Consumer Duty: International payment pricing transparency

We share examples of good and poor practice in how firms communicate the cost of international payments.

1. Summary

We have seen differences in firms’ transparency on the cost of international money remittance and cross-border payments. We are sharing examples of good practices so firms can improve how they help consumers understand how much they will pay.

The Consumer Duty[1] (‘the Duty’) sets a new standard of protection for retail consumers across financial services. It came into effect from 31 July 2023 for new and existing products and services. It applies to firms providing products and services to retail customers, as set out in our Consumer Duty Final Non-Handbook Guidance for Firms (FG 22/5)[2].

2. Who this publication applies to

The examples of good and poor practice below will be relevant to firms authorised under the Financial Services and Markets Act 2000 (FSMA), the Payment Services Regulations 2017 (PSRs) and Electronic Money Regulations 2011 (EMRs), for payment services offered to retail customers when those services involve a currency conversion.

3. Requirements these examples refer to

Under the Duty, firms must communicate information to retail customers in a way which is clear, fair and not misleading, as set out in our Handbook (PRIN 2A.5.3R). The Duty also requires firms to act to deliver good outcomes by ensuring that their communications:

Meet the information needs of retail customers.
Are likely to be understood by retail customers.
Equip retail customers to make decisions that are effective, timely and properly informed.

4. What we looked at

We reviewed the websites of a sample of firms offering UK customers international money remittance and cross border payments. We assessed whether firms’ communications gave clear pricing information before a transfer was initiated. We also looked at how firms interacted with reference rates. A reference rate is a benchmark rate used by a firm to calculate its pricing.

We looked at whether firms provided the following information:

The amount to be remitted or transferred (in GBP).
The exchange rate that will be applied.
The amount a recipient receives (in local currency).
The markup above the reference rate.
Any variable fees.
Any fixed fees, per transaction.
The total remittance fees.

The examples below focus on communications to customers prior to them making international money remittance and cross-border payments. The examples do not cover other consumer-initiated payment services involving a currency conversion (like purchasing travel money cards or withdrawing funds from an ATM). The principles underlying them apply regardless of the method of communication, for example by telephone and in-person as well as through digital means.

5. What we found

While some firms were clearly displaying the amount recipients would receive based on the amount remitted, as well as detail of fees and charges, this was not universally the case. We found:

Transaction fees were not always clearly displayed.
Additional fees, such as those charged by intermediary banks, were often not displayed up front. An intermediary bank acts as a bridge between the sending and receiving bank.
It was not always clear fees could vary.
Relevant information for consumers was not always easy to find.

These issues make it challenging for consumers to compare prices and make informed decisions.

We have set out good and poor practice under the headings below.

Good practice

Clearly displaying all the following information to consumers before they commit to the transaction:

The amount being remitted or transferred, in GBP.
The exchange rate applied.
Where firms present a conversion rate inclusive of a markup, they clearly explain this to the customer.
Firms communicate markups above their reference rate as a cost to the consumer.
Variable fees*.
Fixed fees per transaction*.
Total remittance fees, in GBP.
Amount recipient receives, in local currency.

* Where applicable, intermediary and recipient bank fees are explained

Poor practice

Firms not providing clear and full costs prior to the consumer committing to the transaction.
Firms not clearly communicating their conversion rate contains a markup on top of the reference rate.
Unclear communication that the markup is a cost paid by the consumer and retained by the firm.
Highlighting the absence of a fixed fee as a ‘zero cost transaction’ despite charging a markup.
Firms not providing clear disclosure on the overall cost of the transaction, including any markups that may be applied to the exchange rate.
Firms not proactively informing consumers that intermediary or recipient bank fees may affect the final payment amount, leaving the consumer to discover this after the fees have been incurred.
Firms displaying good practice pricing information, but with some elements difficult to find. For example, requiring consumers to scroll to the bottom of the landing page or click elsewhere to find information about intermediary or recipient bank fees.

6. Examples of good and poor practice

Below, we set out examples of good and poor practice. In each scenario, a customer is entering the transaction with 100 GBP. The reference rate in every instance is 1 GBP to 1.30 USD.

Fixed fees

In these examples, the firm executes the transaction using a reference rate and charges a fixed fee.

