There are a number of cost components to making and receiving international payments, most of which are far from transparent to customers:
Currency conversion rates : Banks charge huge margins for currency conversion to the majority of businesses and individuals. They tend to fix rates once a day and therefore need to incorporate enough margin to protect against intraday rate volatility.
In addition, the level of price discrimination is extortionate – they get away with it because they can; businesses and consumers have been kept apathetic to using better alternatives.
Correspondent bank fees : These relate to the network of banking relationships that are utilised to complete an international transfer. Each correspondent bank skims a fee of the transferred amount for simply acting as link in the payment chain.
Customers are rarely made aware in advance as to how many correspondent banks are in the chain and what they will charge.
All Vendor rates on BestExchangeRates are compared to what we call the International Mid-Market Rate for the currency pair eg: AUD to USD, GBP to EUR etc. This is the mid-market rate (sometimes also called the interbank rate or spot rate) used in global financial markets.
The mid-market rate is the rate used in the global financial markets and what you normally see reported on the news. Continue reading
Travelling with Credit Cards can be expensive!
Wondering what those extra “Fees” are on your credit card statement for purchases in Foreign currencies? Most banks and financial institutions charge these sneaky fees for transactions in a foreign currency (as much as 3% of the amount), only a few do not charge a fee for this so its worth knowing what your card is costing you.
The currency rates that PayPal offers is competitive with most multi-currency credit card transactions, in which Visa or MasterCard charge a 1% spread above their wholesale exchange rate, and the card-issuing bank typically charges an additional spread of 1-3%.
PayPal seeks to keep its foreign exchange rates competitive with credit
card transactions and transferring money via banks however they are not competitive when compared to specialist on-line payment service providers such as Ozforex or the other FX currency converters for your country as featuring on our best rate calculator.
PayPal can handle payments between the following currency pairs :
AUD, BRL, GBP, CZK, DKK, EUR, HKD, HUF, ILS, JPY, MYR, MXN, TWD, NOK, PHP, SGD, SEK, CHF, TRY & USD
Whenever you use PayPal to transfer money from one currency to another you will be charged a currency conversion fee.
We are often asked that question here at BestExchangeRates!
Most people these days go for credit and debit cards over cash or travellers cheques. The cards main advantage is that exchange booths don’t have to be open for you to be able to change money. However there are many credit card fees you need to watch out for on purchases abroad or even just when you buy something in USD of Amazon!
We’d suggest taking some cash especially if you are flying in somewhere as this will allow you to go straight to the taxi or airport bus/train station without having to queue jet-lagged at an ATM while also watching over your bags in a strange airport.
There are lots of ways; most importantly you need some information. When you use our Best Exchange Rate calculator you can see who is offering the best deal for your needs, and who is taking the smallest margin (see below) from the current market mid rate.
This is always a good start; but depending on the amount you are looking to exchange you may be able to get an even better deal. When you walk into a branch or outlet always ask if you can get a ‘dealer quoted rate’ normally any branch will have access to FX Dealers that can give them up to the minute quotes with a much better rate. They will normally only do this for amount over $50,000 AUD but you never know your luck it can’t hurt to ask.
You may well think that you are being ripped off, but it is not always the case. In simple terms what you see on the news or in the paper or on yahoo finance is the Middle Rate or mid-rate. Some people want to buy a currency and some people want to sell a currency. There is a gap between the price at which you buy and the price at which you sell. In market terms this is normally called the ‘profit spread‘ or just the ‘spread’.
Foreign exchange rates are constantly changing. Indeed the FX markets are active 24 hours a day 5 days a week. There are even some middle eastern countries that continue to trade FX on the weekends.
There are a number of reasons. Some foreign currency exchange outlets may be more keen for your business or have a lower cost base and can therefore afford to provide better rates. You also need to watch out for additional fees that you might get when exchanging money. Some places, particularly around exchange foreign currency notes and coins, will charge you a transaction fee on top.
The Forex market is open 24 hours a day across 4 major timezones:
New York opens at 8:00 am to 5:00 pm EST (EDT)
Tokyo opens at 7:00 pm to 4:00 am EST (EDT)
Sydney opens at 5:00 pm to 2:00 am EST (EDT)
London opens at 3:00 am to 12:00 noon EST (EDT)
More details here: http://www.forexmarkethours.com/