Standardized Disclosures for FX

Transparent & Standardized Disclosures

The Level One Project supports the use of a transparent and standardized methodology for disclosing fees in simple, easy to understand terms. This Spotlight recommends how to disclose the cost of all cross-border transactions to end users.

Total transaction costs are often defined as all relevant charges, including sending and receiving fees, fees to any intermediary and currency conversion costs. While the G20 focus on lowering the cost of remittances has resulted in almost all remittance providers providing a breakdown of total fees and currency conversion costs (FSB 2024), comparing options is not easy. This is because users must perform their own investigations to fully understand the cost structure as providers are free to market as they choose, often using deceptive terms like “zero fee” when, in fact, a higher FX rate hides the fee, making it less beneficial to the consumer.

An illustration of a transparent and comparable standardized disclosure for all cross-border payments (not just remittances) would list the elements shown on the next page in “Imagining a Standardized Disclosure”; the Scheme rules will define the calculations.

Key to enabling a true comparison is using the same underlying FX rate (i.e., a common interbank rate issued by the central bank, other governmental entity, or a standard like Reuters Reference Rate) before adding a unique mark up or spread.

This will require alignment on both terminology and methodology – neither of which exists today. Where a benchmark or reference rate does not yet exist, It will need to be created.

Regulators and the Scheme should guide DFSPs to target a TotalCost (%) for each transaction that is within the G20 target of 1% for retail payments and 3% for remittances. This guidance does not tell DFSPs what to charge but rather orients the market competitively, toward an inclusive policy objective. Attaining these goals is especially important for payments made by low income individuals and micro-small businesses.

Imagining a Standardized Disclosure

Using a shared cost disclosure methodology for all crossborder transfers, DFSPs should display the total cost of FX transaction as a single value—this value includes all fees, levies, taxes, and FX markup—to the payer prior to the payer confirming the transfer.

We present here a sample illustration of the disclosure. The illustration shows the components required for a disclosure. While all components are required to provide a transparent disclosure, we recognize that local market context may influence end user preferences for how the components are presented (which may lead to an illustration other than the one shown here). The exact illustration selected should prioritize end user ease of understanding the total cost of their transaction and enable easy comparison of total cost across providers.

We invite the ecosystem to test end user preferences in order to contextualize the best visual representations of the data that meet users where they are and consider local context, including language and education levels.

Your Transaction Breakdown
Amount Sent	[amount in sending currency]
Transaction Fees	[amount in sending currency]
Levies and Taxes	[amount in sending currency]
*FX Rate Applied	[value]
Amount Received	[amount in receiving currency]
*Benchmark FX Rate	[value]
Total Transaction Cost	[amount in sending currency]
	[percentage of amount sent]

*Shown as “1 unit of sending currency = x units of receiving currency”. For example, in the case of Zambian Kwacha (ZK) as sending currency and Malawian Kwacha as the receiving currency, the FX rate applied, and benchmark FX rate should be expressed as “1 ZK = 74.3700 MK”.

For instructions on how to calculate the recommended disclosure, go to ‘Open the document‘ on the right.

Example of Standardized Disclosure

Setting: A small trader living in Zambia needs to transfer 100 Zambian Kwacha (ZK) to another small trader in Malawi for goods purchased. She wants to use one of two different digital payment providers that can facilitate the payment.

A clear disclosure of the total cost of the FX transaction as a single value—this value includes all fees, levies, taxes, and FX markup—helps her select the best option.