Singapore customers paying $2b in hidden forex fees yearly: TransferWise study

Individual consumers pay on average 15 times what companies pay in foreign exchange fees per dollar remitted, a study found.
Individual consumers pay on average 15 times what companies pay in foreign exchange fees per dollar remitted, a study found.PHOTO: ST FILE

SINGAPORE - Singapore customers are paying $2 billion in hidden exchange rate mark-ups, or 71 per cent of the $2.8 billion in foreign exchange (FX) fees levied annually, a new study commissioned by TransferWise has found.

The study also found that individual consumers pay on average 15 times what companies pay in FX fees per dollar remitted, TransferWise said. This is despite individuals making up only 5 per cent or $46 billion of total volume of money flow. Companies, meanwhile, make up around $880 billion or 95 per cent of estimated total FX volume.

In terms of estimated total FX fees on how much is paid to send money to and from Singapore, the study found that companies pay $1.6 billion or 56.8 per cent in fees, while individuals spend about $1.2 billion, or 43.2 per cent in fees.

By conversion type, individuals spend the most in remittances to Singapore, paying an estimated 6.68 per cent in fees out of the volume of money sent. Remittance from Singapore saw individuals pay an estimated 5.65 per cent in FX fees, while consumers spending abroad paid around 1.51 per cent in FX fees.

In contrast, companies paid about 0.16 per cent in fees out of the volume of money sent for trade in goods and services, and around 2.11 per cent fees for investment earnings abroad that were moved back to Singapore.

The study was completed in November 2018 and did not estimate fees for trading activity by FX dealers. Data was drawn from data sets or studies by Statistics Singapore, World Bank, Organisation for Economic Cooperation and Development, United Nations, International Monetary Fund, commercial banks in Singapore, Refinitiv (formerly Thomson Reuters), KPMG, academic studies and surveys commissioned by TransferWise.