International Transfer Fees 101 – How Much Are You Paying?

There has been a lot of talk lately about how and what the banks charge their customers for international payments. For the sake of clarity, we decided to compare some of UK’s biggest banks to see, just how much they charge for your international payments.


In addition to banks’ fees for every international transfer, regardless the amount transferred, they also have their own conversion rates that cut a hefty piece out of your every payment. To get an idea of just how big those pieces are, we compared the banks’ exchange rates to the mid-market rate. The mid-market rate (sometimes also called spot rate or interbank rate) is the rate used in global financial markets and it is calculated using the median average of the sell and buy rates.

The current mid-market rate1 for GBP to EUR conversion is 1.19234. That means, when transferring £1,000 to Germany the recipient would get 1,192.34 EUR. But that’s really not what happens. See the table below for the banks’ own rates and how much money you lose for every £1,000 you transfer abroad.

  GBP to EUR
Cost from rate Transaction cost Your total cost
NatWest 1.1406 £43 £22 £65
Lloyds 1.1583 £29 £10 £39
HSBC 1.1601 £27 £17 £44
Santander 1.1469 £38 £25 £63

* These rates were prevailing on December 8, 2013

Looking at some of the bigger fees listed above you can see how transferring £1,000 abroad every month can result in about another £1,000 worth of banking fees a year! A far fetch, you say? Read on.

That’s not the end of it

If you think the charges end here, you are in for a surprise. There are also extra hidden fees that the banks say they have no control over. These are fees that depend on the recipient’s bank and if any intermediary banks are used, they will also grab their share. The transfer fee is deducted from your account, the conversion rate difference is cut off the amount you’re sending and the recipient fees are to be paid either by the recipient or you can volunteer to pay them yourself.  Yet mostly there’s still no way of knowing what exact amount will reach the recipient, thus making it really hard to pay bills from abroad, for example.

All charges can vary according to the currency and the amount transferred, if the recipient is a customer of the same bank abroad and how quickly you want the money to reach them. The figures presented in the table above are based on standard payments that usually take 2 to 4 business days to arrive. Urgent transfers that take 1 to 2 business days usually mean an extra cost of £20 to £30.

Banks, you need to up your game!

It’s ironic that some banks list the mid-market rates, but state these are merely indicative and to get these rates for your transactions is utopia. But it’s not. The truth is, banks, you really don’t have to go overboard with the sneaky conversion rate charges, when you’re already charging the transaction fee anyway. You will have to tone it down soon enough because there are some new money transfer companies out there that have already come up with far cheaper and more transparent options to move money across borders. And there are even better solutions to come. Stay tuned!

Resource: (December 8, 2013)


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