New providers beat banks on international paymentsIt pays to shop around when sending money overseas

21 January 2016

Newer providers typically offer a better deal on international payments than banks

Which? research has found that someone sending £10,000-worth of euros overseas could be up to €400 worse off if they use an uncompetitive provider.

We tracked the cost of sending euros and US dollars overseas with 16 providers over three weeks in October and November 2015. Our research looked at sending £10,000 as euros to a bank account in France and how many US dollars you’d get sending £1,000 to an American account. 

There were big differences between what was offered. We included eight high street banks, some well-known foreign currency providers such as Post Office and Moneycorp, and newer entrants to the market, including CurrencyFair and TransferWise.

Best deals for sending euros overseas

Perhaps unsurprisingly, the eight banks were bottom of our rankings for both euros and US dollars. For euros, Santander offered the worst deal. Based on its average exchange rate on the four occasions we looked, you would get €13,292 for £10,000, taking into account the £25 fee. 

Much less than with providers at the top of our table. CurrencyFair offered €400 more than Santander – €13,696 after its €3 transfer fee. TransferWise was next best at €13,683 after its 0.5% transfer fee, and with HiFx you would get €13,664 with no fees (it charges £9 for transfers of £3,000 or less). See full results for euros in the table below.

Find out more: looking for holiday currency? Read our guide on travel money

Sending US dollars 

The situation was similar when it came to our US dollar scenario, with banks again finishing bottom. For £1,000 you would earn just $1,452 (after the £25 fee) with Santander, $1,471 for RBS/NatWest (including a £22 fee), and $1,472 (including a £20 fee) with Nationwide. We got $1,530 with TransferWise, $1,529 from CurrencyFair and $1,521 with World First.

The table below compares how many euros you could send to a bank account in France with £10,000 via 16 online providers. We 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. Transfer fees correct as of 02 November 2015

Fees quoted are for each provider’s ‘standard’ option and these were deducted from the amount of currency being sent. In reality, some providers would charge these separately. Our figures also only include fees charged by the provider sending the money – the bank receiving the transfer may levy fees as well.

Sending Money Overseas
  Transfer FeesCurrency you can send for £10,000
4World First£0€13,601
5World Remit£2.99€13,594
8Post Office£0€13,523
10The Co-op£8€13,413

Table notes: There is a £9 fee for transfers of less than £3,000 with HiFx. Moneycorp charges a £5 fee for one-off transfers, £4 for regular payments. Quotes for The Co-op were obtained over the phone rather than online. Transfers from an HSBC account to another HSBC account are free.

Authorised payment institutions are safer

Unlike money in bank accounts, international payments are not covered by the Financial Services Compensation Scheme (FSCS). If a company goes bust, you’re not entitled to compensation. There are some safeguards, though: under EU rules, all firms handling overseas money transfers must be authorised or registered by the financial regulator in the country that they operate in.

In the UK it’s the Financial Conduct Authority (FCA). Your money is safer with an authorised firm as it must hold client cash in separate accounts from its own - so, if the firm goes bust, you’re more likely to get your money back. Some smaller firms may opt to be registered rather than authorised, but this does not offer consumers the same protection.

We think you should avoid firms not authorised by the FCA or another EU regulator. All the providers we looked at are FCA authorised except CurrencyFair, which is authorised by the Central Bank of Ireland. Reputable firms will make clear on their websites whether they’re authorised.

More on this...