Expats all know the feeling of disappointment after having to exchange pounds into Philippines pesos with a money transfer company.
But it doesn’t have to be like that.
Zero commission, no fees and other promises just don’t work out because the company is making money off you somewhere along the line.
More often than not it’s the exchange rate. You don’t pay to send money around the world, but never seem to pick up the rate you read online.
Foreign exchange company TransferWise has finally revealed why this happens.
Foreign exchange tricks revealed
“It’s all to with the exchange rate these companies offer,” said a spokesman.
“The promise sending the money costs nothing, but they are a business and they have to make some money or they will soon be out of business.
“That’s why most banks and other money transfer firms set their own rate to make what they call a foreign exchange gain in the small print.”
Where that rate is set against the money market rate determines how much the bank or other transfer company makes from the transaction.
So if you are in The Philippines and want some cash from a sterling account in the UK, the transfer is completed at the exchange rate they set, which takes account of their fees and charges.
In most cases, you will end up with more pesos in the bank if you go the TransferWise route.
How TransferWise works
The way this works is the mid-market rate for that currency on the day is the exchange rate.
You can check this rate on any financial news site, such as XE or Google Finance.
TransferWise then charges a fee for the transfer. These are published on the web site.
You pay your sterling and the fee to TransferWise and within four banking days, the pesos arrive in your account in The Philippines.
“This is a fairer deal for everyone. The customer gets the best exchange rate on the day for the pound to peso and knows how much the fee is in advance,” said a TransferWise spokesman.
“In most cases our fee is a lot more competitive than the FX gain charged by other money transfer companies.”
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