By Patrick Graham
LONDON, March 23 (Reuters) - British banks have cut the
amount they charge for small international transfers between
currencies by more than a fifth in the past three months as
competition in the sector continues to grow, an index of market
costs showed on Wednesday.
Money transfer comparison and intelligence firm
FXCompared.com said its quarterly International Money Transfer
Index (IMTI) showed banks were starting to respond more
aggressively to the arrival of small online providers.
Banks cut the average cost of a transfer of 1,000 pounds
($1,410) by just under 22 percent between December and March,
the firm said.
Charges fell to 4.8 percent of the value of each transaction
compared to 6.1 percent in December, still three times more than
the 1.6 percent charged by non-bank providers.
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.
Small web-based providers such as Transferwise, World First
and Azimo have begun to eat into that business.
"It is likely the reason we have seen such a sharp drop in
the amounts banks are charging is down to competition from
currency brokers," said FXCompared managing director Daniel
Webber said.
"But there is still a very big difference between what you
pay to a bank for moving money overseas compared to what you
would pay a broker."
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.
Australian banks remain by far the most expensive, charging
6.8 percent to transfer the equivalent of 1,000 British pounds,
down from 7.0 percent in December. In the United States, those
costs rose to 6.1 percent from 5.6 percent in December.
For full details of the study, see: https://www.fxcompared.com/intelligence/international-money-transfer-index-imti
($1 = 0.7080 pounds)
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Link to study https://www.fxcompared.com/imti
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(editing by John Stonestreet)