According to a report released earlier this month by Transferwise, the peer-to-peer international money transfer platform featured on The Money Cloud, 75% of Singaporeans are unaware of the real costs of sending money overseas.
Singapore’s citizens enjoy a reputation for being financially literate, well organised and capable when it comes to their finances, but even they struggle to understand the mysterious fees that banks have a habit of adding to their customers’ international money transfer arrangements.
TransferWise’s research found that 88% of 1,000 Singaporeans questioned underestimated the size of the fees they would be charged, despite the fact that 75% said that their banks “made it easy to understand the true costs of money transfers.”
According to Lukas May, TransferWise’s Head of Banking, Singaporeans could be paying as much as 5 times more than necessary when making money transfers abroad.
And to make matters worse, May also pointed out that “on a scale of what matters most to them when transferring money, more than half of Singaporeans ranked transparency regarding fees and charges more highly than price”.
According to TransferWise’s research, the Singapore headquartered bank DBS charged the lowest fees for international money transfers after upfront fees and exchange rate mark-ups were accounted for, whilst Standard Chartered bank, which has a sizeable presence across Asia, and HSBC offered the least attractive deals after all charges have been taken into account.
Citibank’s exchange rate was the highest / most uncompetitive, whilst PayPal added the highest exchange rate markup.
Unsurprisingly, across 6 receiving countries; India, Australia, Hong Kong, UK, Germany, and the US, TransferWise blew away the banks average mark-ups, for example charging just S$7.83 for a transfer of S$1,000 Singaporean dollars to India, compared with the banks average of S$47.35, and just S$5.86 for destination UK, compared to S$40.71 – the banks average.
Lukas May added that “many banks tell their customers they only pay a small upfront fee for international payments, but in reality, customers pay much more through poor exchange rates”.
“These complex fees for international money transfers hide important information from consumers and Singaporeans don’t get the most value out of their transactions – whether they are sending money to support loved ones abroad or investing overseas”.
The research also revealed that it costs more to send money to India than any other destination, with Hong Kong and Australia next on the list.
TransferWise, which has been a phenomenal success since launching in London in 2010, has recently begun to enter the South East Asian market, establishing offices in Singapore, and Australia.
The company’s peer-to-peer matching system allows the fintech firm to cut out the middleman, and offer better rates and cheaper services than banks and traditional money transfer agencies such as Western Union and Ria Money Transfer.
Burdened by costly infrastructure, banks have found it hard to compete with TransferWise and other fintech money transfer firms such as World Remit, and Azimo, but there are signs that banks are beginning to fight back.
In terms of market share, Western Union, Ria, and banks still dominate the marketplace. TransferWise’s research shows that even in the most tech-savvy cities, customers are still unaware of where to get the best deals for overseas money transfers, instead relying on tried and trusted methods, which they continue to pay a premium for.
To find the best rates, offered by the most reputable, authorised firms and money transfer agencies, try our international money transfer comparison widget.