Foreign currency: Kiwi family could have saved $18,000 by using online service, not bank

• Herald readers say online dealers are saving them a ‘fortune’ when wiring money overseas.
• One family sending NZ$779,995 to Australia via ANZ received A$687,012 in their Australian bank account. Online competitor Wise said they would have received A$705,415 through it.
• Wise is set to appear before a Finance and Expenditure Select Committee calling for greater transparency in foreign money transfer fees.

A Kiwi family shocked by what it called “exorbitant” rates to transfer money to Australia could have saved about $18,400 using an online exchange dealer instead of a bank.

Since Carl Halvorsen told the Herald about his experience transferring money via ANZ Australia, readers have been writing in to recommend online companies such as Wise and XE as cheaper alternatives when transferring money overseas.

Halvorsen earlier said he was losing sleep after NZ$780,000 was wired to his daughter’s ANZ Australia bank account in Perth.

The family had been expecting something close to A$700,000 to arrive in her account.

Instead, ANZ Australia deposited A$687,012.

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Carl Halvorsen and his daughter Alex say they lost money by using a major bank to transfer cash from New Zealand to Australia for a new house. Photo / Supplied

By contrast, A$705,415 would have arrived in Alexa’s bank account if online dealer Wise had been used.

That’s a difference of A$18,403.

Halvorsen, 72, had not heard of Wise and when told how readers had pointed out how much he could have saved, he said he hoped others would learn from his experience.

“Hopefully, other people will see that and they’ll do their due diligence,” he said.

Wise is not the only online provider. An Auckland business owner told the Herald his business swapped to online exchange dealer XE and had “saved a huge amount over the years”.

Kiwis have been flocking en masse in recent years to Aussie cities like Perth. Photo / 123rf

ANZ Australia and Wise compared

Alexa is among tens of thousands of Kiwis to have moved to Australia in the past few years.

The family transferred NZ$779,995 to help her buy her own home in Perth.

The money was an inheritance after her mum died in March, leaving an Ōhope Beach home to her that the family then sold.

Halvorsen was not involved in sending the money, with the lawyers in charge of his wife’s will instead completing the exchange.

That’s why the family was shocked to receive a letter from ANZ Australia after the December 13 transaction, stating it had charged a flat A$15 fee along with a conversion rate of 1.1353, resulting in A$687,012 being received by Alexa.

Banks and other transfer services are able to choose their own conversion rates and how much they wish to mark them up.

When the family complained, ANZ Australia offered to pay them A$6610 as a “goodwill gesture” to help resolve their concerns.

Halvorsen said the family had accepted the A$6610 payment, feeling it had no other choice.

Online dealer Wise has since sent the Herald an official statement about what it would have charged for the transaction.

It said it would have first charged a NZ$994 fee on the transaction and then used a 0.9055 conversion rate.

That would have resulted in Alexa receiving A$705,415 in her account.

Once ANZ Australia’s “goodwill gesture” was taken into account, the Wise exchange would have still saved the family A$11,790.

Wise said it is due to appear on January 29 before a finance and expenditure select committee of politicians looking into services provided by New Zealand’s banks.

Jack Pinczewski, a government relations lobbyist for the company, earlier handed in a written submission arguing for the need for greater transparency in foreign money transfers.

His submission said all companies that transfer money overseas should be required to advertise their fees in a way that can easily be compared.

Carl Halvorsen and daughter Alexa are moving on from the sorrow of losing Carl's wife last year to Alexa now buying a new home in Perth as she expects a new baby in the coming weeks. Photo / Supplied

For instance, companies that advertise zero or low flat fees should be required to more clearly state how much money they are making from “marking up” their exchange rate, Pinczewski said.

This transparency would promote greater competition and help customers make more informed decisions, he said.

Claire Matthews, associate professor at Massey Business School, said people moving large sums of money overseas should seek financial advice.

They should also call their bank or foreign exchange dealers and negotiate the rates on offer, she said.

Matthews said even though online dealers might be cheaper, people should be careful who they transfer money through and do research to make sure the company they use is legitimate and reliable.

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