Why we ask you to pay in JPY or US$ or €…
We price all of our international tours in the currency that our suppliers invoice us in. So Japanese Yen (JPY) for our Japan photo tours, Euro (€) for our European photo tours and US dollars (US$) for many countries that use the US$ for business, such as the Bhutan photo tour and Cambodia photo tour. Tours within Australia, such as our Tasmania Photo tour, The Pilbara photo tour (coming soon) or the Kimberley photo tour (returning soon) we price in Australian dollars (AU$) for the same reason.
All of our accounts for these international currencies are domiciled in Australia, with the Commonwealth Bank (CBA). But even if you are transferring from within Australia, it’s still considered an international transaction which requires an international currency conversion. This also applies if you reside outside of Australia and are converting to AU$ for tours within Australia.
Can we just pay with AU$…
“Can we simply pay with AU$ for this tour”... is a common question from our local Australian clients feeling a little overwhelmed with the whole foreign exchange and international transfer thing. It is a question we get asked a lot, so let me try and summarise our reasoning.
International tours and international payments
Since our international tours are… well, international, all of our expenses (Hotels, meals, Transport, guides ect…) must be paid in the local currency or the currency those suppliers accept. The AU$ exchange rate with the US$, or the € or JPY is very volatile, it can fluctuate as much as 15% in a few weeks. Who knows what it will do tomorrow?
Because our tour logistics are fixed in these foreign currencies, and we set our tour price up to 18 months in advance, that volatility can give us many sleepless nights. We would be carrying the risk of the AU$ devaluing, for the full 18 months. In the current world economic climate, continuous unpredictable currency fluctuations are normal, so that’s a lot of sleepless nights.
There are several ways we could handle these fluctuations…
- We could price the tours in AU$ and buy forward currency contracts as we setup tours. Meaning we lock in an exchange rate at a fixed price. This would work, but forward currency contracts are expensive, especially with such unpredictable exchange rates. This means the tour cost goes up with these extra hidden costs.
- We could price the tour in AU$ and simply build into the T&Cs a term where any negative currency variation causes us to invoice you for more money. This is what most local tour companies do when they run international tours, it’s buried way down in the fine print that few people read. We don’t feel this is ethical or honest, and it’s also a great way to make clients hate us! Just when you think you have fully paid and you’re ready to go, we invoice you for more!
- We could build a “fudge factor” into the price, based on our worst projections for the currency looking forward… also called a guess. This would require us to push up the tour price considerably to cover potential currency disasters. This would make our tours very expensive for you, and still cause us many sleepless nights, as who can predict the future?
- We charge the tour cost in the currency we pay all the logistics in, JPY, US$ or €. That allows us to fix a fair and reasonable tour price that is stable and everyone knows where they stand. We don’t send you unexpected invoices and the process is honest and transparent with no extra hidden costs to you. The down side of this approach is the inconvenience of international currency conversions for our tour participants. But considering the other options outlined above we believe this to be the lesser of all evils.
What’s the best way to make an international money transfer?
Most people begin by going to see their bank. Often the staff in the bank know little about international funds transfers, so you can waste hours getting all sorts of conflicting information.
From the Bank Branch
If you do successfully achieve an international funds transfer in person from the branch, your bank will give you a fairly ordinary exchange rate and charge a transfer fee. Photo tour payments involve substantial amounts of money so the uninspiring exchange rate plus the bank fee adds up.
EFT from internet banking
International EFTs using your Internet banking are simpler. They are very similar to a domestic EFT – from bank to bank in your local currency – but with a couple of extra boxes to fill in. You will need to know the SWIFT code of the destination bank, amount in final currency to pay and the physical address of the receiver, but nothing too complex. However, they still have the same mediocre exchange rate and the same bank fee.
Forex Agency Transfers
A more efficient way to make substantial international transfers is to use a Forex Agency (Foreign Exchange Agency). Forex agencies specialise in international funds transfers and they operate all over the world. Usually you need to sign up for an account before you begin, show them some ID, fill in a couple of forms, just like opening a bank account. In most cases the process takes about 30 minutes and can be done online.
How a Forex transaction works
You simply transfer a specified sum to the agency via normal online EFT from your bank in your home currency. The agency converts the money at market to your specified currency and electronically transfers it to a stipulated bank account, anywhere in the world. Simple. They handle all the conversions, the rate is better and the fee is built in.
How do I find a Forex Agency?
The best way to find a Forex near you is to ask Google for Forex companies in your country, there will be many. Read a few reviews and find a friendly one. Generally they are easy to deal with and unlike staff at most banks, they actually understand international money transfers because that’s what they do.
Peer to Peer Transfer Agencies – Transfer Wise
Peer to peer organisations such as Transfer Wise are different to a Forex company. They can only convert money into local currencies they hold accounts in within the destination country.
For example: You live in America and want to send AU$ to an account in Australia. So you EFT the agreed US$ amount to Transfer Wise directly from your bank. Transfer Wise then pay out of their local account in Australia to the receiving party in AU$.
Why are they different to a Forex?
The system relies on a large network of unrelated people using the company to ensure they have sufficient currency in each country to balance the transactions.
No actual international transfer takes place, they simply deposit your US$ in their US account, and pay from one of their own local accounts in the destination country at a little below the market rate.
So in Australia they can only pay out AU$. What they can’t do is pay out JPY to a JPY account held within Australia.
Has this Helped?
I hope this rather long winded explanation has clarified this somewhat murky subject. As with anything unfamiliar, it can seem daunting at first but is easy once you know how. It’s always the first transaction that is the scary one. If you still need help, feel free to email me at email@example.com