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Last updated: 11th December, 2020

Understanding the total cost of your international transfer

The total cost of making an international money transfer can be confusing – with a number of different factors complicating matters. Adding to the confusion is that there’s no universal approach across providers to determine the total cost; they each use different ways of calculating their exchange rate, and often add their own fees. So how does it all work and what does good value really look like?

The ways in which you get charged

Companies that help you make international transfers – such as banks, brokers, or international money transfer apps – can provide the service and make money by charging a fee for their time and service. This fee can either be a fixed amount, or as a percentage of the total being sent, and is usually communicated clearly during your international transfer.

However, some companies don’t always make all associated costs clear up front – sometimes adjusting the exchange rate offered to customers in order to make a profit. These charges hidden in the exchange rate are normally not clearly communicated to customers.

Understanding the total cost of your international money transfer by understanding how your provider calculates charges –whether it’s a fee, inflated exchange rate, or both – is key to understanding whether you are getting the best value. Below, we break down what makes up the total cost of your transfer, so you can understand and assess the best options for you and your money.

The exchange rate

The exchange rate has a big impact on your money transfer. The real-time, mid-market exchange rate is the rate you see when using public sources such as Google, Bloomberg and Reuters to search for an exchange rate between two currencies. It is based on the mid-market rate, which is the middle point between the ‘buy’ and the ‘sell’ price of two currencies. However, not all providers apply the real-time mid-market exchange rate. Some add their own mark-up on foreign exchange – charging you a premium to buy it from them. To know if a provider is offering you fair rates, compare their rates with the real-time mid-market rates offered in public sources mentioned above. You can also check the mid-market rates offered on PagoFX.

For example, if the mid-market rate at the time of your Euros (EUR) to British Pounds (GBP) transfer was 1.1450 (I.e. £1 GBP = €1.1450 EUR), a money transfer provider or a bank adding a 3% charge on top would likely offer a customer a worse rate of 1.1107. While this doesn’t seem like a huge difference, on a £10,000 transfer you would lose around €344 on the transfer versus using the mid-market exchange rate.

Checking the real-time, mid-market exchange rate online and looking for providers and services which offer the real-time, mid-market exchange rate means you can be confident you are getting a fair and transparent rate at the time of your international money transfer.


Transaction fees are typically charged either as a percent of the total amount you are sending or as a flat-rate fee regardless of the amount. Fees can vary based on many different factors such as what currency you are sending and how much, how quickly it needs to get there, and how you are sending it – for example, to a bank account, to a mobile phone, or for cash pick up.

So, if a provider charges 0.7% on a transfer from EUR to GBP, your fee for sending EUR10,000 would be EUR70.

When looking at the total cost for your transfer, make sure you are clear on how much all the fees are and look for providers who make sure these are transparently communicated up front – hidden fees or those tacked on at the last minute or at the last step of your money transfer can impact the cost of your transfer and crucially what your recipient will receive.

Commission and inflated rates

Exchange rate commission is a term used for the cost of a transaction. As “commission” is used in different contexts, the important point to note is it will usually only consist of the components above – either in fees or an inflation on the real-time mid-market exchange rate, or both. It’s important to be sure you know if you are being charged a fee or if any commission is being paid, and how transparent this is in the total costs offered for your transfer.

Calculating total cost

So, it is clear that understanding the total cost for your transfer means taking both the exchange rate and fees into account before deciding on a provider. Being aware of this, you should look into exactly what you are sending and how much your recipient will get, so you can be confident that you’re getting the true picture of the total cost.

As an example, let’s consider EUR 1,000 being transferred into GBP, and the real-time mid-market exchange rate of £1 (GBP) to €1.11621 (EUR) – as of 13 November 2020.

● Option A) A provider offers no-fees, but adds 3% mark-up to the mid-market exchange rate

● Option B) A provider offers a flat fee of 0.7% but offers the mid-market exchange rate

● Option C) A provider offers a flat fee of 2.5% and adds a mark-up of 0.2% on to the mid-market exchange rate


PagoFX by Santander is an easy to use app which allows everyone to make low cost, secure international money transfers. PagoFX always offers the real-time, mid-market exchange rate, similar to those found in public sources such as Google, Bloomberg, Reuters, among others, so you know you are getting a cost-effective rate with no hidden mark up and our standard low-cost transaction fee will always be clearly communicated up front – meaning you know the total cost of your transaction, and how much your recipient will get before you press send.

Plus, with our ongoing no-fee programme, you can enjoy the real time, mid-market rate and no fees on transactions for new users up to EUR1000 per user until 28 February 2021, to help you help your friends, family and communities abroad. Giving you the real-time, mid-market rate with no additional costs to you.

Download PagoFX from the App store or Google Play.

Disclaimer: This article is provided as general information purposes only, and is not intended to cover all aspects of the topic. We recommend that you take professional and specialised advice before taking, or refraining from, any action based on the content of this publication, as this article is not intended to constitute expert advice. We do not guarantee, explicitly or implicitly, that the content of this article is accurate, complete or up-to-date. The information in this article does not constitute legal, tax or other professional advice from PagoFX or its affiliates.