CurrencyFair – transferring money overseas

Transferring money overseas and navigating currency fluctuations can be a real challenge for many SMEs, but with the rise of FinTech new payments solutions are becoming more readily available. CurrencyFair is one such solution that helps people and businesses save money on transfer fees and exchange rates. SME caught up with partnerships manager Ben Geoghegan to gain a clearer picture of this industry…

Tell me about the company – where did the idea come from?

It started with the co-founders who were expats – two Australians, a Welshman and an Irishman –when they had to send money back to their respective countries they would walk into the bank and queue up for 45 minutes during their lunch break, miss out on their sandwich and then the person at the desk wouldn’t know how to send money to another country anyway. When they would finally work it out they would charge them a £15 upfront fee and stick a hefty exchange rate margin on top – so if you think a bank charges 3-5% usually – that’s four or five quid of every hundred that you send stripped away that you just don’t get.

Then they thought if one of them is in Australia and one is in London sending money in opposite directions, how about they just hop online and Google the exchange rate, then put the equivalent in each local account? This way you skip the margin and the sending fee, and if it worked for them it could work for others.

What is the process?

It’s pretty easy, it’s like opening any account; email, name and password, and prove who you are bank statement and proof of address. Once that’s approved you put money in, transfer it from your local account in London say to your CurrencyFair account in the UK so it’s just a local transfer, then you go on to the CurrencyFair platform and choose the country you want to send it to and make the exchange. You can do it instantly, and the average exchange rate margin is 0.35% as opposed to 4-5%. A lot of our business clients use it to pay foreign suppliers. The whole thing can be 1-2 working days.

What are the benefits for SMEs?

The main one is saving a lot of money. We have a second option called the Marketplace that you can use if you’re not in a hurry. You can use our Marketplace mechanism to put money up at a rate that is even better than you see on Google, and if someone is prepared to match that in the opposite direction it’s automated, it just happens. But if there’s demand in the opposite direction you can actually beat the rate you see on Google and that exchange rate margin is only 0.15%.

When signing up to a service like this, what should SMEs look out for?

In the past when we first started it might have been seen as more of a risk, but with the rise of FinTech it’s taken a lot of that fear factor away.

SMEs should certainly look for proof that there’s been a successful service in place, that other businesses are using it and are happy with the service. They should check that there are segregated accounts, and that the company is fully regulated through the relevant organisations.

From there it’s about how you can use the service to your maximum value. Can you beat the interbank? I’m not aware of any other company in the world that lets you beat the interbank rate, which is the rate you see when you Google it. If you’re setting up recurring payments each month to suppliers or foreign staff or company transfers it adds up pretty quickly.

Who are your biggest competitors?

The banks are the big ones. Companies out there are trying to do peer-to-peer to a degree where they are money moving in opposite directions, but all they are using that for is to manage supply of money. They’re not actually matching people or businesses against each other automatically to the point where you can beat the interbank rate, and that’s the difference. At the end of the day the banks have the absolute lion’s share of the market.

The thing that does drive me crazy is that people think PayPal is free. Banks, even just postal services, they pair up with a money company and claim that the money transfer or the money exchange is free. It’s not; it’s in the exchange rate where the huge cost is. It’s not actually that hefty £15 fee when you go in to the branch that they charge you, that’s almost a distraction, it’s the margin on top you need to watch.

What are the biggest issues facing SMEs when they go to convert currency?

The big one is transparency. Businesses are trying to reduce their costs all the time and what you see is not always what you get. If you go on to the website of a money transfer service bank, is the rate that you see the actual rate, or when you look at the fine print and the terms and conditions is that number that they’re showing you the interbank rate? That deception costs SMEs money, because you sign up and when you get to the end result, oh no, it wasn’t the final cost that I would be paying it was the interbank rate with no charges on top.

Special offer for SME readers – Try CurrencyFair and your next five transfers are fee-free when you register here today: