Making an international payment

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.

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:

Firstly I wanted to see how large the sender fee was.

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.

So I compared the exchange rate offered by each bank, with the live exchange rate on Bloomberg, including the FX fees.

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?

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.

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?

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.

This is how bad they were:

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.

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:

An entirely rational person would appreciate this option, even if they didn’t want to use it. But humans are surprisingly irrational.

But this decision isn’t straight-forward, and it’s quite daunting. There are three major things to consider here:

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.

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.

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?

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:

Now, imagine you’ve Googled the address of the payee’s bank, and it’s this:

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.

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?

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.