Calling for more action: The state of transparency in the UK
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What we want
We want banks and remittance providers to show the full cost of international payments.
People sending money to friends and family back home, students paying for overseas student loans, pensioners receiving their monthly payments and many many more - with no hidden fees, and no misleading pricing.
Transparency should apply across the board and not discriminate based on country or currency route. The UN Sustainable Development Goals are clear: by 2030, the cost of remittances needs to be below 3%. According to the World Bank, the UK's average cost of sending remittances abroad has trended upwards to 6.3%, so we have a long way to go. What’s keeping prices so high? You guessed it: a lack of cost transparency.
Together we can fix that.
Tell consumers the full price of an international payment: the estimated* total cost of any fees and the exchange rate mark-up (the difference between the exchange rate offered to the customer and an independent mid-market rate like the one you see on Google). This needs to be communicated to consumers clearly as a total cost of fees (e.g. £3.14 or whatever the currency used) and may additionally be expressed as a percentage.
Governments around the world are starting to take notice of the problem of hidden fees. But we’re not waiting for government action. We want bank and remittance providers to commit to showing the true cost of an international transfer, wherever consumers are transferring money, whether they are using the service online or offline, whether they are a small business or a consumer: exchange rate mark-ups and all!
*only estimated as the total cost may vary if the exchange rate is not guaranteed to the customer through a rate 'lock' or 'guarantee'
Phrases like ‘no hidden fees’ and ‘0% commission’ are misleading when there are charges that haven’t been clearly explained. Banks and other remittance providers should not use misleading terminology or imply that there is no charge for our service when there is a cost, such as inflated exchange rates.
Many services only tell their customers how much a transaction costs if people register or even after their payment is confirmed. We believe in being upfront about costs and make pricing available in at least one of the following ways:
- A calculator that allows non-users to work out the cost of making a payment on every route, with all the pay-in and pay-out methods available, relying on live rates to calculate the total cost based on the mid-market rate and any fees applied.
- A live pricing page that sets out the total cost of the service for reasonable hypothetical payment amounts (e.g. €100, €500, €1000, €10000 or source currency equivalent), for all the routes that offered.
- An open API that gives current rates and fees for all the route combinations offered.
The exchange rate shown to consumers should be similar, or should be an independent mid-market rate that is publicly available to calculate the cost of converting currency. This rate will be disclosed to the consumer so that they can review the calculation. Independent and verifiable sources include:
- Reuters
- XE.com
- Bloomberg
- New Change FX
Banks and other providers should not wait until governments impose new price transparency rules, but they should routinely test their user interface to make it even easier for customers to understand the service and the costs associated with it. Lead by example and not make empty promises.