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FINANCIALLY AESTHETIC · GUIDE 09/37
TRANSFERS, FOREIGN EXCHANGE & CROSS-BORDER PAYMENTS
FA-2.3 · Banking, Payments & Credit
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WHAT THIS CONTROLS
A fast transfer can still be expensive once fees, exchange rates and reversibility are included.
Sending Money Abroad
A money transfer to someone abroad is known as a remittance.
A company or financial institution in Canada sends the details of a transaction to an agent, a company, or a bank in another country. That agent, company, or bank delivers the money to the person you are sending it to (the recipient).
Depending on the service offered, the money can be:
- paid in cash
- deposited into a bank account
- in the form of a credit card, debit card, or prepaid card
Finding a Money Transfer Company
You can send money abroad through various companies and financial institutions, including:
- banks
- credit unions
- money transfer companies
- check cashing companies
- foreign exchange offices
Some money transfer companies also have branches in:
- post offices
- grocery stores
- pharmacies
- convenience stores
Do business with a trusted company
Before handing over your money, do your research:
- Ask your family, friends, and community members about their experiences
- Check with your local Better Business Bureau
- Check with your province or territory’s consumer protection agency
Making a Money Transfer
Depending on the service you choose, you can complete a transaction in various ways, such as:
- online
- by phone
- by email
- in person
You can make your payment:
- in cash
- by check
- by money order
- by debit card
- by credit card
- with a prepaid card
If you use a credit card to send money, the transaction may be considered a cash advance.
This can significantly increase the cost of the money transfer:
- since there is no interest-free period for cash advances
- because interest begins to accrue immediately on these transactions
- because, as a general rule, the interest rate is higher than for regular credit card purchases
Get confirmation that the transfer was completed
Ask how you can confirm that the money transfer has been completed and that the money has been received. Ask if there is any protection or guarantee.
Always get a receipt and a transaction number for the money you send. That way, you can track the transfer if you need to.
The cost of sending a money transfer
Fees: Information About Fees
By law, banks and other federally regulated financial institutions in Canada must inform you of the amount charged to send money abroad.
Fees can make a money transfer to another country very expensive. Shop around and compare fees.
The amount you pay in fees can vary significantly from one company or financial institution to another. Some companies and financial institutions charge a flat fee for sending money. Others may charge different fees depending on the amount sent.
Fees may also vary depending on the payment method used.
In some cases, you may be able to get a discount for regular customers. Some companies may also offer a reduced rate if you send a large amount.
If a financial institution has branches in Canada and in the country where you want to send money, check to see if it offers money transfers at a lower cost.
Exchange Rates
Some companies make a profit on money transfers by charging a rate higher than the standard exchange rate. Ask about the exchange rate to make sure it’s reasonable, and compare it to the rates offered by other money transfer companies.
Changes in exchange rates can also affect the amount the recipient receives.
Ask whether the amount the recipient will receive depends on the exchange rate at the time when:
- you pay for the transfer
- the recipient receives the money
How long does it take for the money to reach its destination?
The time it takes for the money to reach its destination ranges from a few minutes to a few days.
You can send the money faster, but this service usually costs more. Ask yourself if this extra expense is necessary.
The cost of receiving a money transfer
The person you’re sending money to (the recipient) may have to pay taxes or fees to collect the money. These fees are in addition to the fees you paid to send the money.
If you send money using a prepaid card, the recipient may have to pay fees to use it.
Collecting the Money Transfer
Find out where the recipient can receive the money and how to do so. For example, a money transfer may not be convenient if the recipient cannot pick up the money near their home.
The recipient may need to present identification or another document to collect the money.
Filing a Complaint Against a Money Transfer Company
Problems can arise during a money transfer. For example, the transfer may take a long time. Make sure you know what steps to take and who to contact if a problem occurs.
Federally regulated financial institutions, such as banks, must have a complaint-handling process in place to help you resolve your issue or file a complaint.
Other money transfer companies may be regulated at the provincial level.
Transfers and Payments in the European Union
Same Fees for Cross-Border Payments in Euros
Your bank must charge you the same fees for payments in euros throughout the EU as for equivalent domestic transactions.
This rule applies to:
- transfers between bank accounts in different EU countries;
- ATM withdrawals in EU countries;
- debit card or credit card payments throughout the EU;
- automatic debits.
