Chapter 4 • 8 minute read
There’s no getting away from it—the world of international payments is changing. A £30 fee for sending money abroad may have felt reasonable when you had to physically visit a branch, but now that it’s all done online it’s hard to justify.
In fact, free international payments is quickly becoming the norm.
But how do you compete when your competitors are already charging nothing? The answer is quite simple: by building the best experience.
Quite clearly, if you want to make international payments frequently you have to use a challenger bank, or Barclays.
In this chapter I discuss:
👇 Making every click count.
📱 The importance of being able to use the app.
💵 The benefit of showing the fees as quickly as possible.
🌋 Why some banks should remove functionality.
🧠 How the use of flags can reduce cognitive load.
📦 Utilising a global address lookup.
Many banks offer ‘free international transfers’, but are they actually free? Well, no, at least not always. In fact, the world of international payments is a nightmare for consumers.
There are 3 main fees you should pay attention to:
1: Sender fees
What your bank charges you to send money abroad.
2: Exchange rate fees (FX)
The cost of converting your money into another currency.
3: Foreign bank charges
What the recipient’s bank charges for handling the payment.
Firstly I wanted to see how large the sender fee was.
The sender fee for making an international payment
Cost in £ — Sender fees only
Note: please read the footnotes for more information about the criteria of this data.
But what about the second one: the FX fee?
This is more confusing, because the banks actually give you access to slightly different exchange rates. They take their exchange rate, and then add a fee. It’s the same way currency exchanges make money in airports.
But here’s the key point: most people would have no idea if the exchange rate they were being offered was good or not—so you can imagine how easy it is for a bank to be way more expensive than you might realise.
So I compared the exchange rate offered by each bank, with the live exchange rate on Bloomberg, including the FX fees.
Cost (FX and access to exchange rate) of sending £100 to USD
Cost in £ — FX fees only
If you’re confused right now, thinking; “wait, I thought my bank said it was free to send money abroad”, I totally understand. I was too.
They’re the two main fees. The third—foreign exchange fees—are far less predictable, and covered later in this chapter.
Combining these two fees, how much does it really cost to send £100 with each of the banks?
The real cost of sending £100 to a US bank account (USD)
Cost in £ — Sender & FX fees
It costs nearly £30 to send £100 with Santander and Metro. Why would anybody pay this when it’s free with Revolut?
Over time, we’ll see that the price people are willing to pay will continue to decrease, until everybody expects this to be a free service.
And then what? Well, people will start comparing the banks by other metrics—probably on the experience of sending money.
In the future, when most of the banks offer international payments for free, what will they do to differentiate themselves? Specifically, how can they build better experiences?
Now, as with previous chapters, I’m not suggesting that clicks alone are a reliable way to benchmark an experience—that’s what the rest of this chapter explores.
But it does broadly give us an indication of how much input, and therefore an approximate measure of effort, required to actually send a payment with each bank.
Number of clicks to send a new payee £1
Number of clicks
Once again, Barclays have shown that they can go toe-to-toe with any of the challenger banks.
Whilst you may not notice the difference between 18 and 20 clicks, you would notice the difference between 18 (Barclays) and 32 (First Direct).
In my opinion, being able to make a payment through the app—and not having to use their mobile website—is the single biggest influence on UX.
The test is simple: can I make an international payment through their IOS app?
Can pay using only the app:
Have to use mobile website:
Can make an international payment through the app:
Forced to use the mobile website:
Unless you’ve tried to use these mobile websites recently, you may not realise how bad they are. But seriously, they’re really bad. I would go as far to say many of them are basically unusable.
What non-app experiences look like:
International payment screen
And it’s not like the habits of people have changed suddenly, and the banks haven’t had enough time to build mobile experiences.
As I’ve demonstrated, the real cost of making an international payment can be considerably higher than people realise. But, they’re still probably expecting to pay something.
