Australia Remittance Market: Comparative Analysis of Key Players

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Copying or distribution without written permission is prohibited 1 Contents

1. Overview 03 2. Research Methodology 04 3. Comparative Analysis 07 a) Australia to India 08 b) Australia to UK 10 c) Australia to US 12 d) Australia to EU 14 e) Australia to Vietnam 16 4. Key Findings 13 5. Glossary 20 6. Appendix 22

Copying or distribution without written permission is prohibited 2 Overview

MEDICI has always been interested in the developments of the consumer remittance space. This segment represents a massive market, great opportunities, and very promising players. We have closely followed the rise of many FinTech challengers in this space who have pushed the boundaries by challenging incumbents and banks with lower costs, higher speeds, and enhanced transparency related to remittance transactions.

To understand this space better, we have analyzed a number of banks and MTOs in terms of their transfer fee and FX rates in some of the key regions across the globe.

In this exclusive report, we present a comparative analysis of some of the major players – banks as well as MTOs – operating in the Australia market.

List of players involved in List of corridors involved in the the study: study: o Commonwealth Bank of o Australia–India Australia (CBA) o Australia–EU o InstaReM o Australia–UK o OFX o Australia–US o TorFX o Australia–Vietnam o TransferWise o WorldRemit

This research is funded by InstaReM. However, the research is independent and views expressed in this report are purely that of MEDICI.

Copying or distribution without written permission is prohibited 3 Research Methodology

For the scope of this study, MEDICI’s research methodology consisted of two different approaches: Actual Transactions and Desktop Research.

Actual Transactions o An actual transaction worth AUD 1,000 was conducted only for CBA, for the corridor Australia-India. o For the above transaction, the receiving bank in India was ICICI Bank. o Screenshots for the above transaction are included in the appendix section of this report.

Desktop Research o Desktop research was conducted for each of the six players involved in this study using the conversion tool on the bank’s/MTO’s website. o The transaction amount for this desktop research was AUD 1,000. o The corridors for desktop research were: • Australia–India (All players except CBA) • Australia–EU • Australia–UK • Australia–US • Australia–Vietnam o Screenshots of the conversion tool for each of these players are included in the appendix section of this report.

Copying or distribution without written permission is prohibited 4 Research Methodology Key Points

The scope of this study involves comparisons on the basis of transfer fees, FX rates, and estimated/actual amount received. Factors such as ease of setting up accounts, user experience, customer service, etc., have not been considered in this study.

Also, the scope of this study is limited to the P2P remittance services provided by these players.

In the process of desktop research in all the corridors, we were only able to obtain the upfront costs of sending money through banks and MTOs, i.e., fee and FX rates charged to their customers. However, there is a possibility that other hidden fees were involved in the process, which could not be assessed.

CBA and WorldRemit charged the transfer fee over and above the amount to be sent. TorFX did not charge a transfer fee. OFX, InstaReM, and TransferWise deducted the transfer fee from the amount to be sent.

InstaReM, WorldRemit, and TransferWise promise to include “Intermediate Landing Charges” in their transfer fee and guarantee the receipt of the exact amount shown by an end-to-end supervision of the transaction. CBA, TorFX, and OFX do not promise the same.

Disclaimer: MEDICI does not vouch for the veracity of these claims.

Copying or distribution without written permission is prohibited 5 Research Methodology Key Points (Cont.)

TorFX does not provide its services in the Australia–Vietnam corridor.

In the Australia-Vietnam corridor, TransferWise does not provide a guaranteed FX rate.

The date and time of all the transactions/desktop research, except the Australia-Europe and Australia-UK corridor: Dec. 08, 2017. 1:30 PM to 3:30 PM, AEDT.

The date and time for the desktop research in the Australia–Europe corridor: January 22, 2018. 3:30 PM to 4:00 PM, AEDT.

The date and time for the desktop research in the Australia–UK corridor: February 07, 2018. 1 PM to 1:30 PM, AEDT.

