“Before CurrencyFair, we transferred income from abroad into our UK Pounds Sterling account at whatever rate our bank saw fit – which was often dreadful. I would estimate that in the last two months of using CurrencyFair we have already saved over £2,000.”

These are the words of Patrick Robertson, Managing Director of Pure Pie, a company that does business in the UK and abroad. It’s the sort of customer comment that’s typical of a new and very welcome addition to the foreign currency exchange market: CurrencyFair.

If you’ve thought about moving abroad, you’ve probably spent a lot of time doing your sums, working out what your UK-based income will buy in your new destination or whether your salary overseas will be enough to meet your commitments back home. But there’s one cost that too many forget to include: the costs of converting money between currencies. And these can really add up.

A Dublin-based group of expats – themselves fed up with poor bank exchange rates and charges, not to mention poor service – decided that the process of sending money abroad could and should be better, cheaper, and just fairer. And CurrencyFair was born.

Managing Director, Australian Brett Meyers, explains: “I had a bad experience transferring money a few years back with a bank and decided I wasn’t going to put up with those kinds of charges anymore.” He started trying to get around banks by finding friends to informally change money with where he could. They’d base their transactions on the interbank rate – the one the banks use when they trade with each other. “So if I needed dollars for a holiday back home, I’d transfer Euros directly to my friend’s Euro account in Ireland, they’d send dollars from their Australian account to mine. We’d each save money on the rate and the international transfer fees. Win-win.”

That’s great if you happen to have a friend in exactly the opposite situation to you. But in practice, transferring money abroad usually means turning to a financial intermediary, typically a bank. When you do this, two things happen. Firstly, the bank dictates the rate you get. This will always be lower than the interbank rate – typically three to five percent lower – so that the bank can make a profit on the deal.

Small print
Then there are usually fees and charges. These can be considerable, and are generally the same regardless of the amount you want to send. If you’re making frequent transfers, they can really add up. If you just want to send a small amount, they might even make you think again. Yes, it seems unfair. But for most expats it’s simply been part of the cost of living away from home and there’s been little you can do about it.

Until about six months ago, that is, when CurrencyFair entered the currency conversion market. CurrencyFair isn’t a bank or a financial institution. It’s a ‘person to person currency exchange’ – an internet meeting place where currency buyers and sellers come together and negotiate rates. Exactly like the two friends in the example, only it’s anonymous.

Since the parties will only agree on a price both of them are happy with, this means that rates typically end up being pretty close to the interbank rate, or around two to five per cent better than bank exchange rates. “And on top of that, our standard transfer fee is €3, as opposed to around €20-30 from a bank. That can work out to a saving of around €50 on €1,000 or equivalent transferred,” Meyers states. In this case, that’s €50 that stays in your pocket.

You might be wondering, given CurrencyFair relies on bringing matching parties together, if there will always be funds available to match even large transactions. The short answer is yes; if there are no matching customers at a particular time, CurrencyFair injects additional funds of its own to ensure that customers can still benefit from excellent rates.

CurrencyFair also hands control of the timing of the trade back to customers, allowing them to make the most of any particularly good deals. This means that, when you see a particularly good rate, you can exchange more funds than you need and keep them in your account until you want them. “It is possible to actually beat the interbank rate on our marketplace, which was basically unheard of before we launched,” Meyers notes.

Case studies
Throw in a commitment to providing excellent customer service, and you might be wondering if this is one of those things that sounds too good to be true.

You’re right to be sceptical. Lots of firms offer ‘commission-free’ deals but these deals aren’t always as good as they sound. Usually the rate is hiked up to make up for the fact that there’s no explicit commission charge. The only way to know for sure if you’re getting the best deal for your situation is to sit down and work out the total cost of changing a given amount of cash, taking the rate, commissions and transfer fees into account.

More and more customers who do so work out they’re better off with CurrencyFair. Like Carole Blasco, who moved with her husband from the UK to Spain five years ago when they retired. “We have been using CurrencyFair for several months… since then we must have saved around £300 – which as pensioners is a good saving!”

Customer John Traynor, an investment banker based in London, agrees. “The rate I was offered by my bank to convert dollars to sterling was dreadful when I compared it to the rate shown on CurrencyFair’s website. There were no hidden costs and the process was fast and efficient.”

Regardless of how good a rate is, it’s vital to find out how safe your cash – and details – are going to be before handing them over to any financial institution.

With CurrencyFair, the answer is ‘very’. CurrencyFair is regulated as an Authorised Payments Institution under European regulations. This means that its customers’ money is kept in a separate client account and that, in the unlikely event that anything went wrong, all customer money would be returned in full. (This wasn’t the case with a British currency exchange service that collapsed recently, taking some of its customers’ money with it).

CurrencyFair has taken similar steps to ensure the security of its customer information, using industry standard security protocols and hosting their servers in one of the most secure types of data centre currently available in Europe. As part of its high security rating requirements, CurrencyFair also needs to ensure that its customers are who they say they are. This means you’ll need to satisfy similar client identity checks to those you’d expect from a bank to set up an account initially.

But the growing number of CurrencyFair customers seem to indicate it’s an overdue addition to the market. “I would not hesitate to recommend CurrencyFair to anyone in our situation. We spent more than five years using a bank to transfer money to pay the mortgage. If CurrencyFair had been in existence we could have saved so much money,” Carole says. ”

Contact
Tel: +44 (0)203 384 6290
Web: www.currencyfair.com