Being somewhat of an international girl, I find myself having to transfer money between my US and NZ bank accounts on a somewhat regular basis. Also being that I’m usually pretty broke, I’ve prided myself on being able to find the best deal on forex for small amounts. But after a few changes over the past few months to the services I’ve known and loved, all the savings I’ve ever discovered have been eroded and I’m now pretty convinced the banks are definitely out to screw us all. As if anyone needed more convincing.
CurrencyFair.com is my forex trading service of choice. It’s a peer-to-peer money exchange service with no minimum transfer amount. Essentially they’re a marketplace that allows users who need to buy and sell currency to do that at better-than-banks’ rates. Their standard fee is $4 per transaction. FOUR DOLLARS. My US bank also charges me $12 to receive, but I was still paying less than $20 per transaction – regardless of amount.
I’ve used CurrencyFair safely dozens of times now and never had a problem. But that changed when the New Zealand banks decided to freeze them out. In October 2012 I received this email from CurrencyFair:
We regret to announce that unfortunately we can no longer accept deposits to, or make transfers from, our account at Bank of New Zealand. This is due to a new policy at Bank of New Zealand around accepting business from money remittance providers in general, and is not specific to CurrencyFair.
In January, I asked for an update and got this email in response from Sean at CurrencyFair:
I can only apologise as we have not yet reached a solution for this as yet. Our initial attempts with both ANZ and ASB have been unsuccessful. I am now trying to work with KiwiBank.
This is becoming a problem for many money remitters though. Here in Australia it is much the same as in NZ (they are mostly aussie owned anyway) and HSBC closed all their accounts globally for money remitters at the end of last year.
Basically it is throwing the baby out with the bath water. They want nothing to do with small money remitters (back alley type set ups) who may pose a higher risk but have just put everyone in the same bucket and cut them off under the guise of compliance and money laundering issues.
As of today, that situation hasn’t changed and – according to the CurrencyFair team, talks at ASB, ANZ and others have all fallen through. The workaround is to send my money to CurrencyFair’s NZD account in Australia, for which I would be charged $28 flat rate by my bank, plus approximately NZ$25 fee by the intermediary bank simply for passing it along.
And I’d like to mention that CurrencyFair requires you provide verification of your identity when signing up for an account, and it requires that both the sending and recieiving bank accounts are yours. This is the same as required by Custom House (owned by Western Union), which is another remittance service I’ve used in the past. So CurrencyFair is compliant with anti-money-laundering regulations, and there should be no issues with them having a presence in New Zealand. But because some money remittance agencies are dodgy, all us legit peeps are getting screwed.
I have found four options – ANZ, currencyfair.com, customhouse.com, paypal - for sending money internationally, and now none of them can be done cheaply. The fees range from around NZ$35 in total (Custom House) to NZ$86 (Paypal) and the exchange rates are at worst 0.785 (Paypal) to the best .8118 (currencyfair). The current interbank rate is .81070 according to Oanda.com. You can see my breakdown of the four options in this Google doc I have shared.
Even though CurrencyFair has the second highest associated fees (around NZ$55 + US$12), the exchange rate is so good that – for the amount I want to send – it’s still actually a better deal than through ANZ, and comparable to Western Union.
The problem is that when so much can be done electronically these days, and when my own experience shows I have been able to set up the transaction to occur for around US$4 in the past – it’s absurd that the banks charge so much for this service. Charge the high volume traders, not regular every day people. It’s a racket, plain and simple.
I’d like to see the New Zealand banks made to answer for why they’re shutting out a valuable service like CurrencyFair.com. The service isn’t illegal, so what’s the problem?