Are our banks doing enough? Part 2

So, in the last Blog, we highlighted the fact that international payment service providers aren’t as transparent as they could be.  Below we offer some ideas of how we think the ideal world should look.

What could this look like?

The best version of what it could look like seen by our team was a US bank “Brand X”, albeit some time ago – it was not perfect but certainly a step in the right direction.  Customer journeys tend to follow a series of steps and can be via a set of screens.  The US bank journey had a dynamic “receipt” on the right-hand side of the screen that built as you selected your choices to provide a concise, easy to read summary prior to sending the payment.  This may be a little too high-tech for some but support text (and not those tiny words at the bottom of a page or lost behind a help button) and then a simple summary page can also work.

Step 1 – Who is the money going to & how much do you want them to receive?

There are obviously many reasons for sending money overseas but in summary, you are either choosing to send a certain amount in your home currency OR a certain amount in foreign currency.  Either way, it benefits both the customer AND the bank for the conversion to take place BEFORE it leaves the customer’s account.  Why?

  1. If the conversion i.e. Euros to Dollars happens overseas, the customer has no sight of the exchange rate to be used by the recipient bank and therefore, the recipient might get less than planned.
  2. If the conversion i.e. Euros to Dollars happens overseas, the bank does not benefit from any retail margin within the Exchange Rate or additional charges applied for currency conversion.

Brand X gave a bright bold warning to the customer, explaining that they will not know how much will be received if they chose to send in their home currency.  The customer could then make an informed decision as to how they proceed.

Step 2 – How quickly would you like it to get there?

Banks usually have a standard and an expedited service.  If so, there should be a clear indication (again not lost in Terms & Conditions) of how long each option would take, and how much each service will cost.


Step 3 – What is the exchange rate to be applied?

Now this is the controversial element and the least consistently applied:

1. Dynamic Rate – the bank provides the rate, and it varies as the foreign exchange market varies in real time.  These usually refresh whilst the customer is within the customer journey.

2. Sheet Rate – the bank sets its rates at set times in the day.  These are usually published or available on the brand’s website.

3. Indicative Rate – the bank provides a rate to give the customer an idea of the rate to be applied, but it is not guaranteed.

4. Guaranteed Rate – the bank provides a rate, and the customer can be assured that this is the rate to be applied to their payment.

In an ideal world:

• All rates should be dynamic, ensuring that the customer benefits from any positive variations within the market.

• Matching funds (the account balance matches the amount you wish to later send) should not be required to obtain a quote from your Bank for the payment, prior to transferring money into the account.  This allows you to determine if your bank is the most cost effective way of sending money!

• Where rates are updated, there should also be an indication of the refresh speed i.e. how long it was valid for such as 30 seconds.  Brand X also showed whether the rate had moved in a positive or negative direction.

• There should also be an indication of the market rate alongside the brand rate offered.  The simplest form could be either a link to market rates held on their own website; a link to Google or a similar provider; or a more technical version would be a live feed provided by a company such as Refinitiv, formerly Reuters.

• Where brands apply a mark-up to the market exchange rate, they should clearly state it both as a % AND as a value i.e. 1.5% or GBP 15.00.  Customers should not have to find this information buried within Terms & Conditions or by doing the maths.  We made a few calls to see if the question is asked of Customer Service as to what the bank’s mark-up is, would the staff no the answer… in general the answer was no.

• There should also be a warning if the rate provided was not the optimum rate i.e. where rates at the weekend are less favourable than rates offered on weekdays.

It is accepted that not all banks are able to offer this technology yet, but they should certainly be able to prove that it is on their developmental roadmap if asked.  The bare minimum should be that there is a rate clearly stated that will be applied to the payment; and there should be a market rate comparison.

Step 4 – How much is it going to cost and who is paying?

Many banks will charge a fixed or % fee for sending funds.  Customers should be aware that this can vary by destination i.e. GBP to Euro may cost less or indeed be free of charge but GBP to US Dollars may cost more.

Customer should also know that they have the choice regarding the fees:

• OUR –  Customer pays all the fees

• SHA –  Customer only pays their bank fees

• BEN –  The beneficiary pays all the transaction fees

This should be clearly stated and an explanation of how it will be deducted from the customer’s account i.e. is the amount to be converted to be reduced; will it be added to the amount to be converted; or will it be debited as a separate transaction.

Step 5 – Review your choices

For us this is one of the most important pages in the customer journey, and so many banks get it wrong.  The Review Page should be a summary of the customer’s choices, with a clear information relating to the total cost of using their payment service so it can be checked BEFORE the customer sends the payment.  It should show:

• The account to be debited

• The account to be credited

• The exchange rate to be applied at point of confirmation i.e. it should be locked/fixed at this point

• The amount in local currency to be debited broken down as follows:

o Amount to be sent

o Retail margin to the exchange rate

o Transaction Fee

This should again confirm HOW it will be debited i.e. in a total debit OR two debits.

• The delivery option chosen with an estimated delivery date

• If there will be a delay in the transaction being processed i.e. next working day, the customer should be notified at this point to offer them the opportunity to choose another provider.  Some banks can take up to 5 days to debit an international payment from the customer’s account.

This is all a simple concept!  People would not be expected to pay a restaurant bill before checking it so why should payment providers not provide similar information.

The Review Page should be standardised within each country by the regulatory body, like the fee documents used by UK banks.  This will then enable each bank to include any legal or regulatory information required by the home country.  It should, however, be as uncluttered as possible to avoid any misunderstanding/misinterpretation by the customer.

Step 6 – Confirmation

And finally, the customer should have a written confirmation of the transaction.

This should be available immediately, if the transaction is processed immediately.  However, it should be sent to the customer via email OR their chosen communication option as soon as it is processed OR as part of a drop-down within the online bank statement.  Just make sure it’s provided!

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