Source for mid-market FX rates: www.bloomberg.com/currencies

Copying or distribution without written permission is prohibited 6 Comparative Analysis

Copying or distribution without written permission is prohibited 7 Actual Transactions/Desktop Research

Corridor Transaction Value Mid-Market Rate Australia–India AUD 1,000 1 AUD = 48.465 INR

CBA (Actual InstaReM OFX TorFX TransferWise WorldRemit Transactions) Amount Payable at 1,006 1,000 1,000 1,000 1,000 1,003.99 Source# (AUD) Transfer 6 5 15 0 6.95 3.99 Fee# (AUD)

Amount 1,000 995 985 1,000 993.05 1,000 Sent#

FX Rate# 46.286* 48.459*** 48.0023**** 47.4029* 48.45978** 47.851****

FX Markup# (Over Mid- 4.7% 0.01% 0.95% 2.19% 0.01% 1.26% Market Rate) Amount Received# 1,000*46.286 995*48.459 985*48.0023 1,000*47.4029 993.05*48.45978 = 1,000*47.851 (Expected, = 46,286 =48,216.71 = 47,282.27 = 47,402.90 48,122.98 = 47,851 INR) Amount Received# 45,460 NA NA NA NA NA (Actual, INR) Difference# 826 NA NA NA NA NA (INR)

*Indicative FX rate **Guaranteed FX rate ***Real-time FX rate ****Not clear if the FX rate is indicative/real-time/guaranteed #The definition of these parameters can be found under the glossary section. (Page 20)

Copying or distribution without written permission is prohibited 8 Actual Transactions/Desktop Research Australia–India Notes: o In this corridor, the actual transactions were conducted only through CBA. For all other providers, desktop research was conducted. Thus, the comparison parameters “Amount Received (Actual)” and “Difference” are only applicable to CBA and are not applicable to the other providers. o CBA charged the transfer fee upfront, over and above the amount to be sent (AUD 1,000). Thus the amount payable at source for CBA is AUD 1,006. Also, it clearly mentioned that the received amount can be less than the indicative expected amount. This, indeed, was the case as there was a significant difference of INR 826 in the indicated amount and actual received amount. o According to CBA’s conversion tool, the amount expected at the receiver’s side, as per the indicative FX rate, was (1,000*46.286) INR 46,286. However, during the actual transaction conducted through CBA, the received amount was INR 826 less than the expected amount. Since this difference is very high, we are not certain if this amounts only to the real FX rate being very high as against the indicative rate, or if there are some hidden fees involved. (We have already covered hidden fees under our research methodology for desktop research). o WorldRemit also charges a transfer fee of AUD 3.99 on top of AUD 1,000. Thus the amount payable at source for WorldRemit was AUD 1,003.99. o WorldRemit, on its website’s conversion tool, shows the FX rate as 1 AUD = 47.85 INR. Here, we have mentioned the rate as 47.851 based on the amount sent (AUD 1,000) and the expected amount received (INR 47,851 as mentioned on the conversion tool’s screenshot in the appendix section).

Copying or distribution without written permission is prohibited 9 Actual Transactions/Desktop Research Australia–India Notes (Cont.): o InstaReM provided real-time FX rates. TransferWise provided a guaranteed FX rate (for 48 hours). TorFX and CBA provided an indicative FX rate. For OFX and WorldRemit, it wasn’t clear whether the FX rates were indicative, real-time or guaranteed. o For this corridor, InstaReM and TransferWise provided their services at the mid- market FX rate. However, InstaReM charged a lower transfer fee when compared to TransferWise. o Among all the players compared in this corridor, CBA had the highest markup on FX rates and OFX charged the highest transfer fee. TorFX didn’t charge any transfer fee but had a significant markup on FX rates. o Based on the desktop research, InstaReM was found to provide the most cost- effective remittance service among all the players compared in this study for the Australia–India corridor.

