Western Advocate

ACCC investigates international money transfer fees

ACCC investigates international money transfer fees
ACCC investigates international money transfer fees

This is sponsored content for The Currency Shop.

If you've never tried to send money from Australia to another country, then you probably have several questions, particularly when it comes to international money transfer fees.

After all, nobody wants to waste tons of money just because of a simple money transfer transaction.

However, in today's digital world, several factors and concerns raised have started to change how people understand wire transfers and their corresponding fees.

Due to the different types of prices charged by a majority of the financial services in Australia for international money transfers, the Australian government, spearheaded by the Australian Competition and Consumer Commission (ACCC), makes an effort to investigate the reasons behind the mark-ups.

This article discusses what international money transfer fees are all about, the role of the ACCC in the issue, and how they conduct their investigation regarding the transfer fees.

What Are International Money Transfer Fees?

Ultimately, international money transfer fees are one of the major factors that influence the total cost of the transaction. However, these transfer fees usually vary among different money transfer providers all over Australia.

Although you may be tempted to go for the one has the lowest transfer fee, it shouldn't be the primary factor you take into account before you proceed with the best method to transfer money.

Depending on the kind of provider you'll use, below are the standard fees involved in international money transfers in Australia:

1. Margin fee

It's often a hidden cost that is applied to the exchange rate. To find out the margin, check the exchange rate posted on the transfer service provider's site against the interbank rate.

2. Transfer amount

This fee is based on a percentage of the total amount of transfer.

3. International fee

This is the fee you'll pay when you send or receive money from an overseas bank account.

4. Investigation fee

You'll be charged with this fee when you inquire about the status of the transfer.

5. Bank-to-Bank fee

This is the fee you'll pay when you transfer money to another bank.

6. Payment method fee

This fee is charged based on the method you'll pay for the transfer. The payment methods may include via credit or debit card, mobile phone, or by branch.

7. Cancellation fee

If you decide to cancel your international money transfer, you'll have to pay a cancellation fee.

8. Disbursement fee

The recipient bank charges this fee for receiving an international money transfer.

ACCC investigates international money transfer fees
ACCC investigates international money transfer fees

Now that you have an idea on the standard money transfer fees, it's time to consider some factors that would affect how much you'll pay for a money transfer. These factors include:

1. Exchange rate

In most cases, banks and other financial service providers aren't upfront about the margin they add to the market rate. Thus, it's essential to check the price before you proceed with the transfer.

2. Method of money transfer

The transfer method you're going to use can influence the amount of transfer fees you should pay for the transaction. In such a case, figure out what method you're going to use to make transfers. You can choose to pay via a credit or debit card, or over the phone.

3. Number of times you send Money abroad

If you schedule more regular transfers, you'll end up saving a few Australian dollars.

4. Sending or receiving

Your international money transfer fees may vary depending on whether you'll make an incoming transfer or outgoing transfer.

5. Transfer amount

Some money transfer service providers online waive their fees if the amount of money exceeds a specific range.

These are the things you need to learn about international money transfer fees in Australia.

When making a money transfer overseas, you have to compare your options based on the fees you'll pay and the other factors mentioned above.

That way, you'll be able to get the best deal for your financial situation.

Typically, sending money back to Australia can be expensive, especially if you're using banks for your transaction.

So, if you want to save yourself from paying a large amount of money for transfer fees, using a specialised money transfer service can be a great option.

What do you know about the Australian Competition and Consumer Commission (ACCC)?

With regard to the issue on international money transfer fees in Australia, the Australian Competition and Consumer Commission has entered the picture to take a look at the issue at hand.

But before we dive into the subject proper, let's first discuss what ACCC is all about and its role in the controversy on the different fees charged by major financial companies in Australia.

The ACCC, is an independent authority that's tasked to implement the Competition and Consumer Act of 2010 as well as other legislation that focuses on fair trading, promotion of competition, and regulation of the national infrastructure for Australians.

Established in 1995, the agency is composed of a Chair, Deputy Chairs, Commissioners, and the Associate Members. However, all appointments made to the agency should be with the participation of the state, territory, and Commonwealth governments.

ACCC, on the other hand, commits to its purpose of making the market work and become sustainable today and in the coming future.

Since competitive markets play a significant role in the welfare and prosperity of consumers, ACCC has the task to safeguard, boost, and support how competition functions in the industries and markets to ensure the economy's efficiency.

In other words, the agency will work to enhance the welfare of Australian consumers, providing protection to the consumers by preventing activities that are harmful to them.

As the primary authority for enforcing the Competition and Consumer Act of 2010, the role of the ACCC is to do the following:

  • Bring awareness among the Australian consumers about their rights under this Act
  • Inform and remind businesses of their obligations when they make money claims, as well as provide guidance through this Act
  • Take action by investigating companies who perform practices which violate the Act

How Does The ACCC commence inquiry into international money transfer fees?

When it comes to foreign exchange and international money transfer transactions, the ACCC has the authority to investigate the said matter.

For instance, the Productivity Commission's Inquiry Report about the competition in the Australian financial system advised that the ACCC should conduct an inquiry about the disclosure methods that should be utilised to better understand and compare fees for international transactions.

