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The best way to transfer money overseas

When moving money abroad, it pays to avoid the big banks.

money transfers via app overseas transfer lead
Last updated: 13 November 2019

Need to know

  • Money transfer services are always a better option than a bank
  • With exchange rates especially, banks really take you for a ride
  • Depending on the size of the transfer, you could save hundreds with a transfer service 

A laughable exchange rate, hidden fees, delays and double charges – sound like your last overseas money transfer? 

Banks can and will siphon off hundreds of dollars as your money makes its way to a foreign land. It's a bit of a racket, really. 

Where did my money go?

Many of us have found that funds can mysteriously shrink while en route to other countries, mainly through a combination of unanticipated fees and miserly exchange rates, especially the latter.

CHOICE member Trish R, for example, was stung with a $30 sending fee, wore a terrible exchange rate, and then got hit with a $50 receiving fee on the other end of her overseas funds transfer. 

The amount she sent overseas bore only a passing resemblance to the amount that came through on the other end.

That's because she sent her money through a bank rather than an online money transfer service – never a good idea. (Trish knows better now.)

CHOICE Tip: Go with an online-based money transfer service when you need to send money overseas or have it sent here. These disrupters have really improved consumer outcomes when it comes to foreign exchange. 

Which is the best money transfer service?

The long and short of it is that there's too many variables at play to identify a single best performer in all circumstances. 

There are lots of players out there who'll act as intermediaries when you want to send Aussie dollars to an account overseas or foreign currency to your local account. 

We've narrowed it down to a handful that have been around for a while and have a solid track record. It's safe to say that all of these services will give you a better deal than the banks – generally a much better deal. 

But which one's best (among these and other services out there) will depend on a number of changeable factors. 

One of those variables is how much the sending and receiving banks will charge for the transfer and how long they'll take to process it. But this is out of the money transfer service's hands. 

  • OFX (formerly known as OzForex) – minimum transfer $250; $15 fee for transfers under $10,000, no fee for over $10,000.
  • World First – minimum transfer $2000; no fees.
  • CurrencyFair – minimum transfer 8 Euros or equivalent; transfer fee from 0.1% to 0.6% of the amount exchanged on each side (depending on the currency) plus 3 Euros or equivalent. 
  • TransferWise – minimum and maximum transfer depends on the currency; fees depend on currencies exchanged and are made up of a percentage of the transfer amount plus a small fee. 
  • XE – no minimum transfer; unlimited maximum transfer; no fees (although sending and receiving banks may charge fees). 

These non-bank services, among others, are better than banks by a long shot when it comes to sending money overseas, but:

  • you'll need to open an account and verify your identity (as per financial industry regulations)
  • some charge a modest fee (compared to banks) for transfers under a certain amount
  • some services have a minimum or maximum send amount.
digital interest rates fluctuations

Exchange rates are constantly on the move. Unlike the banks, money transfer services let you lock in a rate before agreeing to the transaction.

Is one transfer service better than the other?

We checked out the exchange rates of some of the players above using the same money transfer scenario (and data from the comparison site Mozo, who we've partnered with on a number of projects) across five business days (since exchange rates are in constant flux).

In our hypothetical scenario, we transferred $10,000 to the US, or exchanged the sum for US dollars. 

The difference between the best and worst money transfer service exchange rates was $155 over the five-day period. 

It's a lot, but not necessarily enough to pick a service based on exchange rates alone, since fees, the functionality of their online trading platforms, and customer service are also things to consider. 

Plus exchange rates change all the time, and a service offering better rates one week may be outdone by another service the following week.

A service offering better rates one week may be outdone by another service the following week.

The real story is how much better the money transfer services did than the three big banks we included: ANZ, NAB and Westpac. 

As our infographic shows, the money transfer service that gave the best interest rate deal over the five days beat the worst deal offered by a bank (in this case Westpac) by $601.  

It should also be mentioned that these figures are indicative only. 

But what they indicate is clear: money transfer services all do better than the banks by a wide margin and can be used safely and securely if you follow directions, which are not difficult. 

Join more than one service

If you transfer money overseas often and are keen on getting the best rate on every transfer, we recommend joining a number of money transfer services and checking the rate you're actually going to get as a registered user before committing to the deal. 

Among other things, the deal you get will depend on:

  • the size of the transaction
  • the currency involved
  • the exchange rate offered on the day
  • how much the sending and receiving banks charge
  • whether you're a regular customer, since some services offer loyalty discounts.
bank building dont use a bank when using transfers

Banks are never a good option for sending money overseas or having it sent here.

Use the right calculator

Money transfer services (as well as banks) provide conversion rate calculators on their websites, but it's not always clear if you're seeing the market rate that applies to the banking industry or the customer rate that applies to your transfer.

The market rate shows a better deal on the exchange rate, but you won't be getting this rate on a personal transfer. Then again, you will be getting a much better rate than you would with the banks.

Some money transfer services have a calculator on the home page that uses the market rate, but show 'customer rates' on another page. Other services have a customer rate calculator on the home page.

The market rate shows a better deal on the exchange rate, but you won't be getting this rate on a personal transfer

Many services require you to register before you set up a trade using its customer rates but will show you the market rates, which are bound to be better than customer rates since the service is out to make some profit on the trade (just not nearly as much as the banks).

The point is to make sure you're looking at customer rates. In any case you'll be able to see the exchange rate that will be applied before finalising the deal as a registered user. 

CHOICE tip: Non-bank transfer services offer a level of transparency that's lacking in the banking world. You'll always know the exchange rate and any fees before finalising.

We care about accuracy. See something that's not quite right in this article? Let us know or read more about fact-checking at CHOICE