Poor practice

You pay	£100.00
Firm exchange rate (1 GBP to 1.30 USD)	1.30
Fixed fee	£5.00
They receive	$123.50

The firm has not made it clear to the consumer how much is converted. This could result in confusion and consumers sending less money than intended.

Good practice

You convert	£100.00
Fixed fee	£5.00
You pay	£105.00
Exchange rate (1 GBP to 1.30 USD)	1.30
They receive	$130.00

The firm ensures the consumer is made aware of the fee structure. We saw examples where this was added to, or subtracted from, the amount the consumer inputs. We consider either can be good practice if the consumer clearly understands both the amount they pay, and the amount converted.

Good practice

You convert	£100.00
Fixed fee	£5.00
You pay	£95.00
Exchange rate (1 GBP to 1.30 USD)	1.30
They receive	$123.50

You pay	£100.00
Firm exchange rate (1 GBP to 1.30 USD)	1.30
Fixed fee	£5.00
They receive	$123.50

The firm has not made it clear to the consumer how much is converted. This could result in confusion and consumers sending less money than intended.

You convert	£100.00
Fixed fee	£5.00
You pay	£105.00
Exchange rate (1 GBP to 1.30 USD)	1.30
They receive	$130.00

You convert	£100.00
Fixed fee	£5.00
You pay	£95.00
Exchange rate (1 GBP to 1.30 USD)	1.30
They receive	$123.50

Variable fees

In these examples, the firms use a reference rate and a variable fee. Some firms use a reference rate as the conversion rate and charge a variable fee explicitly. Others use a ‘firm rate’ (a reference rate with a markup added).

Poor practice

You pay	£100.00
Firm exchange rate (1 GBP to 1.26 USD)	1.26
Fixed fee*	£0.00
They receive	$126.10
*There is no fee for this transaction

Where the consumer is not clearly informed that the firm’s exchange rate differs from the reference rate, it may lead to misunderstandings about the actual cost. Some firms emphasise the absence of a fixed fee which can create the misleading impression that no costs apply to the remittance.

Good practice

You pay	£100.00
Firm exchange rate* (1 GBP to 1.26 USD)	1.26
Fixed fee	£0.00
Total fees added	£3.00
They receive	$126.10
*Our exchange rate includes a 3% markup charge. For more information, please click here.

The consumer is clearly informed about the fee structure, ensuring transparency in pricing. Additionally, all fees are totalled to provide a clear and comprehensive view of the overall cost.

Firms may provide links to additional information to help improve transparency.

Good practice

You pay	£100.00
Variable fee	3%
Total fees	£3.00
You convert	£97.00
Exchange rate (1 GBP to 1.30 USD)	1.30
They receive	$126.10
*For more information, please click here.

The consumer is clearly informed about the fee structure, ensuring transparency in pricing. Additionally, all fees are totalled to provide a clear and comprehensive view of the overall cost.

Firms may provide links to additional information to help improve transparency.

You pay	£100.00
Firm exchange rate (1 GBP to 1.26 USD)	1.26
Fixed fee*	£0.00
They receive	$126.10
*There is no fee for this transaction

You pay	£100.00
Firm exchange rate* (1 GBP to 1.26 USD)	1.26
Fixed fee	£0.00
Total fees added	£3.00
They receive	$126.10
*Our exchange rate includes a 3% markup charge. For more information, please click here.

The consumer is clearly informed about the fee structure, ensuring transparency in pricing. Additionally, all fees are totalled to provide a clear and comprehensive view of the overall cost.

Firms may provide links to additional information to help improve transparency.

You pay	£100.00
Variable fee	3%
Total fees	£3.00
You convert	£97.00
Exchange rate (1 GBP to 1.30 USD)	1.30
They receive	$126.10
*For more information, please click here.

The consumer is clearly informed about the fee structure, ensuring transparency in pricing. Additionally, all fees are totalled to provide a clear and comprehensive view of the overall cost.

Firms may provide links to additional information to help improve transparency.

Third party fees

In this example intermediary bank and/or recipient bank fees may apply. This might reduce the recipient’s amount below $130.00.

Poor practice

You convert	£100.00
Fixed fee	£5.00
You pay	£105.00
Exchange rate (1 GBP to 1.30 USD)	1.30
They receive	$130.00

The sender is not informed that intermediary bank fees may reduce the amount received by the recipient, which can lead to unexpected shortfalls.