Below are the reasons why the ACCC has been recommended to perform an investigation regarding international money transfer fees:

1. The Annual Remittances Data of the World Bank as of April 2018 provided that there's an outflow of Australian remittances amounting to AUD 8.753 billion, according to the exchange rate at that time.

2. The Remittance Prices Worldwide report of the World Bank in June 2018 stated that the expenses of sending money from Australia are higher than the global average cost. It was 11 per cent higher than the G20 average, 40 per cent higher than the United States, and 13 per cent higher than the United Kingdom.

With these financial reports submitted by the World Bank, ACCC's Financial Services Unit is in its second inquiry to shed light on this matter.

Currently, the FSU checks, monitors, and strengthens competition in the financial services sector in Australia.

This monitoring is by way of conducting market studies and evaluating competition issues.

ACCC investigates international money transfer fees
ACCC investigates international money transfer fees

In addition, the ACCC is also into an inquiry about matters involving sending money abroad and buying international cash. The reason for this is that whatever business they have, Australian consumers tend to use foreign exchange services on a daily basis.

Plus, the World Bank also found out that Australians sent over AUD eight billion for overseas transactions in the year 2016 and the country has also been identified as the third among the most expensive G20 countries for small businesses and consumers in terms of sending money.

Given these reports about Australia's foreign exchange services, the Australian Competition and Consumer Commission are tasked to do the following:

  • Review the way potential entrants can easily compete in the markets.
  • Check the reasons why major financial companies and banks in Australia can offer high fees in a consistent manner.
  • Go over with the price competition taking place among suppliers of the foreign exchange services.
  • Inquire how the prices are presented to the consumers, especially since there's a report from the Productivity Commission that they find it hard to understand the various types of fees involved in international money transfers.

With many complaints filed to the ACCC about these higher transaction fees, the agency is open to hearing from advocacy groups, consumers, and even foreign currency suppliers regarding the costs, pricing, and many variables that affect the market.

They will also be open-minded in conducting the inquiry by way of giving recommendations, comments, and opinions whenever necessary.

What are the major Australian banks that offer international money transfers?

In line with the issue on ACCC's inquiry about the foreign exchange services, the Australian banking system has played a significant role in the subject matter.

Aside from the usual banking services, banks also offer trading in financial markets, international money transfers, funds management, and many more.

Unfortunately, Australian banks offer excessive fees for money transfers overseas, including the less than favourable currency exchange rates.

To make sure you're informed about the issue on high mark-ups on transfer fees that involve banks and other companies, here are the major Australian banks you'd like to get to know better:

1. Commonwealth Bank

It's a multinational bank with offices in New Zealand, Asia, US, and the UK. The bank, which is based in Sydney, has 11,000 branches operating worldwide. Due to its numerous number of staff and millions of customers, the Commonwealth Bank is considered the biggest bank in Australia. It offers a wide variety of financial products and services, including international money transfers.

2. Westpac Bank

Founded in 1817, it's the first bank in Australia. Also located in Sydney, the Westpac Bank caters to over 13 million customers by providing banking products and financial services. With thousands of staff, this bank creates five divisions, including Business Bank, BT Financial Group, Westpac Institutional Bank, and Consumer Bank. Moreover, it's also one of the Australian banks that offer foreign exchange services.

3. Australia and New Zealand Banking Group (ANZ)

Established in 1835, it's one of the biggest banks you can find in Australia since it has branches around the world, including the Middle East, New Zealand, Europe, US, and the Asia-Pacific region. ANZ Bank is known for its several banking and financial products and services, which serve a variety of people, including small businesses, institutional, corporate, and commercial customers. With its headquarters in Melbourne, this bank works with thousands of staff worldwide.

4. National Australian Bank

This bank is created due to the merger of the Commercial Banking Company of Sydney and the National Bank of Australasia in the year 1982. Based in Docklands, NAB has hundreds of branches globally, including Asia, Europe, US, and New Zealand. Due to its operations, this bank has thousands of employees who are serving around 8 million customers across the globe. More importantly, this bank also offers a wide selection of banking products and services, including international money transfers to both individuals and businesses.

5. Macquarie Bank

Located in Sydney, this bank is the biggest investment bank in Australia. It offers financial services in banking, asset management and finance, capital solutions, and commodities markets. Moreover, Macquarie Bank works with thousands of staff to cater to the needs of millions of customers.

Undeniably, banks are good at offering credit cards and home loans and handling banking accounts. However, when it comes to sending money from and to Australia, you may be better off utilising a money transfer service to make sure you can save more money in your wallet.

The Bottom Line

Ultimately, international money transfers are prevalent in Australia. With a variety of Australians using foreign currency conversion services, banks and other financial institutions tend to offer higher mark-up fees and additional related costs consistently.

Thus, in order to protect the Australian consumers when it comes to competitive markets and against the bad practices of financial companies, ACCC has initiated the first few steps to fulfill their roles and responsibilities under the Competition and Consumer Act of 2010.

To have a better understanding of why ACCC has to investigate international money transfers in Australia, keep this article in mind to get you started.

This is sponsored content for The Currency Shop.