Sending money abroad is a significant aspect of the lives of many individuals, including those supporting their families, planning international travels, or expanding their businesses. However, many people remain unaware of the actual costs associated with international money transfers, which can include fees for sending, spending, or receiving funds.

According to a study conducted by the World Bank, the average cost of sending $100 internationally is around 6.84%.

This means that if you were to send $1000 abroad, you could end up paying as much as $68.40 in fees, which can significantly impact the amount of money you receive on the other end.

The lack of transparency in international money transfer fees is a significant issue.

Many providers misleading customers about the costs involved. While some providers may advertise low or even no fees, they often hide additional charges in the exchange rate. This can lead to customers paying more than they realize, as the exchange rate mark-up can be substantial. To avoid being misled by hidden fees, it is essential to understand the mid-market rate, which is the only real exchange rate. This is the rate that banks and financial institutions use when they trade currencies with each other, and it is the rate that you see on Google. 

By understanding the mid-market rate, you can better compare the fees charged by different providers and make informed decisions about your international money transfers.

For instance, if you were to transfer $1000 from the US to Europe, the mid-market rate might be 0.939750, which means that 1 USD can be exchanged for 0.939750 EUR. 

However, if a provider offers a marked-up exchange rate of 0.90 EUR for 1 USD, you would end up paying an additional fee of 4.27%. 

£187 Billion Vanished into Thin Air! The Shocking Reality of Hidden Fees in a Single Year!

According to a report by the World Bank, the global average cost of sending remittances is 6.3%. This is a significant burden for the millions of people worldwide who rely on these transfers to support their families and communities. The World Bank estimated  that remittances reached a record high of $860 billion in 2023 across the globe.

However, the high cost of sending these transfers can significantly reduce the amount of money that reaches the intended recipients.

The United Nations SDG 10c aims to address this issue by bringing down the cost of remittances to less than 3% on average by 2030.

How Much Money Are People Unknowingly Losing?

In the European Union, a Whopping €12.5 Billion Disappears into Thin Air due to Hidden Exchange Rate Mark-ups!

In the European Union, €12.5 billion is lost to hidden exchange rate mark-ups. According to the European Central Bank, remittances to and from the EU totaled €126 billion in 2023.

The second Payment Services Directive (PSD2), designed by the EU, prohibits financial service providers from using non-transparent pricing methods for international payments.

In addition to the EU, other regions are also taking steps to address the issue of high remittance costs. 

For example, the African Union has set a target to reduce the cost of remittances to and from Africa to less than 3% by 2023. Similarly, the G20 has committed to reducing the cost of remittances to less than 5% by 2030.

In the United Kingdom, £5.6 Billion Lost to Hidden Exchange Rate Mark-ups, Leaving Consumers in the Dark.

According to the World Bank, remittances to the UK totaled $22.5 billion in 2023, while remittances from the UK to other countries totaled $21.9 billion. 

However, the lack of transparency in pricing methods used by financial service providers can significantly increase the cost of these transfers.

In Australia, a Heartbreaking $3.1 Billion Slips Away to Hidden Exchange Rate Mark-ups.

To address this issue, it is essential to extend remittance price transparency to include all money transfers from the UK and EU to any other currency in the world. This would require financial service providers to disclose the total cost of international money transfers, including any hidden fees in exchange rate mark-ups.

According to the Reserve Bank of Australia, remittances to and from Australia totaled $15.9 billion in 2019. 

However, the lack of transparency in pricing methods used by financial service providers can significantly increase the cost of these transfers..

While there have been efforts to address this issue, such as the Cross Border Payments Regulation in the UK and guidance from the ACCC in Australia, enforcement of these rules still remains a challenge.

$8.7 billion vanishes in the United States through hidden exchange rate mark-ups

According to a report by the Government Accountability Office, the CFPB has received complaints from consumers about the difficulty of understanding the fees and exchange rates associated with international money transfers. 

In response, the CFPB is considering taking action to improve how fees and exchange rate mark-ups are displayed.

This idea has gained support from US Senators, consumer and immigration groups, industry trade associations, all of whom recognize the importance of transparency in international money transfers. By providing clearer information to people, they can make better decisions when sending money abroad.

In Canada, a staggering $13 billion is being lost in Canada due to hidden exchange rate mark-ups

In the 2023 budget plan, the government outlines new steps to put money in the pockets of people who need it the most, cracking down on junk fees, except in hidden exchange rate mark-ups

According to the World Bank, remittances to Canada totaled $6.2 billion in 2020, while remittances from Canada to other countries totaled $25.1 billion.

However, the lack of transparency in pricing methods used by financial service providers can significantly increase the cost of these transfers.

To address this issue, it is essential to implement rules banning hidden fees in the exchange rate, as has been done in the European Union and the United Kingdom.

A global standard for remittances is urgent

According to the World Bank, remittances to low- and middle-income countries totaled $540 billion in 2020, with an average cost of 6.5%. This means that for every $100 sent, $6.50 is lost in fees. The international community has recognized the need to reduce these costs, with the United Nations Sustainable Development Goal 10c aiming to bring down remittance costs to less than 3% by 2030. According to a report by the OECD, implementing a global standard for remittances could reduce costs by up to 50%.

One way to achieve this goal is by implementing a global standard for remittances. This would involve governments requiring providers to use a benchmark exchange rate provided by a trusted source, such as the World Bank or the International Monetary Fund, and subtract fees from the amount being sent. 

This would enable fair price comparisons and eliminate hidden fees, as consumers would be able to compare send amounts, fees, and receive amounts easily.

Transparency is our number one priority

Wind.App  is dedicated to making finance more honest and fair. 

We don’t like hidden fees and we’re committed to being transparent. When you use Wind to send money, we tell you exactly how much it will cost, with no hidden fees and no surprises. We also offer a fair exchange rate for converting your money. See here! 

Whether you’re sending money to support your loved ones, planning a fun trip, or growing your business, Wind is a great choice. We believe in being upfront and honest, and we have nothing to hide.

Got More Queries? Shoot us an email at support@wind.app