We tested the process of converting money from GBP to Euro, using 2 different providers – one a traditional bank, and the other a dedicated FX transfer provider. We will detail the process, then share the results i.e. how much it costs, how long it takes, how easy it was, amongst other metrics.
We took funds from a HSBC bank account in the UK, and sent them to a Euro account that is with Commerzbank in Germany – so the transfer was cross border, as well as cross currency. The amount for each transfer was 100 GBP.
The different methods we used are:
We made a transfer from the GBP account at HSBC in the UK to a EUR account at Commerzbank in Germany – we did not use any transiting FX provider, but rather we simply used HSBC internet banking to transfer direct to Commerzbank.
We created an account on Wise (formerly known as Transferwise) and made the same transfer as above i.e. originating in a GBP account at HSBC in the UK, and terminating at a EUR account at Commerzbank in Germany. The difference from 1) is that we transited the payment via Wise.
How much did it cost?
The transfers were done at 1500 CET on different days. We took note of the Interbank exchange rate from www.xe.com at the time of the transfer, and compared it against the rate we were quoted by the provider. The Interbank Rate on these 2 days was luckily very similar so we can do a like for like comparison. We will use a transfer at the Interbank Rate as the baseline so we can compare the providers.
- GBP to EUR Interbank Rate at time of transfer: 1.1413
- Amount in EUR that would be transferred at Interbank Rate: 114.13 EUR
- Rate Offered by HSBC: 1.0986
- % Deviation from Interbank Rate: 3.75%
- Additional Fees: None
- Actual Amount Received: 109.91 EUR
- GBP to EUR Interbank Rate at time of transfer: 1.1416
- Amount in EUR that would be transferred at Interbank Rate: 114.16 EUR
- Rate Offered by Wise: 1.1414
- % Deviation from Interbank Rate: Negligible
- Additional Fees: 0.55 GBP
- Actual Amount Received: 113.51 EUR
As you can see – HSBC & Wise follow a very different method for charging for the transfer. With HSBC, they offer their own rate for the transfer, which is far inferior to the Interbank Rate. Wise take a fee for the transfer, and do the transfer at pretty much the Interbank rate.
In this example, the difference is considerable:
- Interbank Rate with no fees: We would receive: 114.13 EUR
- Via HSBC: We received 109.91 EUR
- Via Wise: We received 113.51 EUR
Therefore, we ended up with 3.2% more money after the transfer with Wise than we did with HSBC.
How long did it take?
With Wise it was necessary to create an account before making the transfer. Of course if you already have a Wise account this is not necessary. The account creation process is simple and quick. Also to set up the transfer itself within Wise was straightforward.
Once the transfer was set up within Wise, it was necessary to make the transfer from HSBC to Wise, which was a GBP to GBP transaction.
The transfer from HSBC was made at 1504 CET. At 1505 CET, an email from Wise was received stating that the money had been received and sent to our nominated EUR account. At 1513 CET, the money arrived in the Commerzbank EUR account. Therefore, the transfer process took less than 10 minutes overall.
The transfer was made from an already existing HSBC bank account, to an already existing Commerzbank account. Of course it would take a lot longer to set up these bank accounts but that would not be a fair comparison with the set up of a Wise FX account, and also is not the focus of this article!
We logged into the HSBC account at 1455 CET. We went through and set up the payment, which is via a rather complicated form within their internet banking. At 1504 CET the process was completed and the transfer made.
On the site it clearly stated:
International payments to an account in Euro or GBP within the EEA will normally be credited next working day.
This was indeed the case, we did not see the payment in our Commerzbank EUR account until the following morning.
Both of the providers showed the exchange rate that would be used for the transfer very clearly within the process, and the user had to explicitly agree to the rate offered for the transfer.
Regarding fees, Wise state their fees very clearly when the transfer details are given. With HSBC, the user has to tick a ‘Fees Paid By’ box, and within that box, the only option give is ‘I want to pay the HSBC UK fees’.
What these fees actually ARE, was not stated during the process. However, once the payment was made, a document detailing the transfer became available within the HSBC website, and it stated that there were no fees for this transfer.
How easy was it?
Wise was extremely quick and simple for the entire process, from account setup to setting up the transfer, to transferring in the funds.
HSBC on the other hand was rather more complicated. Not only were the forms harder to navigate, our test process was slowed down by an odd issue;
Once we had made the transfer within HSBC’s internet banking, we went back to the main accounts page. We could not see the transfer that we had just made within the account detail. Upon checking back a few hours later, it was still not there, leading us to wonder if we had made a mistake with the transfer process and it had not been done.
On the morning of the next working day, we checked again, and could finally see the transfer within the internet banking. This lack of transparency over the activities made on the account was quite concerning, and definitely affected our view of the ease of the process!
The transfer via Wise was incredibly easy. But was it too easy? When doing the transfer via HSBC, there are constant messages throughout the process highlighting the risks of transferring money to other accounts, and that checks should be made before doing any transfers to external accounts.
With Wise however, there were few, if any warnings such as this. Of course we are not comparing like with like. The HSBC product we were using was a full banking product, whereas we were only using the currency exchange functionality of Wise, so far less risk.
However, as much as it is great to use simple user interfaces to quickly and easily do things online, in this time, where fraud is rampant online, could there be a benefit to having a more complex system, which slows things down a little, and allows the users to stop and think?
This head to head test actually surprised us. We were not expecting the differences between the 2 providers to be as quite frankly enormous as they turned out to be.
Wise provided the far simpler user experience and much quicker transfer. Most importantly, they allowed us to pay far less in fees, and therefore get more funds once we had transferred our money.
Of course Wise are very focused on currency transfer, whilst HSBC are an enormous bank, with many different products that they offer, so one would expect the Wise service to be superior.
However, this test has highlighted exactly why currency transfer specialists such as Wise, OFX, XE, TorFX and many others exist; because the traditional banks are simply not offering a good enough product.