Copying or distribution without written permission is prohibited 10 Desktop Research

Corridor Transaction Value Mid-Market Rate Australia–EU AUD 1,000 1 AUD = 0.6536 EUR

CBA InstaReM OFX TorFX TransferWise WorldRemit

Amount Payable at 1,006 1,000 1,000 1,000 1,000 1,003.99 Source# (AUD) Transfer 6 5 15 0 6.95 3.99 Fee# (AUD)

Amount 1,000 995 985 1,000 993.05 1,000 Sent# (AUD)

FX Rate# 0.6182* 0.6536*** 0.6406**** 0.6411* 0.65363** 0.64603****

FX Markup# (Over Mid- 5.41% 0 1.99% 1.91% 0 1.16% Market Rate) Amount Received# 1,000*0.6182 995*0.6536 985*0.6406 1,000*0.6411 993.05*0.65363 1,000*0.64603 (Expected, = 618.2 = 650.33 =630.991 = 641.1 = 649.09 = 646.03 EUR)

Copying or distribution without written permission is prohibited 11 Desktop Research Australia–EU

Notes: o CBA and WorldRemit charged their respective transfer fee upfront, over and above the amount to be sent (AUD 1,000). Thus, the amount payable at source for CBA and WorldRemit was AUD 1,006 and 1,003.99 respectively, as against AUD 1,000 for other players. o WorldRemit, on its website’s conversion tool, shows the FX rate as 1 AUD = 0.65 EUR. Here, we have mentioned the rate as 0.64603 based on the amount sent (AUD 1,000) and the expected amount received (EUR 646.03 as mentioned on the conversion tool’s screenshot in the appendix section). o InstaReM provided real-time FX rates. TransferWise provided a guaranteed FX rate (for 48 hours). TorFX and CBA provided an indicative FX rate. For OFX and WorldRemit, it wasn’t clear whether the FX rates were indicative, real-time or guaranteed. o Among all the players compared in this corridor, CBA had the highest markup on FX rates and OFX charged the highest transfer fee. TorFX didn’t charge any transfer fee but had a significant markup on FX rates. o For this corridor, InstaReM and TransferWise provided their services at the mid- market FX rate. However, InstaReM charged a lower transfer fee when compared to TransferWise. o Based on the desktop research, InstaReM was found to provide the most cost- effective remittance service among all the players compared in this study for the Australia–EU corridor.

Copying or distribution without written permission is prohibited 12 Desktop Research

Corridor Transaction Value Mid-Market Rate Australia–UK AUD 1,000 1 AUD = 0.5659 GBP

CBA InstaReM OFX TorFX TransferWise WorldRemit

Amount Payable at 1,006 1,000 1,000 1,000 1,000 1,003.99 Source# (AUD) Transfer 6 5 15 0 6.95 3.99 Fee# (AUD)

Amount 1,000 995 985 1,000 993.05 1,000 Sent# (AUD)

FX Rate# 0.5362* 0.5657*** 0.5547**** 0.5551* 0.56599** 0.55969****

FX Markup# (Over Mid- 5.25% 0.04% 1.98% 1.91% -0.02% 1.1% Market Rate) Amount Received# 1,000* 0.5362 995*0.5657 985*0.5562 1,000*0.5551 993.05*0.56599 1,000*0.55969 (Expected, =536.2 = 562.87 = 546.38 = 555.1 = 562.06 = 559.69 GBP)

Copying or distribution without written permission is prohibited 13 Desktop Research Australia–UK

Notes: o CBA and WorldRemit charged their respective transfer fee upfront, over and above the amount to be sent (AUD 1,000). Thus, the amount payable at source for CBA and WorldRemit was AUD 1,006 and 1,003.99 respectively, as against AUD 1,000 for other players. o WorldRemit, on its website’s conversion tool, shows the FX rate as 1 AUD = 0.56 GBP. Here, we have mentioned the rate as 0.55969 based on the amount sent (AUD 1,000) and the expected amount received (GBP 559.69 as mentioned on the conversion tool’s screenshot in the appendix section). o InstaReM provided real-time FX rates. TransferWise provided a guaranteed FX rate (for 48 hours). TorFX and CBA provided an indicative FX rate. For OFX and WorldRemit, it wasn’t clear whether the FX rates were indicative, real-time or guaranteed. o Among all the players compared in this corridor, CBA had the highest markup on FX rates and OFX charged the highest transfer fee. TorFX didn’t charge any transfer fee but had a significant markup on FX rates. o For this corridor, InstaReM and TransferWise provided their services at the mid- market FX rate. However, InstaReM charged a lower transfer fee when compared to TransferWise. o Based on the desktop research, InstaReM was found to provide the most cost- effective remittance service among all the players compared in this study for the Australia–UK corridor.

