What's different about CurrencyFair from other foreign exchange providers?
When banks trade with each other, the exchange rate is the "interbank rate". This is effectively the wholesale price for currency and is not available to retail customers. Foreign exchange brokers and retail banks add a mark-up to this rate, much like a retail shop marks up the wholesale price of the goods it sells. In banking terms this is called the "spread".
However it can be difficult to get banks and brokers to provide the exact spread at the time a rate is quoted. Currency calculators on websites typically show interbank rates and not true live rates and banks and brokers always price discriminate, the more you exchange the better the rate. Some providers build a transfer fee as well as commission into the rate, whilst others may add a transfer fee after the rate is agreed.
Together such practices make it enormously difficult to discover the true cost of the transaction. Brett Meyers, CurrencyFair's CEO, came up with the idea of matching buyers and sellers of currency directly, thus removing the need to add a mark-up to a rate already marked up by a bank. This would provide the man on the street and SMEs access to rates hitherto only available to large corporates. A bank might charge 3 to 5% over the interbank rate; brokers would typically charge 1 to 2%. CurrencyFair customers, on average, are charged 0.35%.
Four company founders - how did that come about and who does what?
When Brett decided he wanted to do something with his idea to revolutionise currency exchange, he knew he needed a first class team around him. Jonathan Potter had worked with Brett on a previous start-up in the City of London and had already displayed an aptitude for making things happen. Sean Barrett had foreign exchange trading experience with Goldman Sachs and Deutsche Bank and was a natural to head operations and compliance while David Christian's experience with Microsoft made him an ideal CTO.
What are the benefits of opening a relationship with your company?
We regularly survey our customers and our last survey showed a massive 87% would be disappointed if they could no longer use us. These customers are coming back to us time after time because our system is easy to use and, more importantly, our rates are consistently better than everyone else's. There's no need to call us to haggle for the best rate, everything is transparent and available on the website. When our customers do need to communicate our telephones are manned 12 hours a day and emails are handled 24/7. Customers are our number one priority every step of the way.
Take us through a CurrencyFair transaction.
Transactions can be broken down into three simple stages; deposit, exchange and transfer. With CurrencyFair you can only exchange once your funds have been deposited, that way you know that when you exchange with other people we already have their funds as well, so there is no settlement risk. Our customers send us their funds via bank transfer which, if you're sending us pounds, means we'll normally be in receipt of them within two hours. Once we have confirmed receipt (via an automated email) you are able to exchange your funds. This can be done via one of two ways: QuickTrade or Marketplace.
QuickTrade matches you straight away with the best rate available, Marketplace means you can set your own desired rate and wait to be matched. Many of our regular users of the Marketplace have actually achieved a better rate than interbank, something the banks are not even able to achieve! Either way once you have a rate you are ready to transfer out to your designated beneficiary. This can be as quick as the same day if you choose a priority transfer (costing £7) or one to two business days using a standard transfer (costing £3).
Are transactions secure and are you regulated?
The safety and security of customer funds and data is our top priority at CurrencyFair. We are fully regulated as an authorised payments institution under the European Payment Services Regulations and hold all customer funds in segregated client accounts with a major global bank. We also employ top-notch technical security to ensure the safety of personal data.
Is there a typical customer?
A typical customer is one that needs to send funds overseas and wants to save money! Our customer base primarily consists of expats and SMEs who want safety, simplicity and value.
An example of an SME which has experienced significant savings through
CurrencyFair is Optimal Photochromic, which buys and sells materials for
spectacle lenses. Operating across four continents, the London-based company
estimates to have saved around £10,000 in bank fees and exchange rates over
the last year.
What would a client need to begin trading with CurrencyFair?
Customers can be up and running within minutes. Individuals need to complete an online form and provide proof of ID which can often be done by typing in their passport or driving licence number. Companies need to complete two paper forms and we'll need to ID at least one director (two if there are more than one).
When did you first decide to expand abroad and is further international expansion on the cards?
CurrencyFair as an international operation is dictated by customer needs. Outside of Western Europe we have seen the biggest growth in Australia and Poland, which is why we set up offices in these locations. We see further expansion in Asia and North America.
Has the recession caused the company any setbacks?
We started CurrencyFair in 2010 when the recession was already in full flow so it's difficult to gauge. Maybe our rate of growth will decrease as confidence returns to the economy and people are less concerned with best value? We think it's more likely to accelerate!
Where is CurrencyFair going in the next five years?
Our focus is two-fold. By increasing share in current market we can deliver even greater value via improved efficiencies and by staking a claim in emerging markets we can deliver value where there have always been high costs.
For more information go to www.currencyfair.com
