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Banks VS. FX Companies

As people get to send more and more money abroad (and receive more and more currency from abroad) it has become essential to understand the rules of the game and minimize time, cost and worries. As some people have been dealing making money transfers and exchange via banks, a growing number of individuals are finding in International Money Exchange and Transfer Companies a trustworthy, reliable and cost effective partner.

In this article, we will objectively compare between these entities based on different parameters.

  • Cost Effectiveness: Fees & Spreads tightness (rates competitiveness)
  • Transfer speed: Days taken for making transfers
  • Customer Support: Assistance, advisory and follow up
  • Clients Satisfaction: Client Reviews via dedicated portals
  • Payment optimisation: Whether using money transfer companies  helped reduce recipient fees.

 

TL;DR Comparison Results

International FX ServiceBanks
Tested in this comparison:World First, Moneycorp, Currencies DirectLloyds bank, HSBC, Barclays
FeesNo Fixed transfer fees in the UK, EU and Australia. World First charges $10 per transfer in the USA below $10,000. Moneycorp usually charges a flat fee unless you sign up through our link.Wire fees of £4- 25  per transfer. HSBC was the most competitive.
RatesRanging from markup of 0.5% above mid-market rate to 2.5% markup.Ranged between 3%-5% markup.
User Friendliness and PlatformHigh quality, mobile-friendly, websites and trading platforms. Usually limited at around £10,000-£15,000 per transfer.High quality, user friendly, websites, but not apt for large transfers.
Customer SupportDedicated dealer who is readily available on the telephone for transfers above the £5,000 mark.No access to professionals.
User SatisfactionVast majority of positive rating by clients on client review platforms.General mistrust by the public and highly negative reviews of leading banks on client review platforms.
Security of FundsClient accounts are segregated for any company approved by the FCA as an authorised payment facility.Protected by the PRA up to GBP 75,000. Other protective measurements are in place outside the UK.
Nationalities AcceptedClients from UK, Australia, Canada, New Zealand, or the EU are always accepted. Larger companies will accept USA clients, South African clients, UAE clients, and others. All clients have access to all foreign currencies.Each domestic bank accepts clients from its destination locale. Few banks like HSBC will allow clients to interlink international accounts.

Companies Compared:

Banks Compared:

  • Lloyds

  • Barclays

  • HSBC

 

Cost Effectiveness

The comparison on this section is rather simple and straightforward. While most money transfer companies usually do not charge anything on transfers higher than £3,000 – Banks would usually take their share from your international money transfers. Indeed, while HSBC’s fee of £4 seems to be the most competitive among banks, Lloyds takes £10 for transfers below £5,000 and £17,50 above the mark. Finally, Barclays takes an outrageously high fee of £25 on International Money Transfers (See Snapshots Below).

By comparison, International Money Transfer Companies such as Torfx, World First and Currencies direct would not charge any fee whatsoever on transfer of any size, while other companies like HiFX will not charge fees above a certain thershold (the average is £3,000). Other companies like Transferwise or Currencyfair will charge £1-5 per transfer.

In terms of exchange rate which make up the largest factor in the pricing of larger fx transfers, we have discovered a difference of 2.2% on average in rates between banks we tested, against rates our referred customers have achieved. View an example we took in Feb 2015 that shows a price better by 3% by Moneycorp VS HSBC.


HSBC Fee

Source: http://www.hsbc.co.uk/1/2/international-money-transfer

hsbcfee


Barclay’s Fee

Source: http://www.barclays.co.uk/Helpsupport/Internationalpayments/P1242593395280

barclaysfee


Lloyd’s fees

Source: http://www.lloydsbank.com/online-banking/benefits-online-banking/international-payments.asp

 lloydsfee


HSBC’s Rates(Advance Account)

hsbc-quote

VS Moneycorp’s Quote (3% difference) moneycorpquote


 Winner: FX Companies

 

 

 

Transfer Speed & Hidden Fees

One of the worst things that could happen to you is to have to wait for days in order to get the confirmation that your money transfers have gone through. It could make you lose credibility, create tension and endless worries.

Hence, it is extremely important to deal with a house whose payment flows are fast, consistent and performing. So with the intent of making an objective comparison, we looked at what is usually promised on the websites, and then we investigated on client reviews in order to confirm assertions. Basically, delivery times differ based on the destination.

While it usually possible to get faster processing time by paying a premium (£15 for Barclays), it usually take banks from 4 to 6 days to make payments across Europe & North America, and a minimum of 8 working days for payments towards the rest of the world.

Browsing through tens of thousands of client reviews for all foreign exchange companies, we can definitely say that besides the exception of problematic low-ranked companies like Xendpay or Western Union, people are generally very happy with the promptness of service provided to them by FX firms.


HSBC’s Delivery Time

hsbcdelivery


 

World First Client Review

worldfirstreview

 

Hidden Fees / Payment Optimization Comparison:

In addition, sending money abroad can incur fees that were not taken into account. For instance, recipient bank account fees for transfers from abroad are quite common, and can cost hundreds of pounds on a large transfer with the wrong bank.

