Fees & Charges:
The good news for you is how competitive the FX industry is, as a result 80% of currency exchange brokers won’t charge a transfer fee.
Although you’re not charged a transfer fee, it is highly likely your Australian Bank will charge you a receiving fee (approx. $15-25AUD) for your Australian Dollars. Isn’t ideal but easily forgotten when you receive a competitive exchange rate.
How Do Currency Exchange Brokers Make Money?
Like every business the company offering the service needs to make money! To understand this, you will need to know what is called the “Market Rate”.
The Market Rate (Interbank Rate) is what banks, large corporations trade at in millions. This rate is not available but is used as a market guide for Currency Exchange Brokers to use.
As an example, lets say the Market rate is 1.9 for sending money to Australian Dollars. If you called the Currency Exchange Broker to transfer £1000GBP, they gave you a rate of 1.9 = $1900AUD. The Company would be sending this at market rate, therefore making £0 Profit. So realistically the Currency Exchange broker will offer you a rate below the Market rate, example below;
Market Rate – 1.9
Customer Sending - £1000GBP
Customer Rate – 1.7
Funds received = $1700AUD
So you can see from the example above, the currency broker has made a profit of $200AUD. This is the difference in margins between the Market Rate (1.9) & the Customer Rate (1.7)
For more information on exchange rates and how to send money to Australia checkout the “Currency Exchange Rates Explained” article in our Blog.