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Because of the nature of its economy and geography, Switzerland and its currency have a strong link with the Euro. Exchanging these two currencies is a common operation for many in Switzerland and its neighboring countries.
Whether you are a cross-border worker with a Swiss salary to convert each month in Euros, a business paying or sending invoices in different currencies or simply an individual managing his/her currencies between several bank accounts, the CHF-EUR currency exchange is an operation that can be costly if you don't pay attention.
Indeed, hidden fees can be charged when exchanging currencies. What are they and how are they hidden?
Simply in what is called the exchange margin. That margin is a percentage added to the interbank exchange rate, i.e. the reference rate at which two currencies are traded on the financial markets without making any profit.
To earn money, a margin is added to it and reduces this way the actual amount that you receive. For instance, if the interbank rate is CHF 1.20 for € 1.00, but your bank only gives you CHF 1.15 for € 1.00, it means that it earns CHF 0.05 on the operation. It is not much for one Euro, but on thousands it can quickly make a lot of money.
Most banks don't disclose that information, and the only way to see the cost of a currency exchange is to take the amount converted a posteriori and compare it with what you would have received by using the interbank rate.
Banks never really had competition in this domain, and they always could charge comfortable fees on the currency exchange of their customers. Brick-and-mortar exchange counters offer an alternative that is marginally better than banks, but withdrawing and exchanging cash is not exactly an ideal solution in terms of time and safety.
It is possible today to make bank transfers without letting the bank do the currency exchange but giving it instead to a specialized company. By choosing a currency exchange service carefully, you can easily enjoy the best exchange rates of the market and therefore save significant amounts of money on each transfer.
The table below compares CHF-EUR rates charges by Swiss institutions as well as exchange counters of the Geneva region for an example amount of CHF 10,000.
This information was included in the comparison as it is an important one for cross-border workers and businesses.
Having a dedicated Swiss IBAN is required for a cross-border worker wishing to avoid opening a Swiss bank account and collect his/her salary directly converted in Euros on a French/German/Italian bank account.
It is also important for businesses to manage and automate money flows without adding any complexity to its existing processes, accounting and reporting.
This information indicates if the service includes an account on which you can deposit money. If yes, then it must be reported in your tax filling like any other bank account. This fact may influence your choice depending on your needs and personal context.
|Service||CHF sent||EUR received||Margin||SEPA transfer||Dedicated Swiss IBAN||Bank account|
|Crédit Agricole Next Bank||10,000||8'242||2.14%||0||Yes||Yes|
Note: The exchange rates of other banks are calculated by taking their average margin on exchange on the basis of 30 days.
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