Giants urged to halve their rip-off international money transfer charges.
A new campaign has been launched urging firms such as Western Union and MoneyGram to slash the fees they charge for sending money to certain countries.
Tessa Jowell MP has launched Stop The Transfer Tax Rip Off, highlighting that in some cases firms charge as much as 20% on international money transfers. She accusing the firms levying these fees of acting like a payday lender and “exploiting” people sending money abroad to friends and family.
Thousands of people in the UK send money overseas each year. This may be to support family members, in preparation for emigration or to pay for a property abroad.
One big problem area is Africa, where there is a huge premium for sending money. Jowell argues that this is because Western Union and MoneyGram account for two-thirds of the market, with this lack of competition resulting in people being ripped off. And as these firms often secure exclusivity contracts with banks and other financial firms, it’s not easy for new entrants to break in and compete.
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A worse return on your money
Currency broker TorFX said that campaigns like Jowell’s should be welcomed by the thousands of people who send money abroad each year, whether it’s a one-off payment or a regular transfer, and no matter where they are sending the money. That’s because the fees charged by big name firms and high street banks mean that you end up getting a far worse return on your cash.
[SPOTLIGHT]Mark Bodega of broker HiFX agreed, pointing out that banks and global remittance firms like Western Union should be leading the way when it comes to payment innovation and delivering a good deal, but instead it’s the smaller firms that are delivering a better return.
For example, because of the branch networks, banks set their exchange rates just once or twice a day, with a big margin placed in there to ensure they make a decent profit. In contrast specialist online brokers give people access to live rates, meaning you get much more for your pound.
For example, if you wanted to transfer £10,000 into US dollars, you could get $15,186.83 from Barclays at the time of writing. Yet from the likes of Currencies Direct, HiFX and TorFX you could get anything from $15,393.30 to $15,518.45.
However, it’s only by actively shopping around that you can secure a better return on your money. Bodega concludes: “Banks know that very few of their customers leave them because of their international payments services. As a result they take advantage of a captive market. We only have ourselves to blame if we continue our general lethargy around this and other banking services.”
If you want to cut the cost of sending money abroad, be sure to read our guide on how to save money on international money transfers. You can compare what you will get for your money in our international money transfer comparison centre.
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