Quality Principle 8.2.2 of ACFID’s Code of Conduct mentions that members should be effective in their use of resources and minimise financial wastage. Unfortunately, adherence for industry participants can be a challenge when dealing with the hidden costs of international payments. Consequently, wastage is prevalent and at times unknown when sending funds across borders. This can include wastage from:
1. Transfer fees
2. FX margin on currency conversions by sending financial institution
3. Intermediary bank fees
4. Beneficiary bank fees
5. FX margin on currency conversion by the receiving financial institution
6. Investigation fees for when funds do not arrive as intended
StoneX Global Payments Michael Stachowiak, Head of Business Development, Australia and New Zealand, tells ACFID “The FX margin by the receiving financial institution, in particular, is the most significant and opaque of these costs as you have no control over the conversion process when done locally.”
This is most commonly seen when sending hard currency (AUD, USD) to project/partner markets. There is a common misconception by partners that they can receive a better rate converting the funds locally with their bank, however being a captive client, this is not always the case.
“Using local currency (or, as some call it, the functional currency) provides greater control, transparency and ultimately savings over how much money is received by partners in country, helping to minimise financial wastage for charities sending funds overseas”
Furthermore, the Code goes on to mention the measurement, analysis and review of financial performance in Compliance Indicator 8.2.3., One interpretation for charities working overseas can be to periodically benchmark one’s provider to demonstrate best practice adherence. The best provider today may not be the best provider tomorrow – so always review and monitor.
Join StoneX Global Payments at the ACFID National Conference as we unpack these hidden costs and help members better review their financial performance and minimise financial wastage for their overseas transfers and help maximise their donor funds.
ACFID formed a Corporate Partnership with StoneX Global Payments, one of the world’s leading Global Payment Exchange providers, in 2020, after their years of longstanding support and sponsorship of the ACFID National Conference.
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Captive client: a client who is unable to shop around, due to their funds being held on account with their sole provider
Hard currency: any major currency that is foreign to the local market (e.g. USD)
Intermediary: a middleman between an issuing bank and a receiving bank, required when international transfers are occurring between two banks in hard currency