Making Regular Payments to France

ortolickus

I want to send a regular monthly payment of £100 (equivalent) to my 14 year old grandson's existing account in France. I can do this easily enough 'fee-free' using my Lloyds current account. However, the receiving bank seems to feel justified in charging 14.75 euros for accepting the deposit; obviously this does not make economic sense.

I don't suppose there is any method I can use to avoid this charge? Or perhaps someone with experience can suggest a solution that I can pass on to the child's mother to implement?

Many thanks.

Ayr_Rage

Yes, use WISE.

Send Euro and the only fee will be charged by Wise.

https://wise.com/

wmb194

ortolickus said:

I want to send a regular monthly payment of £100 (equivalent) to my 14 year old grandson's existing account in France. I can do this easily enough 'fee-free' using my Lloyds current account. However, the receiving bank seems to feel justified in charging 14.75 euros for accepting the deposit; obviously this does not make economic sense.

I don't suppose there is any method I can use to avoid this charge? Or perhaps someone with experience can suggest a solution that I can pass on to the child's mother to implement?

Many thanks.

Wise also offers a euro account. It allows you to make fee-free for you and them Sepa transfers. It gives you an account with a Belgian IBAN.

https://wise.com/gb/account/eur-account

ortolickus

Thanks for the replies. I've opened a 'normal' (UK?) account; the euro account looks a bit complicated for my limited grasp. It appears there is a small charge by Wise (<£1 on £100) but a much better exchange rate than my bank (although i made that transfer some hours ago now).

Is it possible to explain to a financial illiterate like me why the French Bank will not make a charge on a deposit via Wise but do charge if the funds come via Lloyds?

gelato_cat

I'm moving this to the Bank Accounts board

eDicky

ortolickus said:

Is it possible to explain to a financial illiterate like me why the French Bank will not make a charge on a deposit via Wise but do charge if the funds come via Lloyds?

It's because Wise and similar services move the funds using domestic transfers, which are usually free. So you pay your pounds to the Wise UK account by faster payment in the normal way, when converted to euros Wise pays them from its euro account, probably in Belgium, to the French bank using SEPA transfer, for which no charges are allowed. You could view it as the only international movement of funds being within Wise' own accounting.

PRAISETHESUN

ortolickus said:

Thanks for the replies. I've opened a 'normal' (UK?) account; the euro account looks a bit complicated for my limited grasp. It appears there is a small charge by Wise (<£1 on £100) but a much better exchange rate than my bank (although i made that transfer some hours ago now).

Is it possible to explain to a financial illiterate like me why the French Bank will not make a charge on a deposit via Wise but do charge if the funds come via Lloyds?

Ignore the "fee-free" bit from Lloyds. They make their money from the vastly inflated exchange rate used to convert GBP to EUR. I'd definitely recommend a specialist currency conversion service, such as the Wise account discussed above.

With Wise yes they charge a small fee, but the exchange rate is much better. When you add both these components up you get a much better conversion overall. As for operating the account it's actually very simply - you open a GBP and a EUR account with Wise and move money between them as needed. Then for sending money it's 3 easy steps:

Send GBP from Lloyds to Wise (GBP)
Send GBP from Wise (GBP) to Wise (EUR) - this is the currency conversion step
Send from Wise (EUR) to your grandson's French EUR account.

As for why French banks charge fees, it's likely because the money is coming from an overseas bank (as they see it) and in a different currency. By converting it yourself and then sending it using Wise (which will be treated as a local bank), you get better exchange rates and are not charged fees by the receiving bank.

ortolickus

Thanks again for the replies, but i'm slightly confused. Do i actually need to open a Euro account with Wise? eDicky says "Wise pays them from its euro account" which implies that i don't; PRAISETHESUN seems to suggest that i do? From earlier replies i understood that either would work but that if i only opened a Wise euro account, then i would be subject to a small charge from Wise for the conversion.

Thanks for the explanations re. the French charges. I thought that Lloyds' poor exchange rate was their way of charging to send euros, so there would be no charges from the French bank. Clearly i was wrong in that assumption.

Ayr_Rage

@ortolickus you do not need to open a Euro account.

The second step from @PRAISETHESUN is not needed unless you wish to take advantage of a good rate, hold the funds and send them at a later date.

Wise will pay out in Euros via a local bank even if you miss step two.

The cheapest way is to send GBP to Wise by bank transfer, cards incur extra cost.

ortolickus

Yep - that's very explicit. Thanks.

DullGreyGuy

ortolickus said:

Thanks again for the replies, but i'm slightly confused. Do i actually need to open a Euro account with Wise? eDicky says "Wise pays them from its euro account" which implies that i don't; PRAISETHESUN seems to suggest that i do? From earlier replies i understood that either would work but that if i only opened a Wise euro account, then i would be subject to a small charge from Wise for the conversion.

Thanks for the explanations re. the French charges. I thought that Lloyds' poor exchange rate was their way of charging to send euros, so there would be no charges from the French bank. Clearly i was wrong in that assumption.

Its just an option not a requirement... given its a regular payment you may feel that if exchange rates are great that you convert say more than you want to send this month to make the most of the preferential rates and then use that pre-exchange amount to make the next X months. To do that you'd need to have an account that can hold € and one of the simpler ways of doing it is with Wise. 

Speculating on currencies isn't an easy thing to do and even the pros dont tend to be that good at it so you may find your great rate this month becomes an even better rate the following month which you wouldn't be able to capitalise on if you'd already transferred the next years worth of payments already. Unless you fancy yourself a currency guru or just want the certainty of knowing you'll not be impacted by FX swings for the next X months then you can stick to a month by month exchange 

I'm no expert on international payments but have worked with some people in Treasury that are and know each hop the money is making to go from A to B (there are often more middlemen involved than you'd imagine, esp if going to difficult countries) rather than just telling their bank they need to send £3,000 to a person in Iran with account number 34567. Many banks charge for receiving international payments, in some countries charging for domestic payments isn't uncommon too. Wise dont actually take your money, convert it to Euro, send it to the EU and then send it on to the recipient, instead they receive your money in their UK GBP account and then use money already in an EU Euro account and pay the recipient with that. Clearly a lot of work to ensure you've liquidity in the right places and timing the movement of actual FX transactions but then thats why those that work in Treasury get paid what they do.