Five unexpected insights
1. An estimated $2.59 billion is spent on fees consumers may not know about
When sending an international money transfer a “transfer fee” is listed and so is the consumer exchange rate. However, many senders assume that the given exchange rate is the same as the market rate (what you see when you Google a currency pair). As a result, they only examine the transfer fee when shopping for rates not realizing the consumer exchange rate must also be compared.
- From generating quotes of the consumer exchange rate and comparing them with the real-time market exchange rate, we found the average exchange rate difference (the unknown fee) to be 1.84%. This was based on online non-bank money transfers from the US. If banks and cash transfers were included, the percentage would be higher.
$141 billion is estimated to have been sent from the US in 2016 remittances based on analyzing data from the World Bank
- 1.84% of the $141 billion results in finder.com’s estimated $2.59 billion spent in unknown fees. These fees could explain the findings from our original survey, which said 80% of those sending money transfers from the US felt ripped off.
- From the award finalists, TransferWise and Circle were the only providers that gave exchange rates that reflected the market rate
A User tester experience
sends money transfers regularly — a few transfers per month. He typically uses Western Union and gives Xoom a shot for our testing. When anonymous44 is prompted to evaluate the exchange rates, he hesitates before deciding he could Google the going rate for “USD to GBP” to assess. This frequent sender of money transfers is surprised to learn that he gets 2 pence less per U.S. dollar in his exchange rate resulting in a 2.5% difference. Upon this realization, he demonstrates his distaste and shock by muttering three time, “I don’t like that at all,” before moving on to the next question.
Mexico’s hidden fees estimated to have surged in March 2017
- Remittances to Mexico are growing despite immigration slowing. In March 2017, the remittance tally hit $2.52 billion compared to $2.28 billion in 2016
- Transfers sent to Mexico make up 40% of all remittances sent from the US
- Transfer fees are slightly less with the average hidden fee clocking in at 1.82%
- With March 2017 remittances hitting $2.52 billion and our average hidden fee of 1.82%, finder.com estimates $45.86 million were spent in fees people did not know about
2. Online country and territory coverage still has a long ways to go
Because all our transactions happen on our website, we were interested in transfers that could be sent entirely digitally — meaning no cash. Finding out how many countries and territories were available for this preference was not always straight forward. We tested each site for this preference in the count.
- Western Union can send cash to all 196 countries in the world, but are only available online in 59.
- Digital native, Paypal, was only available in 38 countries and territories
- SmallWorld had the most expansive coverage with 83 countries and territories, but that’s less than half of the world’s countries and territories
- TransferWise and WorldRemit came in second with 74 countries and territories
- 62% of providers offered cash pickup in addition to online transfers
This observation raises questions as to how important is cash — especially to recipients?
3. No such thing as a “sanctuary provider”
Trump signed an executive order to punish sanctuary cities, and the actual implementation is still up for debate. A term commonly discussed by the alt-right suddenly became part of the American vocabulary as a city that limits its cooperation with federal government agencies when it comes to immigrant deportation. While testing money transfer sites, the official documents and identification required varied dramatically. We wondered whether there were providers who were more lenient when it came to verifying legal status. The results showed that less ID verification in the signup stage caused security problems later in the transfer process.
- 4 of the 13 finalists did not require inputting a social security number or uploading additional documents, but 3 out of 4 of them resulted in live transfer failures or complications with those providers due to unknown security reasons.
- Pangea was the only provider that made successful transfers (when following regulations) without SSN or uploaded documents. However, when site testing Pangea with false bank accounts and sending from Pangea’s unlicensed states, inputs and transfers were promptly rejected suggesting accounts are highly monitored for non-compliant activity.
- When transfers failed due to unknown security reasons, representatives only consolation was to direct customers to physical locations (if available) because the liability is on the customer in cash transfers.
- Five providers that could have been finalists were eliminated because they required additional documents to be emailed to a corresponding representative
4. Money transfer industry performs best in user experience despite being a banking product
The high UX scores is a departure from most banking sectors, but this is because we only focused on Money Transfer Operators (MTOs) who are not big banks. They specialize in one area in banking likely leading to a better user experience both because of this area of focus and the need to optimize for the user is required to meet margins.
|Best User Experience
||Sharemoney, Xoom, Pangea, Western Union
||WorldRemit, Xoom, Small World, Western Union, Sharemoney, Pangea
|Best Transfer Rates
||PayPal, Xoom, World First, Western Union,
Small World, TransferWise
5. UX dark patterns could explain why 80% of money transfer senders feel ripped off
As seen in the table above, the industry scored highest on average in user experience, but also lowest in trust. This finding in combination with the first (hidden fees users don’t know about) could explain why our preliminary survey revealed 80% of Americans feel ripped off by their money transfer provider. From our user testing, we asked participants to rate credibility based upon appearances. See the discrepancy when the average of that metric is compared with the average Most Trustworthy score — demonstrating the gap between the perception and reality. This mismanagement in expectations could be the recipe for feeling ripped off.
Furthermore, we also asked our participants to rate if the information was easy to understand on a website. When comparing that average rating with the average Most Trustworthy score, the difference was even greater.