Buying a product from France - most cost effective route?

[callahan]

Hi

I need to pay for a purchase from a French company and have been invoiced in Euros.

I know it's a very simple question, but at around £2.5k the fees could make a significant difference to me, so I'm hoping to keep it as affordable as possible.

I have a Halifax Clarity card but need to pay by bank transfer of some sort unfortunately.

Is a simple transfer from Natwest or First Direct just as good as anything else?

Thanks for any assistance for this financial dunce.

[andy43]

Transferwise is what I use - quick and cheap.

[Evoluzione]

Ask your bank not us. Bank transfer fees are fixed, they aren't a percentage so it may only be a tenner or something.

[rdjohn]

Do you know what your credit card exchange rate is?

Ours is less than 0.5%, so about an extra £10, on your sum, but it’s a simple and convenient way to make purchases.

[egomeister]

andy43 said:

Transferwise is what I use - quick and cheap.

This. Can't fault them at all and way cheaper than using the bank.

[DonkeyApple]

Evoluzione said:

Ask your bank not us. Bank transfer fees are fixed, they aren't a percentage so it may only be a tenner or something.

Yup but it’s then routed via a separate legal entity who levy a spread. This allows the retail regulated arm to comply with a fixed fee while still carrying on as before.

Transferwise is the least bent physical fx product at present.

What a lot of people don’t appreciate and what the industry makes it’s money on is that physical fx is to all intents and purposes unregulated and with no central exchange. It’s one of the last old school bits of bandit country.

[i4got]

Another vote for transferwise. Used it quite a lot for bank transfers and never had any problems.

[DonkeyApple]

anonymous said:

[redacted]

Yup. All you can ever do to really know what true fees you are paying is to note down the OTC bid and offer on the currency pair at the same point of transaction. All the marketing terms such as ‘spot’, ‘intra bank’ are meaningless because there is no central exchange and the bank knows which way you are dealing. Few even bother hiding the latter by offering a two way price (a little thing that serves to highlight the very different regulatory environment).

Only a reputable (in their industry environment) OTC retail broker will be showing a fair mid price because if they don’t we arb against them and take money off their own book so their days of skewing prices ended when they released APIs to us and now the only time they deviate away is when there is a hedging requirement to do so.

So refreshing and taking a snapshot of something like this: https://www.ig.com/uk/forex/markets-forex/eur-gbp will give you a genuinely fair spot rate 99.9% of the time with which to compare against the level executed at by a physical broker. You don’t really want to be seeing a spread that is more than 25 pips either side of that mid.

The last time I checked Transferwise for someone they were quoting less than 1 pip away which given the fluidity of pricing and that you derive your own price via amalgamating the quotes of multiple liquidity providers was about as good as it could possibly get and they were then levying a £14 fee on top which struck me as cheap and fair.

I’ve seen other services quote a market spot rate over 100-200 pips in their favour as they know in advance which way the client is dealing as the platform is designed to reveal this crucial information and gouge the clients eyes out on the trick. Most still run the wheeze off saying they just charge a fixed fee but then pass the order via a controlled separate entity who synthesise a market spot that can be many hundreds out and equate to hidden comm charges into the hundreds and thousands.

The industry still relies on most punters only ever crossing currencies at the airport or post office so thinking of the three big figures are all the same it’s a good deal when it’s the 4th and 5th figure that tell you.

[callahan]

andy43 said:

Transferwise is what I use - quick and cheap.

Thanks all, I'll take a look at Transferwise.

[rdjohn]

callahan said:

Thanks all, I'll take a look at Transferwise.

Their transfer fee is €20 for €2500 with Transferwise, so not sure they are better for a relatively small sum.

I feel sure you credit card is probably better, you just need to check T&Cs and do the math, plus you have comeback if the goods are defective.

[egomeister]

rdjohn said:

callahan said:

Thanks all, I'll take a look at Transferwise.

Their transfer fee is €20 for €2500 with Transferwise, so not sure they are better for a relatively small sum.

I feel sure you credit card is probably better, you just need to check T&Cs and do the math, plus you have comeback if the goods are defective.

I'm seeing it at just over 8 Euros on Transferwise?

