Do you know what the actual foreign exchange conversion rate is?
You probably know the conversion rate your bank is charging you, but did you know there is another "higher" rate known as the market rate?
In fact, the market rate is the only real rate at which to convert your hard earned money to a foreign currency. It is the midpoint between supply and demand. It tracks the exchange rate which changes all the time.
Every other rate you are being quoted has an added “Forex markup.”
For example, if the foreign exchange market rate for AUDUSD is 0.7370 and an average bank quotes a conversion price of 0.6970, because they are charging you an extra 5.5% margin. Now that's just too much!
Where does this "expensive" rate come from?
The average Australian banks have surprisingly similar rates. There's not enough competition.
If you want to understand this costly experience, call your bank and ask these 3 questions.
The 3 Foreign Exchange Questions Your Bank Doesn’t Want You To Ask
1) How much profit is your bank making on your transaction?
Let’s take a look at how the average bank might answer these questions.
The employee will tell you that this is the rate your ‘retail’ payments are exchanged at and you have no choice unless you convert millions of dollars. The transaction fee is just the cost of sending your money across their opaque network of correspondent banks. In essence, they will not answer your question.
2) How do you set your FX rates, and why do you only do it once a day, when rates change continuously?
After you ask how much the bank makes on a transaction, the employee will probably tell you that they set their rates once a day and the FX money conversion rate doesn’t change.
3) How can you offer different rates for different transaction amounts?
The banks want you to believe that they set their rates based on the market rate and make no profit. But if you make a larger transaction you can apparently get a better rate.
How does that make sense?
There’s only one market rate at any given point in time, so how can the bank be charging two different rates without making a profit?
Clearly, there's something going on.
It’s important to remember:
There is only ONE foreign exchange rate, the market rate!
If you’re paying more than the market rate, you’re being charged an extra fee, whether the banks admit it or not.
While these fees may seem small, a 5.5% margin isn't. That’s roughly an extra A$550 in hidden fees for sending A$10,000 overseas!
For years, the average Australian banks have been your only source to convert and send foreign money transfers. That is changing as companies like FlashFX are helping to bring transparency and accountability to the foreign exchange payments business!
You deserve to know the truth about your foreign exchange transactions and at FlashFX we’ll be completely open with you.
If you’re ready to stop paying hidden fees and move into a new, more transparent era of foreign exchange, then it’s time to stop sending your international transfers with the big banks.
Check out Flash FX, where we’ll tell you the rate of exchange up front.
Designed from the ground up to deliver fast, secure and very affordable foreign exchange and transfers, FlashFX delivers extraordinary transparency and transactional control to users, setting a new level of service standard. And it does so without the hidden fees typically imposed by the banks.
With FlashFX, users pick the date; pick the rate; send funds like an email; track transfers like a package; all without any surprise charges. There are none.
This is in stark contrast to the banks, where global payments cost more, take more time, and the routeing is opaque.
So, whether you are a business or an individual you can now skip the banks and make smart foreign exchange transfers.
Read next: The value of choice, control & transparency