The cost of crossing the border: Caroline Merrell looks at the hidden charges of money transfer

TRANSFERRING money between different countries can be time-consuming and costly. On small amounts the costs can be so high that the entire sum is wiped out.

Quirks in the other country's banking system can also bring unexpected increases, as Lloyds Bank customer Bridget Poore found out.

Mrs Poore has been a Lloyds customer for 40 years. For the past 25 years, since her husband died, she has been receiving an annual dividend cheque from the Kenya Power and Lighting Company for 829.45 Kenyan shillings, about pounds 10.

'I have received these cheques for several years as executrix of my late husband's estate, and Lloyds have changed them for me. But recently they told me that a minimum charge of pounds 15 was always levied . . . I told them there was no point in pursuing the exchange on a cheque worth pounds 10.' Previously the charge would have been about pounds 1.30.

Lloyds said that its charge for cheques under pounds 100 was pounds 5 for each transaction, but the minimum was subject to the discretion of the branch manager. It said it was moving to dealing with Kenyan banks from a negotiation to a collection basis.

Under the former system, Lloyds would pay the customer before it had received the money from the Kenyan bank. Now, because of delays in receiving the money from Kenyan banks, Lloyds will not pay out the money until it has received it.

A Lloyds spokeswoman said that it would use its discretion to keep the costs down for Mrs Poore to about the same level as she was paying previously.

It is not just developing countries that pose a problem. With more developed countries, too, the process can be equally as complicated and customers are often unsure about the rate of exchange or the total charge, as sometimes the customer's own bank will pass on an unknown charge from the foreign bank.

Leon Brittan, EC commissioner, is keen that UK banks become more transparent about the charges on cross- border payments, and that customers are given an accurate idea of the payment time.

National Westminster Bank charges a pounds 5 flat fee for payments from abroad made on a collection basis up to pounds 100. Above that, it costs 30p per pounds 100, with a minimum of pounds 16, and a maximum of pounds 80. For cheques paid from abroad on a negotiation basis the charge is a pounds 5 flat fee for under pounds 100, while for sums above pounds 100 the cost is 0.275 per cent per pounds 100. The minimum charge is pounds 9, maximum pounds 80.

Sending money abroad through NatWest costs between pounds 8 and pounds 40 depending on the size of the payment. These costs may be inflated by agents' fees in the other country.

Sending money abroad through TSB costs between pounds 12 and pounds 40, while Co-op offers a flat fee of pounds 5 to customers and non-customers alike. It also guarantees that the transaction will be completed within a published timescale at an agreed exchange.

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