UK - How to receive payments in euros

Question

My father as a business based in UK, but works mainly in Europe, receiving payments in euros.

His bank is HSBC that, apart from charging £8 for each transfer, applies a "custom" exchange rate (i.e. defined by the bank, not the official one). They provide International accounts in Euros or US Dollars, but they are even worse: you have to pay a £5 monthly fee, they still charge you £6 for each transaction and you cannot use the money: there is no card associated to this account, so you have to transfer the money to another account to withdraw the money. If the other account is the HSBC GBP account you'll get again their "favourable" exchange rate.

Is there any account in UK to receive foreign transfers that applies the official exchange rate?

Answer 1

See my comment below about the official exchange rate.

There is no "official" exchange rate to apply as far as I'm aware. However the bank is already applying the same exchange rate you can find in the forex markets. They are simply applying a spread (meaning they will add some amount to the exchange rate whichever way you are exchanging currency). You will almost certainly not find a bank that doesn't apply a spread. Of course, their spread might be large, so that's why it is good to compare rates. By the way, 5 GBP/month seems reasonable for a foreign currency (or any) acct. The transaction fees might be cheaper in a different "package" so check.

You should consider trying PayPal. Their spread is quite small - and publicly disclosed - and their per-transaction fees are very low. Of course, this is not a bank account. But you can easily connect it to your bank account and transfer the money between accounts quickly. They also offer free foreign currency accounts that you can basically open and close in a click. Transfers are instantaneous.

I am based in Germany but I haven't had a problem with clients from various English-speaking countries using PayPal. They actually seem to prefer it in many instances.

Answer 2

I am not sure about transferwise and how they work, but generally when I had to transfer money across countries, I ended up using a foreign currency/transfer company who needed the destination account details i.e. a GBP account in the UK in your case, and money from the source account.

Basically that means your father would need to open an EUR account, probably in an EU country (is this an option?) but may be in the UK is fine too depending on transfer fees. And a GBP account in the UK, perhaps see if there is a better business account than HSBC around, I have used them as well as Santander before.

The only FX transaction done in this straightforward set up is the one performed by the specialised company (there are a few) - and their spread (difference between interbank i.e. "official" and your price) is likely to be around 1.0 - 1.5%. The other expenses are transfer fees to the FX company account, say a flat fee of $25 for the SWIFT payment. The full amount less the spread above then goes to your UK GBP account. There are still the running costs of both EUR and GBP accounts of course, but here the advice would be just to shop around for offers/free banking periods etc. Point being, given the saving in FX conversion, it might still be a better overall deal than just letting HSBC deal with it all.