Banks based in EU countries that are not part of the euro area must also follow this rule: they cannot charge higher fees for a payment in euros to or within another EU country than for a domestic payment in the country’s own currency.
Real-life example - Identical fees for euro payments and domestic payments
Jakub lives in the Czech Republic and has a Czech bank account. His bank charges him 5 Czech korunas when he transfers money in Czech korunas to another bank account in the Czech Republic.
Upon returning from vacation, Jakub needs to transfer 150 euros to a friend’s bank account in France. His bank must charge him the same fee as for a transfer in Czech korunas made within the Czech Republic - that is, 5 Czech korunas, or the equivalent in euros.
Bank Card User Fees
When you make a payment within the EU using your debit card or credit card, merchants and banks cannot charge you any surcharges (known as “surcharging”) simply because you paid by card. This rule applies to all card purchases, both in-store and online, made in your country or in another EU country.
EU rules on payment services do not apply to credit and debit cards issued by three-party systems (such as American Express and Diners Club), nor to corporate credit cards, where the bill is sent directly to the employer. Surcharges may apply when using these cards.
Please note that if you make a purchase in a European currency other than the euro, your card issuer may charge you conversion fees when you use your card in another EU country. However, the card provider, your bank, the merchant, or the website processing the transaction must inform you of the amount of these fees before you authorize the purchase. The card issuer must inform you of these fees in the terms and conditions for your card, as well as on an easily accessible electronic platform, such as a website or app.
Real-Life Story - Paying by Card Shouldn’t Cost More
Clara, an Austrian citizen, wants to buy plane tickets online. She selects her tickets on the airline’s website and is about to make a payment. But when she enters her credit card information, the airline adds an extra 10 euros to the total price, claiming it’s because she’s using a credit card.
Clara contacts her European Consumer Center, which files a complaint with the airline. The airline repays the 10 euros charged for the reservation and amends its policies to remove the illegal surcharging from its booking process.
Card Payment and Bank Card Fraud
EU regulations limit the amount you can be held liable for if you are a victim of card payment or bank card fraud - that is, if your card or account is charged without your consent. In any case, you cannot be held liable for more than 50 euros for fraudulent payments.
Also, if you were unaware of the loss, theft, or misappropriation (e.g., your account was hacked, or your card was cloned and used without your knowledge), you do not have to pay anything. Your bank or card issuer should cover all costs. This rule also applies if the problem was caused by a bank employee.
IBAN discrimination
If you wish to use SEPA transfers or SEPA direct debits to make payments for bills, purchase goods or services online, pay taxes, or receive tax refunds, unemployment benefits, or other benefits, your account cannot be refused on the grounds that it is located in an EU country other than that of the counterparty. This provision applies only if the other party accepts such transactions from domestic accounts. In the event of IBAN discrimination, a complaint may be filed with the competent authority in the other party’s country.
Automatic Debits: Errors and Remedies
Sometimes an automatic debit from a bank account is processed incorrectly (payment made in error or incorrect amount). This can happen, for example, if you have canceled a contract with a service provider but the corresponding amount continues to be debited. In this case, you are entitled to an immediate refund if you notify your bank within 8 weeks. This rule applies to both automatic debits processed in your home country and cross-border automatic debits within the EU.
Cross-Border Checks
The fees for cashing a check from another EU country can be very high. In addition, checks are no longer accepted as a payment method in many EU countries.
What to Do If You Encounter a Problem
If you encounter difficulties making payments within the EU, you should contact your bank or your card issuer. The bank or issuer must respond to you in writing within 15 days (or within 35 days in certain exceptional circumstances). It must have an official complaint procedure in place for its customers.
Need help asserting your rights? You can contact the FIN-NET network for issues with a financial services provider, or the CEC network for issues with a merchant.
You can also report cases of IBAN discrimination. This will allow the European Commission to closely monitor and help resolve complaints of IBAN discrimination that have been submitted to the relevant national authority.
OPERATING RULE
Compare the recipient's final amount - not just the advertised transfer fee - before sending.
CURRENT-RULES CHECK
Legal protections, tax rates, reporting duties, deadlines and product rules change by country and over time. Use the jurisdiction labels in this guide and check the linked official source before acting.
- Your Europe - Payments, transfers and cheques - European Union - payment and transfer rights.
- Financial Consumer Agency of Canada - Sending money to another country - Canada - international-transfer fees, timing and complaints.
- CFPB - Remittance transfers and consumer rights - United States - remittance disclosures and rights.
