Cutting out the Banking middleman in Money Transfer
People travel around the world; work abroad; and do business globally since decades. They struggled to seek the best way to cut costs when transferring money through banks.
However, is it a fair exchange rate for users? Check out CurrencyFair, TransferWise or WeSwap to see the difference.
Brett Meyers, an Australian after moving to Ireland became aware of transferring issues, and how expense the process can be. However, many years ago, the Asian communities who live in USA had strived to figure out an efficient method to transfer money back to their home countries with fewer fees.
For example the Vietnamese community who is living in the US. At this time transferring money back to Vietnam with a complicated banking system was not an ideal option, therefore some of the money transfer organizations had started up their concept of Family Exchange Money.
This concept is now developed to be up-to-date with the current banking system and legal terms and conditions. Efficiently, with a combined background in technology and finance, Meyers and a group of colleagues set out to solve the problem, creating the online marketplace CurrencyFair that was launched in 2010. It’s now offering users a new option to deliver safe transfers at a fraction of the fee and with a better rate.
CurrencyFair works based on exchanging between individual users, it means an individual can sell or buy currency from someone else. People can either exchange using the best rate currently available at the moment, or CurrencyFair offers your funds at a rate of your choice and wait for another user to match you.
“We don’t do what I’d term as the remittance corridors,” says Currency Fair chief executive officer, Brett Meyers on Forbes. “We focus on flows going in both directions. Our innovation is solving the big margin that banks charge. There are others concentrating on remittance where the innovation is often more about the payment method and getting money in and out.”
With only a €3 fee deposited with CurrencyFair, it ensures the transaction is accomplished between accounts. Follow the concept of cutting out the banking middleman, CEO Meyers says the model is 90 percent cheaper than using banks. “We came up with a way of transferring money internationally without involving international transfers. It works on the principle that I might be sending Euros back home to Australia for Christmas, at the same time there are plenty of people with Aussie dollars that want Euros — for example, a person who emigrated there needs to send money back to pay the mortgage”(thelocal.no)
Source: CurrencyFair Blog
Nevertheless, in the 21st century where internet develops and delivers information as fast as the speed of sound, not only CurrencyFair runs on this concept. In January 2011, TransferWise was launched with the same idea of serving its guests by Kristo Käärmann and Taavet Hinrikus; the commission charged is usually 0.5% and money is converted at the interbank rate. TransferWise developed to one of the hottest FinTech Startups in the scene and is currently valued over 1 Bio USD. Even Richard Branson invested in this company.
TransferWise has a range of 19 currencies in 42 countries, but most of its transactions taking place in Euros, British Pounds, American Dollars and Australian Dollars.
Whilst CurrencyFair operates on 20 currencies. They are also offering to change money into Israeli Shekels, Japanese Yen, Thai Bhat, and Singapore Dollars, but not to take those currencies out of those countries.
Source, CurrencyFair Blog
And the latest coming of this swapping currency service is WeSwap, which was founded by Jared Jesner and Simon Sacerdoti in late 2013, and it works similar as CurrencyFair and TransferWise.
Instead of paying up to 10 percent at currency exchange services, WeSwap charges only 1% and is free to use if customers sign up and swap with people they already know. While searching for swap partners, if no other members have the currency the searcher needs, then WeSwap itself will step in and swap. The funds can be spent in store or withdrawn at ATMs with a WeSwap Prepaid Master Card. WeSwap is now live in 10 countries enabling travellers to swap between 6 currencies, and offers its clients swap directly with others via email, Facebook, Twitter and Linkedin.
Going back with CurrencyFair, Meyers says to Forbes: “CurrencyFair is focusing on producing a more business specific product that allows better integration with accounting and invoicing systems. This should help business pay suppliers and receive payments in other currencies much more easily”.
Besides, it can offer a significant cost reduction for all businesses, start-ups and entrepreneurs who looking to do business internationally, such that banks are starting to take notice.
Banks are clever in hiding the charges. People have no idea how much they are losing on the exchange rate — they just see the fixed fee. That’s what we need people to understand with our service — it’s about real, concrete savings.
CurrencyFair, TransferWise or WeSwap will definitely help people realize the value of money and save cost of transfer money wisely.