And as we know, using banks for international transfers is not the smartest approach.
That's why I recommend two key solutions:
Receive payments in the currency they were sent in, before converting to GBP efficiently. To do this, use a multi-currency account.
Ensure the sender (whether that's you, another person, or a business) uses a smart currency solution rather than a standard bank-to-bank payment. To do this, make sure a specialist money transfer company is used to send funds.
The cost of receiving foreign currency straight to your GBP bank account
When foreign currency is send to a regular UK bank account, it first needs to be converted to sterling.
With a typical bank-to-bank international transfer, this can happen in two main ways:
Send-side conversion
The sender instructs their bank to convert USD to GBP, then send GBP to the UK. This conversion is made using the 'outgoing' FX markup of the sender's bank.
Receive-side conversion
The sender instructs their bank to send USD to your GBP account. The USD is converted to GBP by your bank in the UK, using their 'incoming' FX markup.
The markups applied for outgoing and incoming transfers can differ substantially.
This means it can be tough to know whether it's best for the sender to convert on their side, or just send and let the recipient bank handle it.
To give you an idea, on the cheaper side you have Nationwide, which charges a very reasonable 0.5% on incoming currency transfers.
At the other end of the spectrum, Co-operative Bank charge 4% on both sending & receiving currency. That's a huge chunk of your cash they're siphoning off.
Having discussed this with a number of UK banks, it's clear the answer is no.
As there is only a single currency conversion taking place for a given transfer, only one marked-up rate can be applied.
So you won't get hit by a 4% Chase sending fee and a 4% Co-op receiving fee. That would be a bit crazy.
Instead, it totally depeneds where the currency conversion happens.
So if you really want to use a bank, be sure to check how the origin bank's outgoing markup compares to the receiving bank's incoming markup. You can then decide whether the sender should send in your currency, or theirs.
Sound confusing? That's because it is, and it's even more tricky to get clarity on the exact rates that will be used by the banks.
Let's look in detail at what UK banks are charging for incoming foreign currency conversion.
As a reminder, these markups are only applied if the sender hasn't already converted the funds to your currency.
Bank | Currency markup on incoming transfers |
|---|---|
Halifax | 3.55% |
Lloyds Bank | From 1.5% (Over £250k) To 3.55% (Under £10k) |
Barclays | 2.75% for Personal and Premier customers 2% for Business customers Percentages decrease further for receiving over £25k |
Nationwide | 0.50% |
Co-operative Bank | 4% |
TSB | 3.2% to 3.65% depending on country/currency |
So if you're a Nationwide customer and are receiving an international payment, you should definitely tell the sender to send in their currency and let Nationwide handle the conversion. That's a solid rate for a bank!
However, in most cases, whichever bank does the conversion, it'll be more expensive than it could be.
In many cases, transaction fees of £5-10 are charged for international bank transfers.
I haven't touched on these fees much on this page.
These tend to become quite insignificant for large payments, but if you're making smaller, regular currency transfers, it's worth keeping an eye on.
Of course, this is mostly a bank problem. Switch to a specialist money transfer company and your fees should come down substantially.
Solution 1: Receive to a multi-currency account
As we've learned, receiving international transfers can be costly due to the currency exchange that takes place.
It makes sense then, that if you receive funds without converting them straight away, that you'll eliminate that fee.
This is the appeal of a multi-currency account.
You could get paid €10,000 into a Wise multi-currency account, for example, and you can hold those funds.
It's then up to you whether you continue to hold the euro, or convert to pound sterling. If you do decide to convert, the fee will be much lower than if you receive the money straight to your GBP bank account.
Solution 2: Make sure the sender sends smartly
If for any reason you can't, or would rather not, receive to a multi-currency account, then it's all about the sender.
It is possible for you to receive a euro transfer to a UK bank account without large losses. The sender will need to ensure they don't send using a direct bank-to-bank transfer; instead, they need to choose a money transfer company with low fees and competitive rates.
The issue with this method, is you're subject to the sender's decisions. This is fine if you're sending the money to yourself, or if you have a good relationship with the sender.
However, if the sender can't be flexible, or is in a rush to pay, they might end up using a method that will result in substantially fewer pounds reaching your account.
I suggest you send my list of money transfer specialists to the payer, with plenty of time to spare. Hopefully they can then make an efficient transfer that you will benefit from.