Good practice

You convert	£100.00
Fixed fee*	£5.00
You pay	£105.00
Exchange rate (1 GBP to 1.30 USD)	1.30
They receive**	$130.00
This is our fee for this transaction. *The recipient will pay any fees charged by third parties, which will be deducted from this amount. For more information please click here.

The sender is clearly informed that intermediary / recipient bank fees or taxes may be deducted, helping ensure the consumer understands that the recipient might receive less than the original transfer amount. Some firms provide links to additional information which helps the consumer understand and estimate costs. Only include links to information where it is too complex to be shown on the transaction screen.

Some firms offer the consumer the option of an up-front fixed fee to cover intermediary banks costs. This ensures the recipient receives the intended amount.

Where the firm does not know (or is unable to estimate) the amount that the recipient will receive due to intermediary or recipient bank fees, it clearly explains to the customer any additional fees that may apply.

Good practice

You convert	£100.00
Fixed fee*	£5.00
Pay all fees?** ☑	£15.00
You pay	£120.00
Exchange rate (1 GBP to 1.30 USD)	1.30
They receive	$130.00
This is our fee for this transaction. *When you make an international payment, intermediary banks may deduct fees from the amount you send. Ticking 'pay all fees' allows you to pay a flat upfront fee which guarantees that the recipient receives the intended amount. For more information please click here.

The sender is clearly informed that intermediary / recipient bank fees or taxes may be deducted, helping ensure the consumer understands that the recipient might receive less than the original transfer amount. Some firms provide links to additional information which helps the consumer understand and estimate costs. This may be provided where it is too complex to be shown on the transaction screen.

Some firms offer the consumer the option of an up-front fixed fee to cover intermediary banks costs. This ensures the recipient receives the intended amount.

You convert	£100.00
Fixed fee	£5.00
You pay	£105.00
Exchange rate (1 GBP to 1.30 USD)	1.30
They receive	$130.00

The sender is not informed that intermediary bank fees may reduce the amount received by the recipient, which can lead to unexpected shortfalls.

You convert	£100.00
Fixed fee*	£5.00
You pay	£105.00
Exchange rate (1 GBP to 1.30 USD)	1.30
They receive**	$130.00
This is our fee for this transaction. *The recipient will pay any fees charged by third parties, which will be deducted from this amount. For more information please click here.

Some firms offer the consumer the option of an up-front fixed fee to cover intermediary banks costs. This ensures the recipient receives the intended amount.

You convert	£100.00
Fixed fee*	£5.00
Pay all fees?** ☑	£15.00
You pay	£120.00
Exchange rate (1 GBP to 1.30 USD)	1.30
They receive	$130.00
This is our fee for this transaction. *When you make an international payment, intermediary banks may deduct fees from the amount you send. Ticking 'pay all fees' allows you to pay a flat upfront fee which guarantees that the recipient receives the intended amount. For more information please click here.

The sender is clearly informed that intermediary / recipient bank fees or taxes may be deducted, helping ensure the consumer understands that the recipient might receive less than the original transfer amount. Some firms provide links to additional information which helps the consumer understand and estimate costs. This may be provided where it is too complex to be shown on the transaction screen.

Some firms offer the consumer the option of an up-front fixed fee to cover intermediary banks costs. This ensures the recipient receives the intended amount.

7. Next steps

Under the Duty, a firm must regularly monitor the effectiveness of their communications in driving good outcomes for retail consumers.

We expect firms to review the information they provide to ensure consumers can understand the costs they will incur, compare choices, and make informed decisions. The above examples should assist firms to deliver better outcomes for retail customers. The examples of poor practice might not themselves be examples of situations where firms are not meeting their duties but at least amount to situations where firms should consider improvements.

We will use our regular engagement with firms to reinforce our expectations, identify gaps in compliance and make sure appropriate action is taken to improve the service and support customers receive. We are likely to undertake future work in this area to understand what improvements have been made.

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1. Summary

2. Who this publication applies to

3. Requirements these examples refer to

4. What we looked at

5. What we found

Good practice

Poor practice

6. Examples of good and poor practice

Fixed fees

Variable fees

Third party fees

7. Next steps