It comes down to money and the cost to get it to you.
What is the online rate that I can see on Google or XE?
The rate you see on XE or Google is usually called the 'live rate' or the 'interbank rate' or even the 'wholesale rate'. Basically, it is the rate that you should get if you are buying or selling a wholesale amount of currency. This might be one bank buying or selling more than $1,000,000 to another bank.
So why can't I get that rate?
To receive this rate without any other fee or charge, you need to be buying or selling a wholesale amount of currency. Most Aussies buying foreign currency only need 1 or 2 thousand dollars.
The other reason is that the retailer that you exchange currency with, needs to make money. They need to make money to cover things like:
- The cost to buy the banknotes: When you buy currency from a money changer, they act as a retailer for the money. These stores have to buy it from a wholesaler and they can't buy it at the online rate. The wholesaler will charge them a margin which they pass on to customers.
- The cost to run the store: Just like any other retailer, money changers have costs like rent, wages and insurance.
- Profit: Years ago, many money changers would charge a commission. This would cover the cost to buy the currency and their profit. These days, they bake their profit into the rate.
How can S Money offer the best rate that is seen online?
S Money is an online currency exchange. The means that we don't have the high costs of running a store like security, insurance and rent. It doesn't mean we can sell currency for free though. We still need to pay for wages, administration costs and make a profit.
Instead of making money by hiding the margin in the exchange rate, S Money charges a service fee. That way, customers know exactly what they are paying for and don't need to worry about getting ripped off with hidden fees.
