Buying & sending foreign money

There are many suppliers of foreign currency services, not just banks. We recommend you compare a variety of suppliers and be prepared to switch between them in order to get the best price.

Shop around

Using a supplier out of loyalty could cost you. Our foreign currency conversion services inquiry found the big four banks are consistently more expensive than other suppliers for foreign cash and international money transfers (IMTs). For common currencies, such as United States dollars (USD) or Great British pounds (GBP), the big four banks are rarely the cheapest option.

Comparison websites

If you use a commercial comparison website, be aware that some sites may not be independent and suppliers may pay for their services to be promoted. Comparison websites may not include all available services.

There are two government-funded comparison websites for IMTs: www.sendmoneypacific.org and www.saverasia.com, which compare prices of IMT services available to a number of South-East Asian and Pacific Island countries.

Compare the total price

When comparing services and suppliers, consider all components of the price, including the retail exchange rate and any fees. Just because a service is advertised as 'fee free' does not mean it will be the cheapest option.

Exchange rates vary across suppliers and are rarely as good as exchange rates reported on the news. That is because they include a margin or mark-up.

For an accurate comparison, compare prices at the same time on the same day, for example, on supplier websites. Some suppliers may also offer discounts, especially for large or repeated transactions.

Purchase online

Look at whether you can make your purchase of IMTs, foreign cash and travel money cards online, as many suppliers offer better retail exchange rates and lower fees for currency purchases made online. Foreign cash is more expensive to buy at the airport than at other locations.

Sending money overseas

It is particularly important to shop around for IMT or remittance services. We found significant price differences across IMT suppliers and savings could be significant if you regularly transmit large-value transactions through an IMT service. 

Our research found that in some circumstances consumers could save up to AUD500 on a USD7000 transfer if they shopped around for a cheaper service. 

We also found that banks are not the only secure option and do not always offer the fastest delivery.

Additional fees

When shopping for IMT services, ask suppliers if any fees will be deducted from the funds you transfer. These are often called correspondent banking fees.

If fees will be deducted, ask the supplier:

  • for an estimate of the funds that will be delivered to the recipient (some suppliers have an online tool that allows you to do this)
  • if you can pay all fees up-front because that may be a better value option
  • if the recipient’s bank will charge a fee as well.

Travelling overseas

Before travelling overseas, consider the different foreign currency services available for conducting transactions while overseas.

There are four key factors to consider when choosing a payment method for travelling overseas:

  1. acceptance – is the payment method widely accepted in the overseas destination?
  2. certainty of price – will you know what the total price is going to be?
  3. convenience – how easy is it to transport and use?
  4. security – what happens if it gets lost or stolen?

Debit and credit cards

A debit or credit card is usually the cheapest option for making purchases while overseas, even more so for credit and debit cards that don’t charge international transaction fees.

Our research found:

  • if customers of the big four banks used a debit or credit card without international transaction fees instead of a travel money card, they could save up to AUD13 on a USD200 purchase
  • the savings are more modest for debit or credit cards to which international transaction fees apply. Customers of the big four banks could save up to AUD5 on a USD200 purchase if they used a ‘regular’ debit or credit card instead of a travel money card.

You should consider all fees when choosing a card. A number of other fees are associated with debit and credit cards, such as annual fees and interest charges on credit cards.

Debit or credit cards do not generally provide the same certainty about retail exchange rates as travel money cards and foreign cash. You may not know the retail exchange rate at the time you make a purchase with your debit or credit card, unlike when you load foreign currency onto a travel money card or purchase foreign cash.

Paying in Australian dollars may be more expensive

When using a debit or credit card, some merchants may give you the option of paying in Australian dollars or another currency. This is known as Dynamic Currency Conversion. Paying in Australian dollars may be the more expensive option.

If an overseas bank processes the transaction and performs the foreign currency conversion, it will usually add a margin or mark-up to the exchange rate to make a profit on the transaction. Also, despite paying in Australian dollars, your card issuer may still charge you an international transaction fee as the transaction occurred overseas.

Travel money cards

Depending on the supplier, a number of fees associated with travel money cards can make them more expensive than other services, including:

  • fees for purchasing a card in store
  • ATM fees
  • inactivity and closure fees.

A travel money card will be a particularly expensive option when used for transactions in a currency that is not loaded on the card.

Our research found that if a travel money card holder with one of the big four banks withdrew the equivalent of AUD100 in GBP from an overseas ATM in May 2019, and GBP was not pre-loaded onto the travel money card, they would be charged an ATM fee of around GBP2 (about AUD3.70) plus a 5.25 per cent currency conversion fee. The total fees for this transaction would be about AUD8.90 or almost 9 per cent of the transaction amount.

Foreign cash

While foreign cash tends to be relatively more expensive to buy than using travel money cards and debit or credit cards for purchases, it may be essential for some overseas destinations. In some locations debit, credit and travel money cards are not widely accepted and cash is required to make purchases.

Check all applicable fees before using your travel money, debit or credit card to withdraw foreign cash overseas. Using these cards may cost more than buying foreign cash in Australia due to various fees charged by card issuers and overseas ATM operators. There may also be fees and interest charges for cash advances using a credit card.

Avoid the airport

Foreign cash is more expensive at airport locations than at other locations. Shop around and purchase foreign cash before you get to the airport to save money.

Our research found that consumers buying USD200 in February 2019 could save AUD40 by purchasing from the cheapest supplier at a non-airport location, compared with the most expensive supplier at the airport.

Shopping online

If you regularly make overseas purchases from Australia or travel overseas, you should consider an international transaction fee-free credit or debit card (comparing all the applicable fees and charges).

International transaction fees are usually around 3 per cent of the purchase price. If you do not have an international transaction fee-free credit or debit card, you may avoid these fees when shopping online by:

  • checking if the transaction will be processed overseas
  • asking if your bank is able to block international transactions for particular payment cards.

Note: it may not be clear from the website that an international transaction fee will apply. Even if a website has a ‘.com.au’ domain name or prices in Australian dollars, it does not mean that the business will process the payment in Australia.

Australian consumer law

If you are charged an unexpected international transaction fee for a purchase in Australian dollars from a business that appeared to be located in Australia, it could be considered misleading under the Australian Consumer Law. You should contact your card issuer (for example, your bank) or the international card scheme (for example, Mastercard or Visa) to request a refund.

If it's not right, use your rights

If you think you have been misled about an international transaction fee and cannot resolve it with the business or your bank, you can report it to the ACCC.

More information

Foreign currency conversion services inquiry - Final report

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