Western Union vs a bank transfer

Western Union

Western Union's fees vary depending on the payment method, destination and the amount you're sending. Also, Western Union is not very transparent when it comes to fees which makes it more challenging to calculate the cost. Their online calculator appears to exclude transfer fees as they are typically waived for first-time customers.

For an online Western Union transfer to the UK, you'll pay between $2 and $15 depending on how much you're sending. But the fees are higher for other countries, for example it'll cost anywhere from $5 to $30 in fee's to send money to the United States. Western Union does not charge any pick-up fees, but certain delivery methods such as sending to a mobile wallet may involve third-party charges.

Bank transfer

International bank transfer fees are numerous and vary wildly compared to Western Union.

At one major Australian bank you could feasibly pay as much as $96 in fees for a money transfer to the United Kingdom regardless of the amount sent, while the lowest possible cost for a transfer of under $1,000 at the same bank would be $17.

• See the fee breakdown

  The maximum cost is composed of:

  • $30 in-branch transfer fee. This is the flat service fee incurred when you walk into a bank branch and request that it sends an international payment.
  • $41 correspondent fee. Bank transfers are typically passed between banks en route to the destination, with each deducting a fee from the amount being sent. It's a flat $41 to cover those fees up front, assuming you want to send euros rather than GBP.
  • $25 receiving fee. This is the maximum receiving fee that might be charged for crediting a foreign currency account.

  The cheapest possible transfer of $17 consists of:

  • $6 online transfer fee. A transfer under $1,000, initiated online, involves just a $6 flat fee.
  • $11 receiving fee. The receiving fee can only go as low as $11, charged when sending funds to an overseas account at the same bank.
  • Unknown correspondent bank charges. There may also be correspondent fees. You don't know how much these are ahead of time. The $41 "correspondent fee" is the cost of paying them up front.

Western Union

As is typical for most money transfer services, Western Union will add a margin to the exchange rate.

For example, when sending money to the US:

• Western Union's exchange rate: 1 AUD = 0.68 USD
• Mid-market exchange rate: 1 AUD = 0.71 USD

So relative to the mid-market rate at the time, Western Union charges an exchange "fee" of sorts equivalent to about 4.2% on an AUD/USD transfer.

It varies widely by currency and circumstance, though. At the time of writing it's over 9% for AUD to EUR, but only about 1.6% for AUD to Indian rupees.

Bank transfer

For the same AUD to USD transfer:

• A typical bank's exchange rate: 1 AUD = 0.67 USD
• Mid-market exchange rate: 1 AUD = 0.71 USD

So you're getting one American cent less per Australian dollar with a bank than with Western Union.

This is equivalent to a 5.6% markup compared to mid-market rates.

The banks offer a slightly more favourable rate for euros, equivalent to 5.3%, but the AUD to INR exchange rates are almost 4% above the mid-market rate at the time of writing.

Western Union

Western Union can offer same-day transfers around the world, seven days a week, with a range of delivery options including in-person cash pick-up, bank deposit or transfer to a mobile money app.

Bank transfer

How long a bank transfer takes depends on which bank you're using and where you're sending money.

A typical international bank transfer can take 2-5 business days to process, often won't be moving on weekends or public holidays and can only be deposited directly into a bank account.

Western Union

Western Union works through thousands of offices and third parties in more than 200 countries around the world.

It sends money by ensuring that it has enough funds on hand at every location to handle most transfers. After the sender makes a deposit, the recipient receives the funds from the Western Union office in that country.

This is how it can send money almost anywhere in the world in just minutes.

Bank transfer

Banks conduct international transfers through the SWIFT network – an interbank communication network. When you send money overseas through a bank, it will leapfrog from bank to bank until it arrives at its destination. This is known as a correspondent banking system.

The reason bank transfers are typically slower and more expensive than other options is that there are so many correspondents involved, and each needs to process your payment as it passes through.