- International Money Transfer firms now have a significant share of the Australian market, according to a study by Transferwise and Galaxy International released on February 7.
- That market is currently worth about US$7 billion.
- The largest share still belongs to banks, but traditional money transfer firms like PayPal have the largest second part, while upcoming alternative firms have about have that amount, the study said.
The study found that name recognition is still a key factor in consumer choice for international transfers in Australia. Western Union, MoneyGram and Ria still lead the market.
But about one in three consumers has already recognised the cost advantages of nt higher fees than money transfer firms, with extra fees imposed for funding with credit cards or for exchange of currencies.
The study also found that exchange rates charged by the major Australian banks were significantly higher than those of alternative money transfer providers. When comparing the exchange rates of the Big Four Australian banks for the currencies of the basket of major ones, NAB, ANZ, and Westpac had exchange rates that were about 4.5 per cent higher than mid-market rates, while the Commonwealth Bank rates were over 5 per cent higher. What’s more, the consumer had no transparency about exchange rates as the banks used clearing banks for currency exchanges.
Alternative providers not only use mobile and online platforms to make transfers cheaper, they also often have local accounts in destination countries, so that there are no fees for actually sending the funds. Most alternative providers also tell consumers what currency exchanges will cost up front, so that there are no surprises when the funds are delivered, the study showed.