And regardless of how much it does end up costing, they’ll be subconsciously anticipating regret. Regret that they spent 10 minutes going through a form, only to be gutted at how much it costs at the very end.
The interesting metric here is how much effort you need to put into the process, before you’re told about the fees.
How far into the process you are when you’re told about the fees
% completion (clicks)
Revolut is N/A because they never mention fees— although it’s worth clarifying that there usually aren’t any (see footnotes).
Co-op is N/A because instead of showing fees they just link you to a 6-page PDF, which explains all current account fees.
Imagine getting 95% of the way through a process, and then learning that it costs too much. That’s a really efficient way of losing a customer.
The banks should be designing their processes to show fees sooner. I’d argue it’s even worth showing illustrative fees at the very beginning, based on common transfers.
Lloyds were the only bank that executed this really well. After just 7 clicks you can see how much the payment will cost, and before entering the payee information. In fact, it’s worth checking out Lloyds’ case study as it’s pretty exceptional.
And the banks that charge nothing—well, it’s still worth clarifying this each time. As an example, even Revolut charge a slight fee FX on weekends, so there’s certainly plenty for a user to be confused about.
When you send money to someone internationally, the receiver’s bank may charge them to process that payment. Or in other words, even if your bank doesn’t charge you for international transfers, the person you’ve sent £100 to might only receive £95.
These fees are called ‘foreign bank charges‘, and the worst part about them is that when you send someone money, you have no idea if their bank will charge them, and if they do, how much.
So someone, somewhere, had an idea: why doesn’t your bank give you the option to pay both the sender fee, and pay a little more to cover any foreign bank fee? That way you know exactly how much the person you’re sending money to will get, right?
Half of the banks offer this kind of fee payment option through the app:
Option to pay payee’s fees:
Does not give you the option:
Gives you the option to pay the payee’s bank fees:
Does not give you the option:
An entirely rational person would appreciate this option, even if they didn’t want to use it. But humans are surprisingly irrational.
Because the option exists, and people are being forced to select something, it’s no longer an option, it’s a decision.
But this decision isn’t straight-forward, and it’s quite daunting. There are three major things to consider here:
1: Lack of understanding
General consumers do not understand foreign bank charges.
2: Unpredictable fees
Banks may charge, they may not.
3: Unpredictable outcomes
If they don’t charge, do I get my money back or not?
Forcing the user to make this decision without any context or explanation is worse than not having the choice at all.
I’d remove the functionality entirely, and instead aim to better educate the user on what these fees are. Ultimately, they may reduce user churn by explaining that even if you use a free service, the recipient may have to pay these fees.
Lloyds were the only bank that I felt did an adequate job of this, who included a link to more information at exactly the right time.
Lloyds’ helpful link
Let’s pick on something way more subtle, that may seem insignificant: the use of flags when selecting the country you want to send money to.
Some banks show little flags next to country names, some don’t.
Comparison of flags vs no flags
With flags: Starling.
Without flags: Lloyds.
It’d be a mistake to assume that these flags exist in an ’emoji-rich’ world just to look nice—they actually serve a purpose.
Flags, like all iconography, are often far quicker at conveying meaning than words. They’re recognisable and distinguishable. As an example, which of the following items grabs your attention first?
Which of these grabs your attention first?
United States of America
US Dollar (USD)
It’s the flag, right? In fact, you’d be able to recognise the flag even if it was the size of an emoji. 🇺🇸
Reducing cognitive load—or simply: making people think less—is a really core component of building a great experience. In this context, the flags don’t replace the words, but they act as anchors for people to quickly find the item they were looking for.
It’s a minor improvement, sure, but when you apply this attention to detail to a whole product, you can make a something that’s less tiring to use.
When making an international payment your bank needs to ask you for the address of the payee’s bank, and sometimes for the payee’s home address too.
Most of the time this means manually typing an address, which is a more significant task than most people realise. Consider the following:
1: You may not know their address
You’d either have to ask them and wait for a reply, or Google it.
