Sending or receiving money from overseas? Why you should avoid using your bank

Lily Canter
17 December 2019

Using a traditional bank to send and receive money overseas might seem like the easiest and safest option. But there are other ways to make international payments without the huge fees


Earlier this year I received my first payment from a Hong Kong media organisation I had written for. Since it was able to pay me in sterling, I thought nothing of my fee being paid directly into my current account.

So I was surprised when my payment arrived with £26.59 missing, which accounted for 10% of my invoice. When I looked online, I noticed a special statement that indicated that £11.59 had been taken as an administrative fee. But where was the other £15?

After a lengthy conversation with my bank, it transpired that the money had been transferred via HSBC, which had added the transparent charge and an additional hidden one. When I asked HSBC why the whole fee was not on my statement and how it was calculated, it simply directed me to a 21-page commercial tariffs guide and a 19-page bank tariff guide, neither of which appeared to answer my query.

I realised there must be a better way to do things and asked the media organisation if there was an alternative way I could be paid. Since then, I have been paid via PayPal and incurred no fees at all.

Don’t put your bank first

International transactions should not necessarily be processed through your bank not only because of the lack of transparency over what the fees are and what the currency rate is but also because these transactions can be slow, sometimes taking up to a week to arrive.

Emma Maslin, money coach and founder of (see page 34), says consumers default to the easiest option, which is the bank, but this is actually “the worst” way to send and receive money overseas.

“We do what we know. The natural way to think is to do it through the bank. I used to live in Australia and I would send money to the UK through the bank. I got hit by fees – they were just made up. I didn’t know what rate I was getting and, at the other end, there was a £20 fee to receive money into the bank.”

The lack of transparency is an issue that has been pursued by the European Union, which is bringing in a new regulation from April 2020 that requires online and card providers to show the total cost of sending money within the EU including any extra fees or mark-up of the exchange rate. But this will only affect money being sent to EU countries. Guidance from the European Commission states that in the event of a ‘no deal’ Brexit, EU1 rules on consumer rights will no longer apply to the UK from the withdrawal date.

Consequently, many consumers are now switching to alternative money services, with UK- based money transfer site TransferWise becoming Europe’s biggest fintech company, worth an estimated $3.5 billion.

Maslin says what makes TransferWise so attractive is that you know how much money will arrive at the other end.

“You know exactly how much you will be charged. You are not paying unjustified, inflated bank charges. It gives a mid-market exchange rate and fixed fees whatever you send,” she says.

Consultant and entrepreneur Brandon Relph used PayPal and then TransferWise when he ran goCreative across 13 countries. The company project-managed advertising campaigns targeted at young people on platforms such as Minecraft. He says he feels there is no point using banks unless there is no other option.

“There was never a situation where we thought we would use the banks because the fees are always expensive. And for smaller transactions, the banks are completely cost-ineffective. In the next few years, the banks will have to drop their rates for international transactions as people will stop using them,” Relph says.

“I have wasted a lot of money on bank fees”


Salon coach Phil Jackson switched to TransferWise when he got stung by bank charges while buying a house in Spain.

He paid the deposit through his bank, losing hundreds of pounds in the process.

“The solicitor said there was a better way to do it. We used ECFX (Excel Currencies) and saved around £700 on the purchase price.”

Learning from the experience, he was happy to use TransferWise when his virtual assistants in The Philippines suggested it as a payment method.

 “ I use TransferWise for everything. It is very easy to send small amounts of money, it has small fees and is very quick.

“It scales the fee on what you are sending and pays real-time rates. The fees tend to be low even on small amounts like £10 to £15.”

Phil, from Pewsey in Wiltshire, who helps salons across the world to grow their businesses, also uses online payment platform Stripe because it has lower fees than PayPal.

“My advice to others is to shop around and don’t just buy into one solution. I wish I had given myself more time to do this but when I have needed to move money fast I have tended to use the bank. I have probably wasted a lot of money.”

Make security checks

When using a money transfer service, take precautions to make sure it is being sent or received securely.

Attila Tomaschek, digital privacy expert at, advises using reputable licensed services that offer a secure means of transferring funds.

“Well-known services, such as PayPal and its subsidiary, Venmo, offer secure, encrypted money transfer options and provide certain protections for both the sender and recipient. Other international money transfer services are regulated by official financial entities and backed by larger financial institutions,” he says.

“For instance, TransferWise is regulated by the United States Financial Crimes Enforcement Network and is backed by Barclays in the UK and Wells Fargo in the US.”

Privacy features should also be considered and security options such as two-factor authentication, fingerprint authentication, notifications of new activity or devices added to your account, and the ability to remotely disable functionality of the service on a device if it gets lost or stolen.

“It is always a good idea to scour the service’s privacy policy to see exactly what the company does to protect you and your financial transactions. Also do some research online and read customer reviews about the service to get a better idea of what users are saying about it from first-hand experience,” says Tomaschek.

Switch to a reliable payment system

PayPal is the world’s biggest online payment system, operating in 25 currencies. Customers pay no fees, except where there is currency conversion. Merchandisers may incur costs for transactions, accepting payments from abroad and currency conversion.

TransferWise is becoming incredibly popular in the UK because it bypasses expensive international payments by using two local transfers. If customers want to convert their pounds into euros, they send the money in pounds to the UK-based acccount of TransferWise. The equivalent amount of money is then sent from TransferWise’s euro account to the recipient using the mid-market exchange rate. Doing this conversion means the money never moves across borders and banking fees can be avoided.

It claims to be around eight times cheaper than high street banks. It gives a mid-market currency rate but has low and transparent transaction fees. It is also possible to set up accounts in different currencies. However, it currently only has access to around 30 countries compared to PayPal’s 200.

MoneyGram is an American transfer service that deals in dollars but you may have to go to a Post Office to collect the funds.

Meanwhile, Western Union transfers money to more than 200 countries and territories with different fees for credit or debit card payments, bank transfer and cash payments ranging from 1.5% to 5%. The receiver may have to collect the money from a local agent.

Canadian transfer service XE charges no fees to send or receive money and does not apply transfer fees. However, charges can still be applied by a third-party bank when transferring the funds to XE or before the funds arrive in the recipient account. Currently the service is limited to North America, Europe and Australasia. 

“You don’t know how much you’ll get with bank transfers”


Using the bank to receive international payments has always been too complex for calligrapher Zoe Lacey.

Her company, The Golden Letter, produces luxury wedding stationery, and around 30% of its clients are in Australia, America and across mainland Europe.

“International clients find it really complicated using bank transfers. I would get emails from them saying they didn’t know what information to give the bank. And I can never work out what I will get due to the bank charges and the exchange rate.”

Within six months of starting her London-based business, she began using PayPal instead.

“Everyone already knows and trusts it. Most people have a PayPal account or can do a payment via credit card on it and it is completely international. I have never had any issues with people using it.”

The ease of PayPal means the currency conversion is automatic and it is clear how much money the person invoicing will receive, plus the fees are relatively low compared to the bank, she says.

“A small percentage of around 5% to 7% goes to PayPal, but the bank charges more and is far more complicated. Plus it is instant with PayPal and doesn’t take several days like the bank.”

First published on 8 January 2020

Security over greed

Transferwise doesn’t have the same licence as a bank and therefore cannot offer the same security as a bank...meaning if they go down, your money goes with it. The important point of this article should be shop around wisely, don’t just go for the cheapest option

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