When you choose to use large money transfer brands like Currencies Direct or World First that have worldwide bank settlements, you actually send and receive the transfer from two different offices as follows – and thus, avoid these fees

process


process-sending

 


 Winner: FX Companies

Support and Guidance

Customer support is a process that consists of 3 phases: pre-sale, execution and follow up. Basically, one would expect to get adequate information before signing up, tailored advisory and guidance while making a transfer and continuous alerts & feedbacks following the transactions.

International Money Exchange and transfer companies would usually adequately cover all these phases. They would get in touch with you and provide you with any needed information. Once you get to sign up, most of them will assign a dedicated dealer to handle your account. The dealer will provide market advisory services, technical training and execution support. Moreover, they will continuously provide you with the latest market information along to trading opportunities.

Unfortunately, banks are not able to cope up with such level of detail orientation. They will basically provide you with their customer service’s phone number and in some cases with a relationship manager (if you are deemed wealthy enough). However, you shall not expect miracle: they usually have millions of clients (because of their size), so do not expect to be treated like a queen. Processes will be quite slow and rigid. Most customers complaining about banks would usually mention customer service as a main source of discontent.


 

 Winner: FX Companies

Client Satisfaction

This section is actually the most important one and it summarizes all what we have discussed until now. Clients’ satisfaction levels provide a clear insight into how do banks and international money transfer companies perform. During the comparison exercise, it is important to have a methodical approach and make the comparison from the same basis.

For this purpose, we have created a table which shows the ratings that these international money transfer companies and banks get on online specialized customer review websites (Reviewcentre.com and Trustpilot.co.uk). For the sake of representativeness, we have only taken into account ratings which are based on at least 10 customer reviews.

When International Money Exchange and Transfer companies get an average 90% satisfaction, Banks receive a disappointing 25%. Obviously ratings speak for themselves and you would definitely get more satisfied by making international money transfers via a money transfer company.


Feb 2015 – Review of FX Companies and Banks on User-Generated Review Platforms

client-satisfaction-comparison


 Winner: FX Companies

 

Companies Recommend by Us:

 

 


What is 0% Commission Money Transfers & Currency Exchanges?

Though we focus on the comparison of FX companies and banks, Bureaux De Change are also an option when it comes to both exchanging money and transferring it online (some companies at least like MoneyGram would allow electronic transfers).

Some of them advertise 0% commission, but it is falsified. This is how currency exchange firms make money and there is no who is doing this for charity. 

The exchange offices are pretty bad with rates traditionally, although usually better than banks, but the ones on airports are even worse, and can charge as much as 10% spread, which is insane.

They are better avoided, especially if advertising 0% commission. 


Conclusion

Having gone through each section, assessed each parameter, and performed deep analysis, it appears obvious that International Money Transfer Companies services are superior to banks’ from several perspectives:

  • They enable individuals and businesses to save money through tighter exchange rate quotes and lower fees (no fees above a certain transfer amount)
  • They enable to process payments in a quicker manner while avoiding delays.
  • In terms of user friendliness, the best international money exchange and transfer companies provide unmatchable levels (though not all companies are at the level)
  • They have a tailored approach which enables clients to smoothly transfer payments, capture market opportunities and stay alert to market developments.
  • Naturally, they trigger way more customer satisfaction and loyalty thank banks.

Shall you be considering making an international money transfer, then you definitely have all the reasons in the world to do so via an international money exchange and transfer company. Moreover, there are differences and some companies would perform better than others. For this reason, we invite you to refer to our individual reviews here and take them into account in your decision making process.

Put simply, as banks’ core job is to match money lenders which money borrower, International Transfer Companies core job is to provide you with an amazing customer experience when making International money transfers.

View our best international money transfer providers on our homepage.

 

 This article is a part of MoneyTransferComparion.com’s Comparison Series. View additional comparative pieces:

Compare Money Transfer Companies

Compare Remittance Providers

Compare Business FX

Compare Travel Money

Compare Transferwise VS Currencyfair

Compare eWallets

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6 comments

  1. Dan Ferguson

    I am sold. Absolutely true and well presented.

    Posted on December 14, 2014
  2. Pingback: FX companies and banks

  3. True Trust Services

    I need a list of companies that will transfer money and/or metals to/from various countries like Chile, Philippines, Bermuda, Belize, Dominican Republic, Paraguay, Panama, etc.
    EJ 949-497-3600

    Posted on November 20, 2016
    • compare

      The companies featured on our website will transfer money to bank accounts. Philippines is definitely one of the countries a lot of companies handle. The other ones might be do-able for the large companies like World First. Transferring “metals” sounds a lot like a tax evasion scheme… none of the companies we have reviewed would come near these sort of schemes (and none of them handles “metals”). It sounds like you’re in the wrong place.

      Posted on November 20, 2016
  4. True Trust Services

    Are there any companies that allow a check, debit/credit, “walk-in” or non-fee (non-wire transfer fee) method to input the funds?

    Posted on November 20, 2016
    • Compare - MTC Admin

      Yes, there are. We apologise for the delay response. Almost every fx company recommended by us will allow to pay view debit card or accept a foreign check. Cash walk-in would be Moneygram or Western Union, not particularly cheap or good based on our review.

      Posted on January 15, 2017

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