Copying or distribution without written permission is prohibited 14 Desktop Research

Corridor Transaction Value Mid-Market Rate Australia–US AUD 1,000 1 AUD = 0.7516 USD

CBA InstaReM OFX TorFX TransferWise WorldRemit

Amount Payable at 1,006 1,000 1,000 1,000 1,000 1,003.99 Source# (AUD) Transfer 6 5 15 0 6.95 3.99 Fee# (AUD)

Amount 1,000 995 985 1,000 993.05 1,000 Sent# (AUD)

FX Rate# 0.7102* 0.7513*** 0.7384**** 0.7372* 0.75160** 0.74314****

FX Markup# (Over Mid- 5.51% 0.04% 1.76% 1.92% 0 1.13% Market Rate) Amount Received# 1,000*0.7102 995*0.7513 985*0.7384 1,000*0.7372 993.05*0.75160 1,000*0.74314 (Expected, = 710.2 = 747.54 =727.32 = 737.2 = 746.38 = 743.14 USD)

Copying or distribution without written permission is prohibited 15 Desktop Research Australia–US

Notes: o CBA and WorldRemit charged their respective transfer fee upfront, over and above the amount to be sent (AUD 1,000). Thus the amount payable at source for CBA and WorldRemit was AUD 1,006 and 1,003.99 respectively, as against AUD 1,000 for other players. o WorldRemit, on its website’s conversion tool, shows the FX rate as 1 AUD = 0.74 USD. Here, we have mentioned the rate as 0.74314 based on the amount sent (AUD 1,000) and the expected amount received (USD 743.14 as mentioned on the conversion tool’s screenshot in the appendix section). o InstaReM provided real-time FX rates. TransferWise provided a guaranteed FX rate (for 48 hours). CBA and TorFX provided an indicative FX rate. For OFX and WorldRemit, it wasn’t clear whether the FX rates were indicative, real-time or guaranteed. o Among all the players compared in this corridor, CBA had the highest markup on FX rates and OFX charged the highest transfer fee. TorFX didn’t charge any transfer fee but had a significant markup on FX rates. o For this corridor, InstaReM and TransferWise provided their services at the mid- market FX rate. However, InstaReM charged a lower transfer fee as compared to TransferWise. o Based on the desktop research, InstaReM was found to provide the most cost- effective remittance service among all the players compared in this study for the Australia–US corridor.

Copying or distribution without written permission is prohibited 16 Desktop Research

Corridor Transaction Value Mid-Market Rate Australia–Vietnam AUD 1,000 1 AUD = 17,045.3003 VND

CBA InstaReM OFX TorFX TransferWise WorldRemit

Amount Payable at 1,006 1,000 1,000 NA 1,000 1,009.99 Source# (AUD) Transfer 6 5 15 NA 14.78 9.99 Fee# (AUD)

Amount 1,000 995 985 NA 985.22 1,000 Sent# (AUD)

FX Rate# 16,232.00* 16,969.9141*** 16,077.3489**** NA 17,055.56720* 16,538.645****

FX Markup# (Over Mid- 4.77% 0.44% 5.68% NA -0.06% 2.97% Market Rate) Amount 995*16,969.914 985*16,077.348 985.22*17,055.5 Received# 1,000*16,232 1,000*16,538.64 1 9 NA 6720 = (Expected, = 16,232,000 5 = 16,538,645 = 16,885,064.5 = 15,836,188.67 16,803,486 VND)

Copying or distribution without written permission is prohibited 17 Desktop Research Australia–Vietnam

