/ Money, Travel & Leisure

TransferWise: are hidden fees eating into your holiday money?

travel money in back pocket

Taavet Hinrikus of TransferWise calls for greater transparency in the fees banks charge you to buy holiday money or transfer money abroad.

If you’ve ever transferred money internationally through your bank, you’ll know that something doesn’t quite add up. You think you know what you’re getting: you see the exchange rate in the papers or on Reuters online, the bank tells you that the transfer is ‘free’ or ‘fixed fee’… but then you find a chunk of your money’s gone missing. Where does it go? It goes to pay the fee that the banks say they’re not charging you.

They might say it’s ‘free’, but they’ll then apply a mark-up on the exchange rate that they often don’t tell you about. This mark-up is usually 3-5% – that’s as much as £50 on a £1,000 transfer. That means people across the UK could be losing as much as £3bn a year in hidden fees on their international transfers.

Hidden international transfer fees

I used to get paid in euros but was living in London so had to transfer money every month through my bank. Not only was the process slow and pretty painful, it was also costing me money in hidden fees: I would never know how much was actually going to end up in my account. I couldn’t believe how unfair it was.

So I started swapping my euros for pounds with my friend Kristo, who needed to send money in the other direction. We used the mid-market rate – the real rate that you see in the papers, and the one the banks use between themselves. We soon saved thousands of pounds and that’s how we came up with the idea for TransferWise.

We realised there were millions across the world who are getting an unfair deal from their banks and brokers. There are students studying abroad, people paying for holiday homes, expats who need to move their salaries across borders. They’re all losing money in hidden fees.

Buying holiday money

And it’s a similar story if you’ve looked at how much you had to pay for your holiday money after arriving back from a well-earned break. Despite being charged ‘0% commission’, the fees are once again hidden in the exchange rate. In fact, an estimated £1.3bn in hidden fees were paid by Brits in 2013 for their holiday money.

People are increasingly fed up with being stung by hidden costs, as Which?’s Sneaky Fees and Charges campaign has shown. People just want to know what they’re being charged. Surely, customers have a right to know what they’re paying?

That’s why we’ve launched our Stop Hidden Fees campaign, calling for an end to misleading pricing in foreign exchange. And if you’ve been hit by hidden fees on international transfers or holiday money, tell us your experiences below.

This is a guest contribution by Taavet Hinrikus, co-founder of TransferWise. All opinions are Taavet’s own, not necessarily those of Which?


As someone who works in wholesale foreign exchange where one pip (0.0001) makes a difference, I don’t tolerate the very wide spreads that are typical in retail FX. Through my work, I have access to multiple wholesale market prices sources. I have found one free-of-charge price source, http://www.truefx.com, that correlates precisely to the wholesale markets in real time without a delay. Therefore use this to see how much you are being ripped off in retail FX. Note that the whole world (except for retail FX in the UK) quotes market convention EUR/GBP (whereby €1 = a variable amount of GBP) unlike the non-standard GBP/EUR quotation method (whereby £1 = a variable amount of EUR).

Although TransferWise and CurrencyFair are fantastic, I’ve recently stumbled across an even better service – Revolut offers all of the following:

1. Retail foreign exchange at the wholesale interbank rate
2. Free transfers to or from bank accounts in GBP, EUR and USD
3. Add money for free using your bank’s debit card
4. Spend from your GBP, EUR and USD balances with a debit card at face value without fees
5. Withdraw cash from your GBP, EUR and USD balances with a debit card at face value without fees
6. Smartphone app to manage your GBP, EUR and USD balances

It’s ideal both for travelling and for moving money internationally. They make their money only from the usual fees paid by merchants when you spend on the card.

I use CurrencyFair. Better than Transfer wise when you are sending more than 500 pounds

I find that CurrencyFair is particularly good for selling EUR/GBP (selling EUR buying GBP). This is because most of its other users are buying EUR/GBP and if you put in an offer above the market, one of them will soon match your off-market offer and you end up very favourably selling at a higher price than the interbank market. I haven’t used TransferWise but it’s possible the same happens there too. Perhaps Taavet can enlighten us as to whether TransferWise has a similarly imbalanced market in favour of sellers of EUR/GBP?

