Commonwealth Bank will absorb correspondent bank fees on all foreign exchange transfers, saying it wants to make international money transfers simpler and cheaper. 

“Correspondent banks help move money between countries but they can deduct fees from an IMT. CBA is now absorbing these correspondent bank fees on behalf of our customers,” the bank said in a statement yesterday.

CBA’s move includes all its offered currencies, which adds up to around 200 countries.

The bank said it was motivated by a desire to make sure IMT costs did not add to customer stress or confusion as foreign travel starts up again.

However, its move can also be read as a response to the growing presence of lower cost FX specialists, as well as criticism from the Australian Competition and Consumer Commission that banks’ FX pricing is expensive and opaque.

Canstar released an IMT star ratings report this month, giving outstanding value awards to TorFX, Wise, CurrencyFair, XE and WorldRemit – not a local bank name among them. Canstar awarded 80 per cent of its scores on cost and 20 per cent on features.

Canstar said: “Our research found that these alternative providers tended to offer better exchange rates and low or no fees, in comparison with some of the more recognised competitors.”

Compared with the five-star performers, CBA was at the bottom of the rankings with two stars.

In 2019, the ACCC reported that IMT pricing was complex and difficult for consumers to understand and that “loyalty to the big four banks costs consumers”.

It said newer non-bank suppliers had changed the competitive dynamic for IMTs by offering lower prices and better features.

In August this year, the ACCC reported that as a result of its 2019 review and recommendations IMT providers are giving consumers the tools they need to compare the total price of transactions, giving consumers the means to identify the best deals in the market.