NZ cash and foreign currency

Foreign transaction fees

It’s an expensive business arranging – and getting – an international bank transfer. Sending and receiving fees and the banks' exchange rates can leave your payment mysteriously shrunk on arrival.

But using your bank isn’t the only option. Online money transfer services can send your cash from New Zealand to an international bank account of your choosing. We trialled two services and found they may work out cheaper.

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Our trial

We booked a $250 payment to the same UK bank account through five banks and two registered online transfer services: OFX and TransferWise.

The latter had the lowest fees and its payment was the fastest to arrive. While the five banks and OFX had fairly similar exchange rates, TransferWise’s was slightly more generous.

Using TransferWise saved $45.88 compared with Westpac, which offered the least generous exchange rate at the time of our transfer. Our payments sent via Westpac and ANZ were subject to £12 (NZ$23) receiving fees. The Kiwibank payment attracted a US$12 (NZ$16) fee on arrival at HSBC UK. ANZ converted our NZ$250 to £128.86 but, after the receiving fee, we were left with just £116.86.

In contrast, the OFX and TransferWise payments came via these services’ accounts in the UK and so avoided similar charges.

If you’re sending money from an overseas bank directly to your New Zealand account, you’ll face a $15 fee when it arrives (or $12 if you’re with Kiwibank).

The only exceptions are ASB and Westpac, if the incoming amount is less than NZ$100.

The banks say the charge covers their time spent authenticating the payment and meeting anti-money laundering regulations.

Charges compared

  Exchange rate (to £)  $250 converted (£)  Transfer fee ($)  Arrival date 
ANZ 0.51544  128.86  18  Same day 
ASB 0.51440  128.60  15  Same day 
BNZ 0.51504  128.76  25  Same day 
Kiwibank 0.51633  129.09  20  Same day 
Westpac 0.51152  127.88  20  Same day 
Transfer services
OFX 0.51330  128.32  12  Next day 
TransferWise 0.52406  131.02  2.94  Previous dayA

GUIDE TO THE TABLE TRANSFER FEE is the cost to send $250 to the UK via internet banking and is in addition to the payment. The fee is in New Zealand dollars. EXCHANGE RATES recorded between 11.10am and 11.25am on 23 January 2018. Foreign exchange rates fluctuate constantly. ARRIVAL DATE indicates the date in the UK when the payment arrived. AOwing to the time difference, TransferWise’s payment arrived on the previous date (22 January) in the UK. Payments were tracked using sender names and unique codes.

Making the transfer

You’ll need to set up an account to use an online transfer service and verify your identity by sending a copy of your passport. This can take a few days.

Once you’re approved, OFX and TransferWise payments are straightforward to arrange. On their websites, you select the amount you want to send and lock in an exchange rate, which expires in 24 (OFX) or 48 hours (TransferWise). You then use internet banking to transfer this amount to the company’s local account.

TransferWise also allows you to pay with a credit or debit card, though this costs extra.

OFX and TransferWise accounts let you send multiple currencies (not just New Zealand dollars), so you can save by using these services to send money into the country as well as out.

After our trial, TransferWise raised its fee to send payments between $239 and $895 (while dropping fees for lower and higher amounts). A $250 payment now costs $3 to send. Even with the rise, the service remains the cheapest option for transfers under $2000. Beyond this, OFX can become a better deal.

If you want your bank to do the transfer, it’s cheaper to arrange it online – ANZ charges $28 to arrange an outgoing overseas payment over the phone or at the branch, but $18 using internet banking. If you download ANZ’s goMoney app and make a transfer using your phone, you’ll pay $9.

ANZ also offers the reduced rate of $7 to send money to the Cook Islands, Fiji, Kiribati, Samoa, Solomon Islands, Tonga and Vanuatu using internet banking or the app.

Bitcoin trading

Cryptocurrencies, such as Bitcoin, are another way to transfer money between international bank accounts, but we haven’t included this method in our trial. You can buy cryptocurrency in New Zealand dollars through an online marketplace and then sell it in the currency you desire – but it’s complex. You’ll pay a commission for both transactions. Cryptocurrencies can fluctuate wildly, as they’re uncontrolled, and exchange marketplaces can be vulnerable to hacking. We’ll be looking at the subject in more detail in future.

Lower fees for Aussies

As four of our five banks are Australian-owned, we looked at what an Aussie customer would pay to make a similar transfer into British pounds using internet banking.

Commonwealth Bank, which owns ASB, offered the cheapest rate – A$6 (NZ$6.40) – if you send under A$1000. That’s less than half the $15 Kiwi customers pay, even taking the exchange rate into account.

Last year Commonwealth, National Australia Bank (which owns BNZ), Westpac and ANZ cut their fees for Australian customers. National Australia Bank now charges A$10 – again, less than half the $25 you’ll pay at BNZ. ANZ cut its rate from A$18 to A$12 – though here in New Zealand, customers still pay $18 for most transfers via internet banking.

Westpac Australia charges its customers A$10 – a little more than half the $20 here.

The banks didn’t justify why charges for Kiwi customers haven’t changed.

Retail banking expert Dr Claire Matthews, from Massey University, says Australian regulators have investigated other types of bank fees in the past – the transfer fee drop could be the banks pre-empting further action.

The local arms of the businesses could follow, particularly with the recent change in government, she says.

In the meantime, she encourages shopping around for the best rates, and letting your bank know you’re considering taking your business elsewhere. “Being vocal can have an impact.”

By Olivia Wannan
Investigative Writer

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