Guide
The cheapest way to move money abroad from the UK
The number that decides what an international transfer costs is almost never the fee. It is the exchange rate you are given, and the gap between that rate and the real one is where the money goes.
How to work out the real cost
Three steps, and it takes about two minutes.
- Find the mid-market rate for the pair. This is the rate currency is actually traded at between banks. Search the pair and take the number that appears on a neutral source.
- Get a full quote from each provider, showing the exact amount that will arrive in the destination currency after everything.
- Compare the amount that arrives. Not the fee, not the rate in isolation. The arriving amount is the only number that includes every charge, disclosed or otherwise.
Do that once with 1,000 pounds and the differences are obvious. A provider advertising no transfer fee will often deliver less than one charging a few pounds, because the fee-free provider has taken two or three per cent in the rate.
Where the charges hide
The exchange rate margin. The main one. A margin of 3 per cent on 5,000 pounds is 150 pounds, and it never appears as a line item.
A fixed transfer fee. Honest and easy to compare, which is why the cheapest providers tend to charge one.
Receiving fees. Some banks charge the recipient to accept an incoming international payment. This catches people out constantly, because the sender's quote looks right and the arriving amount does not match.
Intermediary bank fees. On a SWIFT payment, correspondent banks in the chain can each take a cut. Ask whether the transfer is sent with charges paid by the sender, which some providers offer and which removes the surprise.
Card funding fees. Paying for a transfer by credit card is often treated as a cash advance by the card issuer, with a fee and interest from day one.
Weekend and out-of-hours rates. Some providers widen the margin when markets are closed.
What to look for in a provider
- A published margin, or a rate you can check against mid-market yourself. The good ones tell you what they are taking.
- A full quote before you commit, in the destination currency.
- FCA authorisation as a payment institution or e-money institution, which you can check on the FCA register. This is not deposit protection. Payment firms have to safeguard customer funds rather than insure them, and if one fails your money is meant to be ring-fenced but is not covered by the FSCS.
- Sensible limits. Sending 40,000 pounds is a different product from sending 400, and the cheap consumer apps are not always the cheapest at size.
- Corporate accounts, if you are sending business money. Rates and limits usually differ from the personal product.
A note on this page
An older version of this page carried screenshots and rate comparisons from 2017. Every one of those figures is now wrong, and at least one of the providers covered has since closed. Rather than update a table that goes stale within weeks, this version explains the method, which does not.
This page will carry referral links to one or two payment services in future, once I have applied to their programmes. When it does, the disclosure block will appear at the top of the page and the terms will be set out on how this site makes money. Payment services are not investments, which is why they are the one category this site is willing to take a commission from at all.
Common questions
Why is a zero fee transfer not free?
Because the charge is in the exchange rate instead. A provider quoting no fee is buying currency at one rate and selling it to you at a worse one, and the difference is their income. A transfer with a two pound fee and a rate close to the interbank rate is usually much cheaper than a free one at a rate three per cent away from it.
What is the interbank rate and where do I find it?
It is the rate banks trade currency with each other at, sometimes called the mid-market rate. It is the midpoint between what buyers are bidding and what sellers are asking, and no retail customer gets it. Any independent currency site or a search for the pair will show it. It is the benchmark: compare every quote against it rather than against each other's marketing.
Is a bank ever the cheapest option?
Rarely for the amount a person or a small company actually sends. High street banks typically charge a fixed fee plus an exchange rate margin of several per cent. Specialist providers make their money the same way but at a much smaller margin, because it is the only thing they do. For very large one-off amounts a broker with a negotiated rate can beat both.