New Wise Research Reveals Indonesians Pay 15,09 Trillion Rupiah For Foreign Exchange Transactions in 2022

Jakarta, Indonesia, 18 October 2023 - Wise, a global technology company building the best way to move and manage money around the world, uncovers that Indonesians pay approximately Rp 15,09 trillion in foreign exchange fees in 2022, of which roughly Rp 6,83 trillion were hidden as exchange rate markups on currency conversions, payments and card purchases. The remaining Rp 8,26 trillion were spent on transaction fees. 

These figures were from independent research carried out by Capital Economics in July 2023, which aimed to estimate the scale of foreign exchange transaction fees in Indonesia. 

The scale of hidden fees problem in Indonesia 

Among Indonesians who often send money abroad, most are generally aware of the two primary costs in international transfers: the upfront transaction fee and the exchange rate. However, many are still unaware of the actual cost of remittances. Today, the global average fee of sending money abroad is at 6,3%. This means that transferring USD 1,000 (± Rp 15 million) to Indonesia still adds up to USD 63, equivalent to about Rp 1 million in fees. 

While upfront fees are usually stated by providers, they often do not represent the total cost of the transaction. In fact, providers tend to add an undisclosed markup on the exchange rate, instead of using the fair, mid-market rate, resulting in consumers being unknowingly charged more than the initially advertised amount. 

This issue recently became a topic of discussion on Twitter or X, after Ayudia Chaerani, also known as Ayudia Bing Slamet, an Indonesian actress, writer and musician, shared her experience of sending money abroad to her family and friends on the social media platform.

“I remembered there was a time when I transferred money to my friends and family. I know there was supposed to be a fee but when the money arrived, it was less than what I received. If I had known about this, I would have found other ways to transfer money,” she tweeted.

Ayudia’s experience is likely not unique, as more people and businesses are becoming international and the need to move and manage money is growing. Today, there are more than 50,000 Indonesian students who are studying abroad every year. The study found that consumers sending money from Indonesia, including parents with children studying overseas, are paying Rp 4,03 trillion in total fees in 2022, which includes Rp 2,70 trillion in transaction fees and Rp 1,32 trillion in exchange rate margins. 

Indonesian foreign workers are also another group that encounters hidden fees. Consumers sending money to Indonesia from abroad are paying a total of Rp 7,61 trillion, which includes Rp 4,76 trillion in transaction fees, and Rp 2,84 trillion in exchange rate margins. Of the share of total fees paid on inward remittances to Indonesia in 2021, Saudi Arabia, which has the second-largest number of Indonesian workers, ranked first at 37.5%, followed by Malaysia (25.2%), United Arab Emirates (7.5%), and Singapore (4.1%).

The study also revealed that Indonesian travellers incurred a total of Rp 3,45 trillion in fees when they spend overseas, of which Rp 2,66 trillion are hidden in exchange rate mark-ups. 

Wise’s #TransparanBarengWise campaign aims to drive hidden fees awareness 

Wise has launched a nationwide campaign #TransparanBarengWise to educate the public on hidden fees and promote price transparency across the industry. Providers in Indonesia are making significant strides in addressing this cross-border problem, but there is still more work to be done. 

“Indonesians are increasingly seeking improved service, faster speeds and fairer pricing, due to the rise of the Internet and technology,” said Elian Ciptono, Country Manager of Wise Indonesia. “The results from our survey are pretty clear. We’re seeing a noticeable drop in foreign exchange fees over the years in Indonesia, from Rp 21,47 trillion in 2018 to Rp 15,09 trillion in 2022, which we see as an industry-wide evolution and trend towards more transparency as a benefit to everyone."

"Through this campaign, we hope to inform and educate the public about transparency and what it means, which is also aligned to our long-term goal of helping people to move and manage money in a faster, cheaper and more transparent way,” he added.

Consumers are still recommended to do their due diligence and research the best providers that provide fair currency exchange rates and transaction fees, or use an international money transfer platform like Wise. 

Wise offers the ability for Indonesians to send money to over 70 countries globally at the mid-market exchange rate, found on Google or Reuters, with no exchange rate mark-ups.