How International Money Transfers Work: Exchange Rates and Fees Explained

Summary

An international money transfer moves money from a bank account or payment method in one country to a recipient in another country, converting the sender’s currency into the recipient’s local currency along the way – the three key elements are the transfer fee (a flat or percentage charge applied by the service), the exchange rate (the rate at which one currency is converted to another) and the delivery method (bank account, mobile wallet or cash pickup); a service that advertises low or zero fees is not necessarily cheaper overall, because the exchange rate margin is also a cost – always compare the total amount the recipient receives in their local currency

The exchange rate applied to your transfer is almost always different from the mid-market rate (the rate you see on Google or xe.com) – most transfer services make their margin by applying a slightly less favourable rate than the mid-market rate; some services charge a transparent flat or percentage fee on top of a near-mid-market rate; others charge no flat fee but apply a wider rate margin; either way, the all-in cost is what matters – the total destination currency your recipient receives for the AUD or NZD you send

International transfers move through one of two main routes: the SWIFT network (used by banks) or specialist payment networks (used by most online transfer services) – SWIFT is a global messaging network connecting over 11,000 financial institutions in more than 200 countries; specialist services use proprietary networks and local banking rails that are often faster and cheaper; understanding which route your transfer takes helps explain why delivery times and costs differ significantly between a bank wire and an online transfer service

How an international money transfer works – step by step

Step 1: You send money in your local currency

You initiate the transfer by entering the amount you want to send (in AUD or NZD), the recipient’s details and the destination country. You fund the transfer by internet banking, debit card or another supported payment method.

Step 2: The provider converts the currency

The transfer service converts your AUD or NZD into the destination currency (INR, PHP, GBP, VND etc.) at the exchange rate shown to you at the time of confirmation. The provider applies its exchange rate margin – the difference between the rate it uses and the mid-market rate – which is one of the ways it generates revenue.

Step 3: The money moves to the destination

The converted funds travel through a payment network to the recipient’s country. Depending on the service and the destination, this may take a few minutes or several business days.

Step 4: The recipient gets paid

The recipient receives the converted funds into their bank account, mobile wallet (such as GCash or a UPI-linked account) or as cash at a pickup location.

Exchange rates explained

What is the mid-market rate?

The mid-market rate (also called the interbank rate or spot rate) is the midpoint between the buying and selling prices of two currencies on the global foreign exchange market. It is the rate shown on Google, xe.com and most financial data services. Banks and transfer services do not transfer at the mid-market rate – they apply a margin.

What is an exchange rate margin?

An exchange rate margin is the difference between the mid-market rate and the rate a transfer service actually applies to your transfer. It is the primary way most transfer services generate revenue – even those that advertise low or zero fees.

Example: If the mid-market AUD/INR rate is 55.00, a transfer service might apply a rate of 54.00, keeping the difference (approximately 1.8%) as margin. On a AUD $1,000 transfer, this means the recipient receives INR 54,000 instead of INR 55,000 – a difference of INR 1,000 that does not appear as a line-item fee.

How to compare exchange rates

The only reliable way to compare exchange rates across providers is to enter the same amount in each service and compare the destination currency total before confirming. Do not rely on the advertised fee alone – a service with a zero fee but a wide rate margin can cost more than a service with a flat fee and a tighter rate.

What to look for: The total destination amount shown before confirmation. This accounts for both the fee and the rate margin.

What affects the exchange rate?

Exchange rates fluctuate continuously based on:

Supply and demand for each currency in global foreign exchange markets
Central bank interest rate decisions (a higher rate tends to strengthen a currency)
Economic data releases (employment, inflation, GDP)
Geopolitical events (conflicts, elections, trade disputes)
Market sentiment

This is why the rate you see today may differ from the rate you see tomorrow – and why locking in the rate at confirmation protects you from movements between when you initiate a transfer and when it processes.

Transfer fees explained

Flat fee

A fixed amount charged per transfer, regardless of how much you send. Example: NZD $4 per transfer. A flat fee is better value for larger transfers – the same NZD $4 fee on a NZD $500 transfer (0.8%) represents a higher percentage cost than on a NZD $5,000 transfer (0.08%).

Percentage fee

A fee calculated as a percentage of the transfer amount. Example: 0.5% of the amount sent. Percentage fees can be cheaper for small transfers but more expensive for large ones.

No flat fee (rate margin only)

Some services charge no flat fee but apply a wider exchange rate margin instead. The cost is built into the rate rather than shown as a separate fee. Always compare the total destination amount to understand the real cost.

