By Patrick Graham
LONDON, Dec 18 (Reuters) - U.S., Canadian and Australian
banks cut the cost of international money transfers in December
before the traditional boom in migrant workers sending cash home
for the holiday season, a regular index of market costs showed
on Friday.
The International Money Transfer Index (IMTI) run by money
transfer comparison and intelligence firm FXCompared showed for
the first time that U.S. banks were cheaper than British
counterparts, owing to a steady easing in costs in recent
months.
Foreign currency transfers has long been an easy cash-cow
for banks, with major global lenders charging up to 8 or 9
percent of the value of smaller-scale transactions to send money
abroad and exchange it into the appropriate local currency.
A raft of small web-based providers, like Transferwise,
World First or Azimo, have begun to eat into that business but
have struggled to gain ground in a U.S. market where capital and
regulatory barriers to entry are high.
FXCompared Managing Director Daniel Webber said that it
appeared to be banks competing with each other that had driven
the cost in the U.S. market down, citing falls in costs at major
lenders including Wells Fargo (N:WFC) WFC.N , Bank of America (N:BAC) BAC.N
and JP Morgan Chase (N:JPM) JPM.N .
"On average all the biggest U.S. banks have become cheaper
in recent months, while some of the smaller banks have moved
downward with their pricing quite aggressively," he said.
"In a sector still dominated by banks and Western Union, the
U.S. banks have become much more competitive than their UK
counterparts over the past year."
A breakdown of the numbers showed Australian banks remain by
far the most expensive, charging 7 percent to transfer the
equivalent of 1,000 British pounds, down from 7.2 percent a
month earlier.
In the United States, those costs are 5.6 percent on average
compared with 6.0 percent a month earlier and the average of 6.1
percent charged by UK banks.
The non-bank online providers in all three jurisdictions are
much cheaper in comparison, charging between 1.6 and 1.8 percent
of the value of the transaction, the study again showed.
The index measures the cost - including fees and the spread
to the central market rate at which banks trade currencies with
each other - for a range of transaction values and currencies.
Those are gathered from dozens of Canadian, U.S., Australian and
UK banks and brokers.
For full details of the study, see: https://www.fxcompared.com/intelligence/international-money-transfer-index-imti
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Link to study https://www.fxcompared.com/intelligence/international-money-transfer-index-imti
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(Editing by Mark Heinrich)