2: Unfamiliar format
Foreign addresses don’t all follow the same format. The user has to work out which elements go in which of the input fields.
3: Unfamiliar characters
i.e, characters and words not in your native language.
Now, imagine you’ve Googled the address of the payee’s bank, and it’s this:
CHUVASHSKO-DROZHZHANOVSKOYE, DROZHZHANOVSKIY RAYON
TATARSTAN RESPUBLIKA, RUSSIA
How confident are you at pasting that into the correct input fields?
But this problem has been solved already, and I guarantee you’ve encountered the solution whilst shopping online. Of course, I’m talking about address lookups.
How an address lookup works (Revolut)
You start typing an address.
It then live searches for addresses.
You select one, and it completes the fields.
And don’t assume that address lookups only work in the U.K.—there are plenty of third parties who offer global address searches.
Which of the banks utilise this functionality?
Uses an address lookup:
Pulls an address automatically:
You have to enter an address manually:
Uses an address lookup:
Does not ask for an address (pulls data automatically):
You have to enter an address manually:
Barclays and Metro take a different approach, which is to pull data themselves and not allow you to edit it. This would be great if it worked, but from my experience they often get this wrong.
Revolut were the only bank to implement this technique. I’m not sure why every bank hasn’t done this, but they should.
Firstly, I need to state the obvious: it doesn’t matter how good their experience is, people shouldn’t pay £30 in fees when they can get the same service for free.
But, would I pay £1 for a better service? Yeah, probably. Would I pay 25p? Definitely. So it’s not that all the banks have to be free, but they certainly need to be competitively priced.
But how do the experiences compare?
Honestly, from a UX perspective, this was a victory for Barclays and Lloyds—they’ve both built really good international payment journeys.
But, the winner here has to be Revolut. And until the other banks are priced competitively, I think all 3 challenger banks will continue to wipe the floor with the incumbents.
There’s more FinTech analysis like this coming soon.
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Here are some things I felt important to explain, but are non-essential.
Notes about making international payments
1. I used the native IOS where possible, then the mobile website where not. This mimics how I believe most consumers will make payments.
2. I’ve excluded external schemes, even if they’re affiliated with a bank. For example, I’ve ignored the Santander-backed PagoFX, primarily because although they’re affiliated with Santander, they require the user to download another app, and are not accessible from within a user’s online banking.
3. I always chose the cheapest option available. Some banks offer multiple methods of sending money, charged at different rates. In these instances I always chose the cheapest option.
4. This was on a weekday. Even Revolut charges on weekends, which is basically a fee to counteract any changes in the exchange rate that may happen on Monday morning. I made all these payments on a weekday, within trading hours.
5. This was my first international payment. The fees change depending on volume, and if you were regularly sending £10,000 abroad each month you may find that the price-ranking of the banks changes. So for this study, consider that this is a one-off payment under my monthly limit.
Variable exchange rate
In order to control the FX fees, I compared each bank to the real exchange rate as shown by Bloomberg, at the exact time I got my quote from each bank.
Here’s another example of anticipating regret:
You’re playing a particularly hard mission in a video game, and it’s taking way longer than you thought it would. You’ve already spent an hour, when you thought it’d take 30 minutes.
At the end of each mission you unlock something—say, weapons or cool items—but you never know what you’re going to unlock.
You will likely start anticipating regret. You don’t regret it yet, because you don’t know what you’re going to get, but you anticipate that you won’t actually get something cool, and will regret spending hours completing it.
The more time you invest in a process, the worse this regret gets. To the point where you’ve actually had a really bad time playing the game.
Notes on calculating % for ‘time to show fees’
To do this I counted the total number of clicks in their experience, and then the number of clicks it takes for the fees to be visible. This gave me a % of completion.
I counted the fees as being ‘visible’ even if I have to scroll to see them.