Interesting subject as on commencing reading I thought unusual to see a commercial plug. However it has lead to interesting information thanks to the two previous comments.

It is not clear what security implications are for funds which may require some thought. Bricks and mortar offices tend to provide an element of security.

I am converting sums January 2017 so will try to remember to investigate nearer the time.

Unless a payment services provider holds a banking licence, they have to keep client money in a segregated client account. In the event that the provider goes out of business, all client money is ring-fenced and protected.

which would you reccomend for buying EUR, from GBP

Revolut gives you a wholesale interbank rate for buying or selling EUR/GBP. Therefore I would recommend that. But for selling large amounts of EUR/GBP, CurrencyFair often gives a rate that is even better than the wholesale interbank rate.

You are all talking about GBP and EUR, what about USD to EUR. What/ Who are the best to deal with?

Elliot says:
25 September 2015

Worldwide currencies Ltd, they offer all currency pairs.

currency pair i buy from them are: GBP/EUR USD/EUR and GBP/CHF.

Elliot says:
25 September 2015

I myself use Worldwide Currencies for my travel money and all of my corporate transactions.

Worldwide Currencies by far offer the best service and prices in the FX Market. Trust me, i have used far to many.

i have only recently started investigating this method of international transfer as I am receiving monthly salary in NOK and every month this is deposited into a UK bank account. Looking to maximise the final amount I receive each month, can you recommend a site that would achieve this?

hamid farahanialavi says:
15 January 2016

Delivery arrangement with Federal Govermment delivery Service Transferwis

I have been working in the Europe for 9 years and have all of my savings in Euros. I am now moving back to the UK and want to move the money to the UK and convert to GBP. Can anyone give me any advice on the best way do this?

Hi Lucy, there are a few options open to you, but all will charge a fee and they usually take a few days to complete the transfer. You may want to investigate using a money exchange company such as MoneyCorp, HiFx, CurrencyFair etc. Banks also offer this service, although they’re usually more expensive than the money exchange companies.

John says:
28 April 2016

For reasons I won’t go into I have been exploring the costs of lending to someone in NZ. Sending one way and then repatriating the money incurred a loss of almost 10 per cent with NatWest but seemed to cost virtually nothing (£24 on £25,000) with HiFX which says it is authorised by the FCA. Is there a catch and if so what is it?

We are selling a property in France that we have inherited and plan to put the money into our French bank account before transferring the funds back to the UK. Have looked at the banks and am shocked by how poor their advice has been. They all have reasonable fees for the transfer and say that the exchange will depend on the rate when transferred, which I understand, but what they don’t tell you is how poor that rate will be compared with actual banking rate so in reality the fee can range from £4000 – £12000 between the different banks.
Can anyone advise on a good company to use with good rates and low fees with good security.

Sean Allen says:
24 February 2018

What about a one off transfer from GBP to AUD, what or who is the best service to maximize my final amount with minimal fees/loss?

Brian Dean says:
18 May 2018

I am disappointed that there seems to be no advice available from Which Money as to the best way to send money to Australia, or New Zealand either. Just how many Which subscribers have relatives there.
I have two grandsons both nearly 18 and I find the cost of transferring cash economically an absolute pain. Just how do we get some action on this ?

Hi Brian,

I’m a writer on the Which? Money team.

We don’t currently have any advice about the best way to send money abroad but we do cover the topic in our news section (https://www.which.co.uk/news/money/).

I recently took a closer look at the new TransferWise Borderless Account. Here’s the link: https://www.which.co.uk/news/2018/05/transferwise-borderless-account-can-it-save-you-money/

You may also find this story comparing Revolut and TransferWise helpful: https://www.which.co.uk/news/2017/05/revolut-turbo-is-this-the-cheapest-way-to-transfer-money-abroad/