It amazes me that in this day and age when information is so readily available online people are still being overcharged for international currency transfers.
On a daily basis, we are approached by firms who wish to join our currency broker comparison tables.
The objective of which of course is to allow people to compare quotes from multiple currency brokers, so they can get the best exchange rate.
The problem though, is that when you request a quote the underlying rate will have changed by the time your account is open and you are ready to transfer the currency.
We’ve written numerous articles on how to get the best exchange rate and they all generally revolve around asking one simple question. You can read them here:
- A 10 step guide to preparing for a large currency conversion and international transfer
- How to compare currency quotes and avoid getting ripped off by a currency broker
- A Quick Guide To Foreign Currency Exchange For Large Amounts of Money
- Why use a currency broker compared to your bank?
- What to look out for when choosing a currency broker
- Three top tips when receiving large amounts of money from overseas
Fixed and transparent exchange rates are not a new thing. Transferwise has been a benchmark for many transactions for a few years now. In that, people look at Transferwise’s online converter on their website and ask a potential currency broker if they can beat that rate.
But the problem is that people are still not asking the right question. That question of course being, “what is your mark up?”.
There is only one answer to this question, and it will be a percentage.
But still, currency brokers insist on opaque pricing.
When currency brokers get in touch asking to be featured I always ask what their mark up is. I say, “Imagine I’m Mr Jones buying a villa in Spain and need to transfer 500,000EUR in around six months. What would the mark up be on that?”
Almost without fail, the currency broker will enter into some drivel about how it varies from client to client, give their spiel about how they add value with market timing and execution advice (which to be fair they do). They will ramble on about personal service, global offices, billions in transacted payments and sliding scales.
Basically anything to avoid actually giving a transparent answer as to what their charges are.
A sliding scale is fine, there is a cost to all transactions and the bigger the conversion the cheaper it should be. No one should complain about smaller deals costing a little bit more in percentage terms, but what people really should be getting is a straight forward answer to a straight forward question.
It’s so simple really, when asked what the mark up is, just give a straight answer.
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