Notes: o CBA and WorldRemit charged their respective transfer fee upfront, over and above the amount to be sent (AUD 1,000). Thus the amount payable at source for CBA and WorldRemit was AUD 1,006 and 1,003.99 respectively, as against AUD 1,000 for other players. o WorldRemit, on its website’s conversion tool, shows the FX rate as 1 AUD = 16,538.65 VND. Here, we have mentioned the rate as 16,538.645 based on the amount sent (AUD 1,000) and the expected amount received (VND 16,538,645 as mentioned on the conversion tool’s screenshot in the appendix section). o For this corridor, InstaReM provided real-time FX rates. CBA and TransferWise provided an indicative FX rate. For OFX and WorldRemit, it wasn’t clear whether the FX rates were indicative, real-time or guaranteed. o TorFX did not provide its services in this corridor. o Among all the players compared in this corridor, CBA had the highest markup on FX rates and OFX charged the highest transfer fee. TransferWise charged significantly higher transfer fee in this corridor as compared to the other four corridors. o For this corridor, InstaReM and TransferWise provided their services at the mid- market FX rate. However, InstaReM charged a lower transfer fee as compared to TransferWise.

Based on the desktop research, InstaReM was found to provide the most cost- effective remittance service among all the players compared in this study for the Australia–Vietnam corridor.

Copying or distribution without written permission is prohibited 18 Key Findings

o As an outcome of the desktop research conducted for all the players analyzed over the five corridors under the scope of this study, InstaReM was found to be providing the most cost-effective money transfer service with its low transfer fee (which was standard across all five corridors) and competitive, real-time FX rates, giving it an edge over the other remittance service providers. o CBA (AUD 6), InstaReM (AUD 5), and OFX (AUD 15) provided services at a standard transfer fee across all the corridors. TransferWise (AUD 6.95) and WorldRemit (AUD 3.99) provided a standard transfer fee for all corridors except the Australia–Vietnam corridor, where they charged AUD 14.78 and AUD 9.99 respectively. TorFX did not charge a transfer fee in any of the corridors it operates in. o CBA and OFX did not present a clear picture of the landing fee for the beneficiary. Also, there was a significant difference (INR 826) in the actual vs. the expected amount to be received in the actual transaction conducted through CBA in the Australia–India corridor. o CBA was found to be providing the costliest money transfer services in all these corridors. It also had the highest markup on the FX rates when compared to all the other players. o In the Australia–Vietnam corridor, TransferWise charges very high transfer fees when compared to all the other players analyzed, except OFX. It also does not provide guaranteed FX rates in this corridor. o For all the corridors under the scope of this study, TransferWise and InstaReM provided very healthy FX rates, which were found to be equal to mid-market rates. In terms of transfer fee, InstaReM proved to be better than TransferWise for these corridors. o CBA, OFX, WorldRemit, and TorFX were found to be providing services at marked-up FX rates. o TorFX did not provide its services in the Australia–Vietnam corridor.

Copying or distribution without written permission is prohibited 19 Glossary

Copying or distribution without written permission is prohibited 20 Glossary o Amount Payable at Source: The amount that is needed to be paid to the remittance provider in order to conduct a cross-border money transfer. This includes the actual amount to be sent, as well as the transfer fee. o Transfer Fee: The fee charged by remittance providers for their service. Some providers charge a flat fee, whereas some providers charge a percentage fee. o Amount Sent: The amount actually sent during the remittance process. (Amount Payable at Source – Transfer Fee). o FX Rate: The currency conversion rate provided by a remittance provider. o Mid-market FX Rate: The average of “buy” rate and “sell” rate for any currency. The mid-market rate is considered to be the fairest exchange rate possible. o FX Markup: The difference between the mid-market rate and the FX rate offered by the remittance provider. It is usually calculated as a percentage, with the below formula: • FX Markup (%) = {(Mid-Market FX Rate – Provider’s FX Rate)/Mid-Market Rate}*100 o Amount Received (Expected): The amount expected to be received by the receiver of the remittance transaction. It is calculated as – (Amount Sent*FX rate). o Amount Received (Actual): The amount received by the receiver in his/her bank account, in actuals. o Difference: The difference between the amount received (expected) and the amount received (actual).

