For many expatriates around the world, remittance is often confusing and riddled with hidden fees. Revolut, the UK's most valuable fintech, wants to make remittance as transparent as possible. Here's how it's doing it
According to the World Bank, the global average cost of a remittance is a painfully high 6.5%. That's more than double the 3% target identified as a Sustainable Development Goal by the United Nations, who believes this goal can be achieved by eliminating hidden remittance fees.
Many of us may claim we understand how exchange rates work, but often, it is because we think the difference in fees and rates between providers is so negligible, we can "afford" it.
Can we though?
Assuming you are planning to send $1,865 (approximately £1,000) to the UK. At 6.5%, the fee you incur is $121. If you're sending that sum every month, the fees you end up paying every year will add up to a hefty $1,452! Let's not even talk about foreign exchange margins or the fee your bank could charge you just for accepting an international transfer, or whatever fee the financial institution you're using might impose.
How can we save more in fees so that we can send more money home to our loved ones?
1. A fee structure that's easy to understand
Financial super app Revolut recently revised its remittance fee structure to make it easy for their over 15 million customers worldwide to understand what it costs to send money internationally.
The fee is 0.3% (the decimal point is correct) of the exchanged amount in the base currency (which in our case is SGD), pegged to a minimum of $0.30 and $9.
So, if you're looking to send $1,865 to the UK, the fee you'll pay is $5.60.
2. Different subscription plans for different needs
It costs nothing to set up a Standard account with Revolut. Customers may even request for a debit card free of charge. With the Standard plan, you can exchange and send up to $5,000 a month before a fair usage fee of 0.5% applies.
Premium customers have up to $15,000 before incurring the fair usage fee.
Metal customers get unlimited FX and number of transfers every month.
The subscription fees for Premium and Metal plans are $9.90 and $19.90 respectively.
3. Get a transparent review of your transaction on the app
Before you hit confirm on a transaction, the Revolut app will show you details like the amount your recipient will get, the exchange rate you got, the amount in SGD exchanged, the fees charged, the total amount you'll pay, and the estimated time it'll take your money to reach your recipient.
If you like what you see, you may then proceed with the transaction.
4. A note on markups
Exchanging currencies during the Foreign Exchange Market Hours will not be charged a fee. The exceptions being TBH and UAH, which will incur a 1% fee.
In short, if you are a Standard customer sending money during Market Hours, and you're well within your monthly limit, the only fee you need to consider is the 0.3% fee.
One last thing before we go:
If your recipient is a Revolut customer, transferring money from one Revolut app to another is completely free and the money arrives almost instantly.