In the OP he said he can't use the credit card as he needs to make a bank transfer anyway. One thing to watch out for on cards is that while there may be no fees, you are relying on the card rate for the conversion whereas Transferwise are pretty much bang on mid market.

[DonkeyApple]

That’s spot on for both.

€20 for a small trade would seem excessive and mean that using someone who hides a far comm in a manipulated spot could actually be cheaper.

But at €8 and if the spot is confirmed as being unmanipulated then I’m not sure there is any point in spending precious time looking to better it.

The key with physical fx is to understand how the market works so you can begin to understand which firms are using which scams to charge hidden commissions.

So far with Transferwise I’ve never been able to work out what their scam is which would make them pretty much a unicorn. They’ll be selling the flow for a few $ per $million which is fine and they are charging a fixed separate comm to the client which is fine but there doesn’t appear to be any monkeying about using smoke and mirrors to dupe the customer which is really odd. I keep coming back to them when I see these threads as I’m convinced that I must have missed something as their behaviour is unheard of.

[egomeister]

DonkeyApple said:

So far with Transferwise I’ve never been able to work out what their scam is which would make them pretty much a unicorn. They’ll be selling the flow for a few $ per $million which is fine and they are charging a fixed separate comm to the client which is fine but there doesn’t appear to be any monkeying about using smoke and mirrors to dupe the customer which is really odd. I keep coming back to them when I see these threads as I’m convinced that I must have missed something as their behaviour is unheard of.

They "story" was of two Estonian friends who worked/had worked in London realised at one point that they both needed to move money in opposite directions so instead of paying the fees they agreed to transfer the money to each other locally from their accounts. I can see how an internal netting off of transactions might have been the genesis of the company and how you might be able to do it with highly liquid pairs, but since they now deal with a huge range of currencies I'm not sure how that would work and my knowledge of the financial plumbing is way to limited to even guess.

[callahan]

The amount was just under 2500 euros so the fee was only 8.99 which I think has saved quite a bit over just using my bank.

As mentioned above, they asked for bank transfer rather than credit card, or there would have been an additional charge on top.

The process was nice and easy, I would recommend it.

[DonkeyApple]

egomeister said:

They "story" was of two Estonian friends who worked/had worked in London realised at one point that they both needed to move money in opposite directions so instead of paying the fees they agreed to transfer the money to each other locally from their accounts. I can see how an internal netting off of transactions might have been the genesis of the company and how you might be able to do it with highly liquid pairs, but since they now deal with a huge range of currencies I'm not sure how that would work and my knowledge of the financial plumbing is way to limited to even guess.

I imagine that they sell the unmatched flow to a prime broker now they have enough. It’s probably cheaper an easier than trying to match flow within the book at specific point in time.

It’s quite interesting that it’s taken an army of E.U. labourers and service sector workers to make the industry change in the UK. I guess that those people know and understand the price of money innately whereas historically most Britons only experience of the price of money had for years been at the airport or post office etc.

[egomeister]

DonkeyApple said:

I imagine that they sell the unmatched flow to a prime broker now they have enough. It’s probably cheaper an easier than trying to match flow within the book at specific point in time.

It’s quite interesting that it’s taken an army of E.U. labourers and service sector workers to make the industry change in the UK. I guess that those people know and understand the price of money innately whereas historically most Britons only experience of the price of money had for years been at the airport or post office etc.

Yeah, quite possibly. From a quick play on the site it's clear that they charge higher fees on the less popular currency pairs. Botswanan thingymajigs were about 4x rge fee of Euros and seemed to be slightly off from mid price on the rate but still clearly a very competitive transaction.

It's great how much the market has moved on in the last few years since I first started doing some work abroad. When I began the options were terrible - I don't think Santander would even offer me a Euro business account.

I think Transferwise have played a large part in shaking things up somewhat - the multicurrency card/account they do is fantastic. I'd actually thought of the concept due to the frustration how difficult such things were to do the banks - why is it so difficult to have one product that allows you to hold different currency balances and route transactions to the most appropriate? Fineco (Unicredit related co) actually do this as a true banking product now I think, and also allow you to tie in trading/investments to the same account which seems quite neat although I've not tried it yet.

It's amazing there aren't more customer centered options out there like this.