Copying or distribution without written permission is prohibited 21 Appendix

Copying or distribution without written permission is prohibited 22 Screenshots Australia–India

Copying or distribution without written permission is prohibited 23 CBA Australia–India (Actual Transaction)

Sender’s Side

Receiver’s Side

Copying or distribution without written permission is prohibited 24 OFX Australia–India (Desktop Research)

Copying or distribution without written permission is prohibited 25 TORFX Australia–India (Desktop Research)

Copying or distribution without written permission is prohibited 26 TRANSFERWISE Australia–India (Desktop Research)

Copying or distribution without written permission is prohibited 27 INSTAREM Australia–India (Desktop Research)

Copying or distribution without written permission is prohibited 28 WORLDREMIT Australia–India (Desktop Research)

Copying or distribution without written permission is prohibited 29 Screenshots Australia–EU

Copying or distribution without written permission is prohibited 30 CBA Australia–EU (Desktop Research)

Copying or distribution without written permission is prohibited 31 OFX Australia–EU (Desktop Research)

Copying or distribution without written permission is prohibited 32 TORFX Australia–EU (Desktop Research)

Copying or distribution without written permission is prohibited 33 TRANSFERWISE Australia–EU (Desktop Research)

Copying or distribution without written permission is prohibited 34 INSTAREM Australia–EU (Desktop Research)

Copying or distribution without written permission is prohibited 35 WORLDREMIT Australia–EU (Desktop Research)

Copying or distribution without written permission is prohibited 36 Screenshots Australia–UK

Copying or distribution without written permission is prohibited 37 CBA Australia–UK (Desktop Research)

Copying or distribution without written permission is prohibited 38 OFX Australia–UK (Desktop Research)

Copying or distribution without written permission is prohibited 39 TORFX Australia–UK (Desktop Research)

Copying or distribution without written permission is prohibited 40 TRANSFERWISE Australia–UK (Desktop Research)

Copying or distribution without written permission is prohibited 41 INSTAREM Australia–UK (Desktop Research)

Copying or distribution without written permission is prohibited 42 WORLDREMIT Australia–UK (Desktop Research)

Copying or distribution without written permission is prohibited 43 Screenshots Australia–US

Copying or distribution without written permission is prohibited 44 CBA Australia–US (Desktop Research)

Copying or distribution without written permission is prohibited 45 OFX Australia–US (Desktop Research)

Copying or distribution without written permission is prohibited 46 TORFX Australia–US (Desktop Research)

Copying or distribution without written permission is prohibited 47 TRANSFERWISE Australia–US (Desktop Research)

Copying or distribution without written permission is prohibited 48 INSTAREM Australia–US (Desktop Research)

Copying or distribution without written permission is prohibited 49 WORLDREMIT Australia–US (Desktop Research)

Copying or distribution without written permission is prohibited 50 Screenshots Australia–Vietnam

Copying or distribution without written permission is prohibited 51 CBA Australia–Vietnam (Desktop Research)

Copying or distribution without written permission is prohibited 52 OFX Australia–Vietnam (Desktop Research)

Copying or distribution without written permission is prohibited 53 TORFX Australia–Vietnam (Desktop Research)

TorFX does not operate in this corridor.

Copying or distribution without written permission is prohibited 54 TRANSFERWISE Australia–Vietnam (Desktop Research)

Copying or distribution without written permission is prohibited 55 INSTAREM Australia–Vietnam (Desktop Research)

Copying or distribution without written permission is prohibited 56 WORLDREMIT Australia–Vietnam (Desktop Research)

Copying or distribution without written permission is prohibited 57 Have questions? Get in touch Aditya Khurjekar CEO & Founder [email protected]

Amit Goel Chief Innovation Officer & Founder [email protected] www.goMEDICI.com

Copying or distribution without written permission is prohibited 58