Sending money home: the fee is not the cost, it is only the part they show you

When you send money home, the figure they quote at the counter — «five euros commission» — is not what the transfer costs you. It is the part they show you.

The real cost is something else, and there is only one way to measure it: how much actually reaches the person waiting for it.

The cost is made of three parts, not one

The Bank of Italy sets it out plainly. When you send money abroad you pay:

1. the fees on sending, the ones you are told about;
2. the exchange rate applied, where two currencies are involved;
3. the fees on receiving, paid by whoever collects it at the other end.

You see the first. Your mother discovers the third at the counter. Almost nobody sees the second, and it is often the most expensive.

The exchange spread: the part you cannot see

The rate they give you is not the market rate: it is slightly worse. That difference is called the spread, and — these are the Bank of Italy's words — it conceals an additional commission.

This is why «zero fees» can cost more than «five euros of fees». An operator who takes nothing on sending can take it all on the exchange rate, and on the form you sign that part does not appear as a cost: it appears as a number.

One question, to ask before signing

Do not ask «how much does it cost me». Ask:

«If I send 300 euros, exactly how many pesos does the person receive?»

That figure — the net amount arriving — puts everything together: fees here, exchange rate, fees there. It is the only number you can compare between two operators, and it is precisely what the Bank of Italy advises: obtain several quotes specifying the net amount the beneficiary will receive.

If the counter cannot or will not tell you, that is already an answer.

Two public sites to compare on, before leaving home

You do not need to walk from counter to counter: the comparison is done beforehand, free.

• mandasoldiacasa.it — compares the cost of sending money from Italy to various countries, by operator and by channel. Every month it records both the fees and the exchange-rate margin, using the World Bank's method: it was the first site in the world to receive that certification.
• The Bank of Italy's remittance cost calculator, on its «L'economia per tutti» site, which tells you how much actually reaches the beneficiary.

There is also the World Bank's international portal, remittanceprices.worldbank.org, which is where the method comes from.

Before and after: two habits that save money

Before: get several quotes, always on the amount that arrives, and have the fees, taxes and exchange rate given to you in writing.

After: check that what was promised actually arrived. It sounds obvious, and it is how people notice that an operator has changed the terms without saying so.

And redo the comparison from time to time: costs change, and the cheapest operator two years ago may not be the cheapest today.

Do you need a bank account?

No, an account is not required in order to send money. But having one opens channels that often cost less than cash counters — and, above all, it puts you in a position to choose rather than accept whatever is downstairs.

If you think you cannot open one, read this: the basic account, which the bank is obliged to open for you, free with an ISEE below € 11,600.

One thing never to do

Do not send money through people who offer to carry it by hand or through informal channels, however well known. If something goes wrong there is no receipt, no complaint procedure and nobody to ask. Regulated operators are supervised and must give you the terms in writing: that is the difference between a cost and a risk.

Found an operator that works out well, or one that delivered less than promised? Tell us in the Money and bills section of the community: on this, the experience of people who have done it beats any table.