Consumers missing out on $200m in savings with IMTs
Increased transparency has improved international money transfer costs but consumers are still losing money by failing to switch providers.
The ACCC has been tracking developments in the market for international money transfers (IMTs) since 2019 and has recently found consumers are still missing out on over $200 million in potential savings.
This gap in savings has occurred despite improved transparency which has lowered costs for Australian consumers who spend money overseas, the ACCC said.
Its new research found the market for IMTs has experienced a significant transformation since the last report in 2019.
The ACCC said the continued growth of IMTs each year can be attributed to the shift from in-store methods to online transfers.
The report explained how the competitive IMT landscape has changed due to the growth in fintech businesses.
“Fintechs have significantly grown their market share by offering cheaper prices, and sometimes, better service than the big banks,” the ACCC said.
“While the major banks have lowered prices in response to competitive pressure, the big four banks’ prices still remain higher than many of their rivals.”
The report found the overall transaction costs for IMTs have recently experienced a decrease, due to the industry adopting the ACCC’s Best Practice Guidance for suppliers' improved transparency for consumers. The guidance is “voluntary guidance that explains to suppliers how they should be disclosing prices to consumers.”
ACCC chair Gina Cass-Gottlieb said the guidance is being used and taken into consideration within the industry.
“We are pleased that the industry’s adoption of the ACCC’s Best Practice Guidance has led to improved transparency for consumers, unlocking savings for those choosing competitive offers to send money overseas,” she said.
The ACCC stated the research found consumers who used the most expensive bank in February this year to transfer $10,000 worth of US dollars could have saved more than $400 if they chose the cheapest IMT supplier in their sample.
By switching to a low-cost supplier, consumers could save over $100 per transaction compared to a big four bank with an average transfer of $3,000.
IMT costs in Australia remain above the G20 targets of 1 per cent for IMTs to advanced economies and no more than 3 per cent for remittances to emerging market economies by 2023.
In partnership with the Behavioural Economics Team of the Australian government (BETA), the ACCC led research to a better understanding of the consumer experience when using IMT services, such as online FX calculators.
Cass-Gottleib said the ACCC is “seeking feedback” for the Best Practice Guidance from IMT suppliers.
“Following consumer research, we have proposed amendments to the Best Practice Guidance to help provide further transparency to consumers so they can better compare IMT suppliers’ online FX calculators,” she said.
The ACCC is seeking information about the proposed amendments of estimated transfer times, consumers being able to track their payment statuses, and subtracting fees by 21 August 2024.
