Currency Exchange for Sending Money to France
- Regulatory Framework
- Spot and Forward Contracts
- Negotiating the Rate
- Fees and Charges
- Setting up an Account
4. Fees and Charges for Currency Exchange
European regulations require that customers are clearly informed of the fees that will be imposed by the payment provider. However, some brokers are better at conveying this information than others.
It is possible that you may face three separate charges when transferring money to France.
i. Commission Fee - Some banks and brokers impose a commission fee, which is a percentage of the transfer, normally a maximum of 2%.
ii. Transfer Fee - They may also (or alternatively) impose a transfer fee, being a charge for transfer of the money to France. It is frequently a fixed sum, eg £25.
iii. Receiving Charge - Finally, the receiving bank in France may also impose a small charge, particularly if the money is not going to your own bank account. So you may need to discuss these 'beneficiary fees' with the recipient of the funds, as the fees can otherwise be paid by the sender. Currency brokers also frequently settle them as part of their service.
Although banks always impose a charge this is not necessarily the case with foreign exchange dealers. While some do impose a charge (or fee), others run their business based entirely on the commission they make on each deal.
Others may advertise a 'commission free' service, but charge a fee.
In some cases the imposition of a charge may well depend on the size of the transaction, with a charge applicable for smaller transactions, but not for large sums.
In theory, those brokers who do not impose a charge are likely to be cheaper.
However, this is by no means the case, for if the rate being offered to you by the 'no fee' broker is lower than that being offered by one who charges a fee then you may well be paying more with the former.
Our own preferred foreign currency broker FC Exchange does not charge any fees on their minimum transaction value of £3,000.
There are particular rules that govern bank charges on international transfers within the Eurozone. Broadly speaking, under the Single Euro Payments Area (SEPA) rules, a bank can only charge on the same basis as it does for transfers within its own borders.
However, there are a number of caveats concerning this rule. First, it only applies if the sums being transferred are denominated in euros, into another account in the same currency. So unless the bank also carries out the exchange (for which it may impose a fee) a charge can be applied.
Second, you must include the IBAN (International Bank Account Number) and receiving bank SWIFTBIC (Bank Identifier Code) for the person or company to whom you are sending the money.
Your IBAN is basically your bank account number plus some other bank and country sort codes; your SWIFTBIC identifies your bank and the country.
Finally, the rule is limited to transfers of a maximum of €50,000.
The only way of establishing the best deal is to view the amount of money that will be transferred into your account for the total sum of money you are handing over to the broker or bank.
Next: Setting up an Account
Back: Negotiating the Rate
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