Receiving international payment and banks' exchange rate

kuepper

I've just received flight delay compensation from a foreign airline and having been told by Lloyds there'd be no charges I discovered there was a hidden 'charge' because to convert euros to £ Lloyds used THEIR 'standard exchange rate' as opposed to what the actual exchange rate was, so I received about £20 less than I expected.  I wondered for future reference are there any banks who use the actual exchange rate when receiving international payments as opposed to one decided by the bank, and do some banks have lower exchange rates than others?

DullGreyGuy

kuepper said:

I've just received flight delay compensation from a foreign airline and having been told by Lloyds there'd be no charges I discovered there was a hidden 'charge' because to convert euros to £ Lloyds used THEIR 'standard exchange rate' as opposed to what the actual exchange rate was, so I received about £20 less than I expected.  I wondered for future reference are there any banks who use the actual exchange rate when receiving international payments as opposed to one decided by the bank, and do some banks have lower exchange rates than others?

No bank pays an identical amount for buying and selling currency and most hide their margins in their spread rather than having a discrete fee. 

Some banks add no margin for card payments so simply mirror Visa or Mastercard's spread (that are fairly small) but are much more average when talking about bank transfers and other mechanisms of payment. 

If you are regularly moving currencies you may want to consider third party services like Wise which will also allow you to hold the money in other currencies until such time as you need to convert but they are not banks so do not come with FSCS protection etc were they to go bust. 

Hoenir

The charge wasn't hidden. There was a cost in processing the foreign currency credit. 

grumpy_codger

kuepper said:

...I wondered for future reference are there any banks who use the actual exchange rate when receiving international payments as opposed to one decided by the bank, ...

Possibly, Global Money account at HSBC -

"HSBC UK's best exchange rates

• Benefit straight away from our competitive live exchange rates"

The rate isn't 'actual', but reportedly very good.

kuepper

Hoenir said:

The charge wasn't hidden. There was a cost in processing the foreign currency credit. 

It was hidden as they hid the charge from me and categorically said there'd be no charge when I phoned to inquire, so let me believe I'd get exactly what the law stipulated I'd get - not an amount minus their cut. It only takes a banking computer a millisecond to convert between currencies so it's hardly 'processing'. 

eskbanker

kuepper said:
It was hidden as they hid the charge from me and categorically said there'd be no charge when I phoned to inquire, so let me believe I'd get exactly what the law stipulated I'd get - not an amount minus their cut.

Are you referring to the law defining what the sender needed to pay you (which isn't relevant to the bank), or asserting that there's some law covering exactly how banks price exchange services?

wmb194

kuepper said:

I've just received flight delay compensation from a foreign airline and having been told by Lloyds there'd be no charges I discovered there was a hidden 'charge' because to convert euros to £ Lloyds used THEIR 'standard exchange rate' as opposed to what the actual exchange rate was, so I received about £20 less than I expected.  I wondered for future reference are there any banks who use the actual exchange rate when receiving international payments as opposed to one decided by the bank, and do some banks have lower exchange rates than others?

Use a foreign exchange company like Wise or, as mentioned, HSBC's Global Money Account.

Ayr_Rage

@kuepper you won't find any institution that works for free, there is always a charge somewhere.

Even if you had got the full amount into a Wise Euro account for example there is still a charge to convert that to Sterling, although the rate would likely be better than you received from Lloyds.

True, it does take milliseconds, but they still have to pay for that computer, the software and staff.

PRAISETHESUN

Another vote for a specialist currency conversion service such as Wise. You can choose to hold the refund in the foreign currency or convert it to GBP. In either case the minimal fee and significantly better exchange rate will result in you saving money compared to letting Lloyds manage the conversion for you.

Gino_the_chef

For international payments and currency exchange, Wise is hands-down the best solution! As an Italian working in the UK who travels back home often, I’ve tried a bunch of services, and Wise offers the lowest fees, real exchange rates, and fast transfers - no hidden charges like traditional banks.

Even my family in Italy uses it now for sending money between the UK and EUR accounts. The multi-currency account and debit card are game-changers too!

kuepper

eskbanker said:

kuepper said:
It was hidden as they hid the charge from me and categorically said there'd be no charge when I phoned to inquire, so let me believe I'd get exactly what the law stipulated I'd get - not an amount minus their cut.

Are you referring to the law defining what the sender needed to pay you (which isn't relevant to the bank), or asserting that there's some law covering exactly how banks price exchange services?

the former. I complained about being misled and they've apologised and now made up the difference so I've now got 100% of the compensation I was due. At least I'm aware of the options if I'm ever in the same position again. What I still don't understand is how come some bank accounts such as Virgin money don't charge for converting the currencies of purchases and cash withdrawals abroad yet charge for receiving international payments.