Forex transfers - bank robbery?

Forex transfers - bank robbery

Expats who take a relaxed approach to managing their forex transfers will often find that it costs them dearly. I know that we have mentioned forex transfers before, but ensuring that these transfers are made on a cost effective and efficient basis needs to part of the essential skill set for expatriates - unless you want to effectively continue making large charitable donations to some of the world's leading banks.

A recent transfer from HSBC Canada provides a good example of how using a bank can be a very expensive option. Let's look at the various components of the transfer:

Firstly, believe it or not, HSBC Canada charges a wire transfer fee for any electronic transfers from the bank, either to domestic or international accounts. It almost makes you think fondly of Australian banks! Presuming that a transfer comes from an Advance account, the charges are $30 for a transfer made via the Internet or over-the-counter (OTC) for amounts under $10,000; and $50 and $100 respectively for amounts between $10,000 and $50,000. There is no rationale for charging higher fees for higher amounts - the administration is exactly the same; clearly the bank simply believes it can charge more.

Secondly, and this is the most profound issue, the bank provides no accurate indication of the rate at which it will convert the currency on transfer. You are effectively asked to take them on trust, or call a local branch for rates (?). One of the world's largest banks seems incapable of providing a real-time rate on transfer - the only reference to exchange rates on the website being a page which appears to show tourist exchange rates. Or at least we hope they are tourist exchange rates - the spread (which is effectively to the bank's profit margin) is enormous. At a guess, the bank is making a margin of at least 3% on just the currency exchange.

I stress the above is indeed a guess, and these comments are not restricted to HSBC alone, but I would very much recommend that anyone considering a transfer into Australia review the rates available through so that you are a position to compare the cost, and to have at least a dialogue with the sending bank about the exchange cost.

Thirdly, your receiving bank in Australia is likely to charge you a fee on receipt of funds - typically $15. I'm not sure that they merit the fee, but compared to the other charges and fees above it is chicken feed.

So, with a transfer of around $10,000 out of Canada to Australia, HSBC are likely to effectively charge fees and conversions which take 3- 4% of the balance out of your pocket. Don't get me wrong - fees and charges in these circumstances are warranted, but they just need to be fair, and my guess is that 1 to 2% of the balance is much closer to the mark. Banks are simply relying on "complexity" to make fat margins on retail forex transfers - it's time that changed.