What to watch out for

A reputable transfer service shows all costs – including the exchange rate applied and any flat fee – before you confirm. If you are surprised by costs after confirmation, choose a different service next time.

How money moves – SWIFT vs specialist networks

The SWIFT network (bank wire transfers)

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the global messaging network used by over 11,000 financial institutions in more than 200 countries. When you send an international wire transfer through an Australian or New Zealand bank, the payment instructions travel through SWIFT – often through one or more correspondent banks before reaching the recipient’s bank.

Typical bank wire transfer:

Fee: AUD/NZD $15-35 per transfer plus exchange rate margin
Transfer time: 3-5 business days
Available to: any country with a banking system
Intermediary bank fees: may apply and can be deducted from the transferred amount

Specialist payment networks

Most online money transfer services use their own payment networks, local banking partnerships and proprietary technology rather than SWIFT. They often hold balances in multiple currencies in local bank accounts, which means a transfer from Australia to India may be settled locally in India rather than moving physically across borders.

Typical specialist service transfer:

Fee: Low flat fee or percentage, depending on the service and corridor
Transfer time: Minutes to 2 business days, depending on the destination and delivery method
Intermediary fees: Generally none – the cost is clear at confirmation

Delivery methods

Bank account deposit

Funds are deposited directly into the recipient’s bank account. This is the most common delivery method and works for virtually any destination with a banking system. Typical delivery time: 1-3 business days with a specialist service; 3-5 business days via bank wire.

Mobile wallet

In countries where digital wallets are widely used – particularly the Philippines (GCash, Maya), India (UPI-linked accounts) and Vietnam – some transfer services can deliver directly to a mobile wallet. Typical delivery time: minutes once the transfer is processed.

Cash pickup

The recipient collects cash at a partner agent location using a reference number and ID. Useful where the recipient does not have a bank account or needs cash immediately. Typical delivery time: minutes to a few hours.

What affects transfer speed

The transfer service you use: Specialist online services are generally faster than bank wires.

The time of day: Transfers initiated during business hours on a weekday process faster than those initiated at night or on weekends.

Public holidays: Transfers do not process on public holidays in either the sending or receiving country.

Destination country: Some countries have faster banking infrastructure than others. India’s UPI system processes credits near-instantly; some Pacific island bank accounts may take longer.

Identity verification: First-time transfers require identity verification. Completing this in advance avoids delays when you need to send urgently.

Transfer amount: Large transfers above AUD/NZD $10,000 may require additional documentation under anti-money laundering regulations.

Regulated services – how to check

In Australia, transfer services must be registered with the Australian Securities and Investments Commission (ASIC). Check the register at moneysmart.gov.au.

In New Zealand, transfer services must be registered as reporting entities with the Department of Internal Affairs (DIA) under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009. Check the register at dia.govt.nz.

Only use registered services. Unregistered services offer no consumer protection.

FAQs (frequently asked questions)

How does an international money transfer work?

You send money in your local currency (e.g. AUD or NZD), the transfer service converts it to the destination currency at the rate shown, and delivers it to the recipient via bank account, mobile wallet or cash pickup.

What is the difference between the exchange rate and the transfer fee?

The transfer fee is a separate charge per transfer (flat or percentage). The exchange rate margin is built into the conversion rate – it is the difference between the mid-market rate and the rate the service applies. Both are costs. Compare the total destination amount to see the all-in cost.

Why is the exchange rate different from what I see on Google?

Google shows the mid-market rate. Transfer services apply a margin to this rate. The rate you are offered will be slightly less favourable than the mid-market rate.

How long do international transfers take from Australia?

Specialist online services typically deliver within 1-2 business days for bank deposits and within minutes for mobile wallet deliveries. Bank wire transfers via SWIFT typically take 3-5 business days.

What is SWIFT?

SWIFT is the global messaging network used by over 11,000 banks in 200+ countries to exchange payment instructions. Bank international wire transfers use SWIFT. Most specialist o

Is it safe to use an online money transfer service?

Yes, provided you use a registered service. In Australia, check moneysmart.gov.au. In New Zealand, check dia.govt.nz.

Related guides

This guide is for general information only. Fees and transfer times vary by provider and are subject to change. Always verify current rates before sending. Last updated October 2026.

Sources: moneysmart.gov.au – Sending money overseas (ASIC official) | accc.gov.au – Foreign currency and money exchange (official) | swift.com – About SWIFT (official) | dia.govt.nz – AML/CFT register (official)