Netherlands

Expats in the Netherlands Complain About Intermediary Bank Fees – How to Avoid Them?

Expat life in the Netherlands gets even better as avoiding intermediary bank transfer fees gets easier than ever!

According to a recent study, it was estimated that there are anywhere between 39,00 and 75,000 expats currently living in the Netherlands drawn from all over the world. It is very easy to see just why the Netherlands is such a popular destination for expats and migrants; the nation offers a high standard of living in terms of both work opportunities and public services, and the compact country boasts a very tolerant and diverse cultural landscape.

Famed for its pretty canals, cycle culture and thriving cafe scene, there isn’t really too much to complain about life in the Netherlands except perhaps for the winter weather. However, one niggle which expats’ have expressed serious dissatisfaction with is the high Dutch banking costs and especially the costs they experience when sending or receiving money internationally. With many expats in the Netherlands regularly sending home to their families, these costs can very quickly add up.

But what exactly are these costs and why are they so high?

Currency Exchange Rates

Firstly, it is important to understand that an international money transfer is always subject to variances in currency exchange rates. Somewhat frustratingly, banks will more often than not choose to use the exchange rate which benefits them rather than the one which favours either the sender, or the recipient. Additionally, the rate they apply may not correlate with what Google or the XE currency broker suggests the rate should be meaning that the recipient may not end up getting as much as the sender was intending – these differences commonly range from a few cents to tens of euros.

That said, as the Euro is amongst the world strongest currencies, expats sending back to Morocco (for example) may not feel the impact of this as acutely as if the transfer was going the other way. On the other hand, somebody wanting to transfer money to the Netherlands from Morocco, would certainly feel the impact of this.

However, the next problem is a much bigger one for expats in the Netherlands.

Intermediary Banking Fees

Another reason for the high costs, (and one which is all too often under-examined) is that banks generally charge a fee for handling international payments and transfers.

In many cases, both the sender’s bank and the recipient’s bank will both levy a fee which can either be a fixed amount, or a percentage of the amount transferred. Now, most customers can wrap their heads around a sender bank charging a fee but why recipient banks feel entitled to charge intermediary fees for receiving funds is anybody’s guess and the practice has attracted some criticism.

Furthermore, in instances where the senders and recipients banks do not have a direct relationship, they will use 3rd party, intermediary banks to get the monies from A to B. In some cases international money transfers can even go through as many as 5 different global banks before reaching the end recipient. Not only does this slow down the transfer (it can take up to 5 days!) but each intermediary bank will usually levy its own fee.

It is very hard to provide any kind of specific data based examples here as each transaction is unique. However, one of the Netherlands most popular banks for expats, ING, charges a flat fee of €6 euro for handling international payments. Therefore in a scenario where the monies had to pass through 5 different banks and each bank was charging €6, this would mean transfer fees totaling €30. That’s a lot of money to pay in banking fees, especially if you were only sending €100 to begin with. Indeed, horror stories abound on Dutch ex-pat forums about users being stung as much as €130 for making international transfers. Ouch.

It is worth noting that international money transfers within the Euro-zone (SEPA) are generally a lot cheaper than “Worldwide” non-Euro zone transactions.  This is because there is no exchange rate to contend with and also because Euro-zone banks almost all have direct relationships. Therefore if you are sending money from the Netherlands to Germany, you may not have too much to worry about. Everybody else though, should read on.

How to Avoid Bank Transfer Fees

The reality is that sending money across borders costs money. However, there are ways in which expats can minimise these costs. One of these is to cut the intermediary banking costs down as much as possible. The best way of avoiding intermediary bank transfer fees is quite simply to cut banks out of the picture altogether.

Specialised international money transfer services dedicate themselves to moving money around the world as fast and as cheaply as possible. They achieve this by bypassing the SWIFT international payment network and instead, use their own local presence in each country to quickly debit the sender’s local account, and then credit the recipient’s local account.

In effect, the money transfer provider is not “transfering the money” in the conventional sense at all, but is kind of, taking with the left hand and then giving with the right. Of course, the international transfer service provider will charge a fee for this but they are considerably a lot cheaper than the banks and sometimes the fees are even only a matter of cents.

Anecdotally, many expats in the Netherlands have also commented that they find the exchange rates more favourable than the ones the banks apply, making it something of a win/win.

Regulatory Concerns

In case anybody has any concerns about sending money outside of the banking system, just remember that money transfer specialists are licenced and governed by local financial authority regulators so are as trustworthy as banks with the money they handle. This means that if anything goes wrong, they can be held fully accountable.

If you are sending money overseas and want to cut costs, then ditch the banks and seek out an international money transfer provider.

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