When sending payments overseas, traditional banks can be slow, inefficient, and charge high fees and unfair exchange rates, so it’s wise to consider alternative payment providers - such as Monzo and Starling Bank
It’s important to take the time to research your options when sending money overseas, to make sure you are getting the best deal for your payment. This article will introduce some key points to consider, such as fees and exchange rates.
The only exchange rate that you should care about is the mid-market exchange rate.
This is simply the midpoint between demand and supply for a currency, and because of that, it changes all the time.
Most banks add a mark-up to the exchange rate that they offer to you - basically hidden fees behind the exchange rate. So, when banks or providers state they offer a 0% commission transfers - it may well be that they have applied a mark-up exchange rate.
If you’re unsure if you’re getting the real exchange rate - you can always check, as it will be the one that you see on Google.
Monzo joined forces with TransferWise in 2018, so that their customers can make fast and low-cost international payments, straight from their Monzo app.
This means that when you send money abroad with Monzo, you’re getting the same rates and experiences as you would with TransferWise - such as having your money converted at the real exchange rate - the one you’ll see on Google.
Not only that, but TransferWise also offers the multi-currency Borderless account. It lets you hold balances in more than 40 currencies, receive money from people around the world for free, and convert at the real exchange rate. It’s a great option for freelancers, small businesses or travellers who tend to send or receive payments internationally.
Starling Bank, unlike many other banks and payment providers, does not adjust the exchange rate. It offers the real exchange rate, just like Monzo and TransferWise.
In terms of transfer fees, Starling Bank charges 0.4% of the total payment amount for every transfer.¹ So, for a transfer of £1,000 to EUR, for example, £4 will be taken as a transfer fee. The percentage system used by Starling Bank means that the bigger your payment, the higher the transfer fees will be, so if you need to send a large amount of money then you may end up paying very high transfer fees.
Other fees you need to be aware of with Starling Bank include the SWIFT fees and local fees, which can vary from one country to another. These fees are in addition to the 0.4% transfer fee on all international payments. So, if you want to send money to the Euro zone, for example, you'll pay the 0.4% fee, plus a £5.50 fee, plus a 30p local fee.²
Starling Bank, offers a euro account to customers, that lets you hold, send, and receive euros for free. If you need to convert to another currency, the Starling euro account charges 0.4% fees on all conversions.³
Overall, we can see some key similarities between Monzo and Starling bank, but also a few differences. However, both are mobile banks that are challenging the traditional world of banking. When making an international payment, consider an alternative to traditional banks - as you’ll likely save money by avoiding fees hidden in marked-up exchange rates. You can download the Monzo app to any Android or iOS device.
Sources checked on 12-August 2019.
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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