Study: Malaysians Unknowingly Lost Nearly RM3 BILLION in Foreign Exchange Fees in Just 1 Year

A new study by Edgar Dunn & Company (EDC), a global strategy consulting firm, found that Malaysians had unknowingly lost a staggering RM2.99 billion to hidden foreign exchange (FX) fees in 2023 alone.

The research, commissioned by Wise, a financial technology company focused on global money transfers, further asserted that if these hidden fees continued unchecked, the amount lost by Malaysians would increase up to RM3.3 billion annually by 2029. 

Malaysians set to lose RM3.3 billion annually from hidden FX fees by 2029

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In a press release, Wise revealed that the 2023 hidden fee data from EDC were calculated based on the exchange rate margin offered by the largest banks in Malaysia when their customers move money from the country.

The data was in RM (converted using the average exchange rate for USD/RM for 2024) and expressed in millions. As for the fee data from 2024 to 2029, they were projected based on the expected GDP growth of Malaysia.

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Moreover, the EDC research, conducted between September and November 2024, analysed the cross-border payment landscape using a market sizing model, which leveraged various data sources to project growth rates and allocated market size across different regions and customer segments.

Additionally, the hidden fees data was analysed to assess trends and identify areas of concern.

Most Malaysians are oblivious to these hidden FX fees

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Besides that, Wise also referenced the findings of a survey on consumer understanding of FX payments conducted by YouGov, a global Internet-based market research and data analytics firm.

The survey was conducted from 6 to 10 February 2025 on a nationally representative sample of 1,000 Malaysians aged 18 and above. The data was weighted by age, gender, race and region to reflect the latest Malaysian population estimates.

The survey found that 76% of Malaysians who transfer money internationally believe they ‘somewhat’ or ‘fully’ understand the true costs of these payments.

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However, only 18% of these Malaysians recognised the hidden FX margins impacting their transfers. 

Wise provided an example of an international transfer of USD 1,000 (approximately RM 4,424) advertised as “fee-free” could actually cost RM 159 in hidden FX markups if a 3.6% margin is applied.

The statement elaborated,

“While upfront fees are usually stated by providers, many providers tend to add an undisclosed markup on the exchange rate, rather than using the fair, mid-market rate (the rate typically seen on Google). This results in consumers paying more than expected.”

The survey also explored how Malaysians who have sent money abroad are doing so, with PayPal leading the way (52%), followed by banks (44%), and Western Union (33%).

While many assume these providers are transparent about their fees, hidden exchange rate markups often go unnoticed. As more Malaysians send money abroad for family support, education and healthcare costs, these charges can quickly add up, becoming a significant financial burden.

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How to spot hidden FX fees

With all of that in mind, Wise advised Malaysians to follow these 3 steps to spot hidden FX fees:

1. Compare the exchange rate to the mid-market rate

The mid-market rate is the rate that you will usually see on Google or Reuters, which is the midpoint between the buy and sell rates on global currency markets. To check, simply search “1 USD to RM” on Google or Wise’s currency converter. Then, compare this to your provider’s rate—if it’s worse, they’re adding a markup.

2. Watch out for “zero-fee” or “low-fee” claims

If a provider advertises zero fees, chances are they’re making up for it with a hidden FX markup. Always compare their exchange rate to the mid-market rate to ensure you’re not losing money.

3. Read the Fine Print

Always read the terms and conditions. The fine print can reveal hidden fees that are not advertised elsewhere, such as foreign transaction fees charged by credit card companies. Always check the fine print before making a transfer.

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So, what do you guys think of Malaysians losing nearly RM3 billion in hidden FX fees in 2023? Share your thoughts with us in the comments!

Also read: LHDN Collected RM184.805 BILLION in 2024, the Highest Direct Tax Collection in Malaysian History