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By Patrick Graham
LONDON, Dec 18 (Reuters) - U.S., Canadian and Australianbanks cut the cost of international money transfers in Decemberbefore the traditional boom in migrant workers sending cash homefor the holiday season, a regular index of market costs showedon Friday.
The International Money Transfer Index (IMTI) run by moneytransfer comparison and intelligence firm FXCompared showed forthe first time that U.S. banks were cheaper than Britishcounterparts, owing to a steady easing in costs in recentmonths.
Foreign currency transfers has long been an easy cash-cowfor banks, with major global lenders charging up to 8 or 9percent of the value of smaller-scale transactions to send moneyabroad and exchange it into the appropriate local currency.
A raft of small web-based providers, like Transferwise,World First or Azimo, have begun to eat into that business buthave struggled to gain ground in a U.S. market where capital andregulatory barriers to entry are high.
FXCompared Managing Director Daniel Webber said that itappeared to be banks competing with each other that had driventhe cost in the U.S. market down, citing falls in costs at majorlenders including Wells Fargo, Bank of America and JP Morgan Chase.
"On average all the biggest U.S. banks have become cheaperin recent months, while some of the smaller banks have moveddownward with their pricing quite aggressively," he said.
"In a sector still dominated by banks and Western Union, theU.S. banks have become much more competitive than their UKcounterparts over the past year."
A breakdown of the numbers showed Australian banks remain byfar the most expensive, charging 7 percent to transfer theequivalent of 1,000 British pounds, down from 7.2 percent amonth earlier.
In the United States, those costs are 5.6 percent on averagecompared with 6.0 percent a month earlier and the average of 6.1percent charged by UK banks.
The non-bank online providers in all three jurisdictions aremuch cheaper in comparison, charging between 1.6 and 1.8 percentof the value of the transaction, the study again showed.
The index measures the cost - including fees and the spreadto the central market rate at which banks trade currencies witheach other - for a range of transaction values and currencies.Those are gathered from dozens of Canadian, U.S., Australian andUK banks and brokers.
For full details of the study, see: https://www.fxcompared.com/intelligence/international-money-transfer-index-imti
(Editing by Mark Heinrich)
