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I live in the UK and have a UK individual (not business) bank account only. I have done some remote work for a client in the USA and I have already agreed to their terms before work started which included a clause that I will be paid in USD.

If I have them pay the USD directly into my bank then I assume I am at the mercy of whatever exchange rate my bank decides, which I expect to be a very poor rate for me as they know I don't really have any choice.

But do I have a choice? Are there any other options open to me here? Can I choose to use a third party to do the currency exchange in order to find a better rate? How would that work exactly?

Just in case it's relevant, the sum I am exchanging is 4 figures.

  • First, call your bank to see if they can even deposit a US check for you. Second, ask them what their exchange rate would be and compare to public exchange rates. I suspect it will be a good rate. – gaefan Feb 18 '18 at 13:43
  • @JeffO'Neill, most UK banks don't do that. Some do, with a large fee, and usually only if the cheque is for a very large amount. As well as a large fee, the exchange rate per se offered is poor. – Fattie Feb 19 '18 at 15:32
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One of the peer-to-peer transfer services (like TransferWise, CurrencyFair, etc.) should help you. These services are radically cheaper than banks. I tried to research why the rates are cheap and the answer was quite technical. These services match currency moving in either direction.

My understanding of the operation of peer to peer services is this: Assume a person A in the US sends X dollars to B in the UK. And let a person C in the UK sends pound equivalent of X dollars to D in the US. Now, A's money will be routed to D while C's money will be routed to B.

Therefore, in reality, no currency exchange takes place and hence the rates are low. This is not the case with bank transfer.

  • That makes a lot of sense. Thank for the explanation! – Darren H Feb 18 '18 at 16:25
  • Wikipedia page for TransferWise says it is P2P. Seems it is a pioneer of the concept. – Kannan Feb 18 '18 at 17:17
  • Actually @Kannan dude I just phoned transferwise, and the lady confirmed they are a completely normal currency exchange (like ofx, their competition). Absolutely no connection to P2P. Note that transferwise absolutely and totally explain how they work - with a video - on this page: transferwise.com/us/ . it completely explains every step of how the money goes through them. (There is no connection at all to P2P.) (I'm pretty sure the only actually P2P experiment still operating is midpoint.com.) – Fattie Feb 19 '18 at 0:45
  • @Fattie I just checked the video on the homepage of TransferWise. On the timeline, please check the part between 0.55 to 1.05 seconds. The principle is same as I explained. May be the response you got from the company rep was that there is no "real time" P2P. Nevertheless the principle of operation is still Peer to Peer. May be I will try to email someone and clarify further. – Kannan Feb 19 '18 at 2:59
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    Oh boy. This has become one of "those" posts on the internet. What a time waste. – Fattie Feb 19 '18 at 15:16

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