sharp drop in the amounts banks are charging is down to competition from currency brokers, because when we look at other data sets across the first full year of the IMTI™, there is no direct correlation between currency movements and costs to suggest otherwise.”
The IMTI™ was specifically designed for individuals and businesses who want to understand the costs of transferring money overseas. It is also of value to banks, non-bank money transfer providers, corporates, consultancies and other companies who operate in the international payments space.