Companies with overseas customers and suppliers are returning their focus to the ongoing need to reduce expenses and increase the bottom line writes Sean Barrett.
In business there are few easy ways to make these savings happen. However, if you need to move money internationally, then ditching your bank in favour of a specialist money transfer company may be an excellent option.
Traditional methods are expensive and banks are certainly guilty of overcharging for what is essentially a relatively simple product.
The various levels of bank fees and charges make it difficult to understand the full costs. Typically there will be an upfront transfer fee and a hefty margin on the foreign exchange rate. This margin is the difference between the rate your bank gives you and the rate banks use when dealing with each other, or the interbank rate. It is the exchange rate that has the biggest impact when moving larger amounts as typically done by businesses. Intermediary and receiving banks may also take a slice of the transferred funds. Often these charges are not made clear at the time of the transfer.
Specialist transfer companies can offer far better value.
Thanks to the internet and its universal acceptance as a means of facilitating financial transactions, specialist international transfer companies can now offer a superior service at a fraction of the cost. By leveraging technology and global banking systems, they can reduce their margins and pass the savings on to businesses and individuals.
Leading international transfer company, CurrencyFair, has taken it a step further and created a ‘peer to peer’ marketplace, effectively ‘crowd sourcing’ foreign exchange rates to reduce the costs even further.
This peer-to-peer marketplace operates as a network of users, each offering to individually (but anonymously) trade money, rather than having a ‘client/server’ relationship with a bank at the centre. CurrencyFair’s role, as a regulated entity, is to provide security and convenience. Their task is to ensure that businesses can exchange safely and that the money gets where it needs to go efficiently and quickly.
This powerful peer-to-peer model means that fixed transfer fees are far lower than standard bank charges and exchange rates are significantly better.
Processing payments through domestic banking systems can also eliminate the intermediary and receiving bank charges, which can often come as a nasty surprise.
In order to access the excellent exchange rates and greatly reduced fees from a transfer service such as CurrencyFair, a business simply needs to register online (it’s free). It costs nothing to do a comparison and the savings speak for themselves. On a typical transaction of AUD10,000 a business could be saving $400 in fees and foreign exchange rate margins.
Any business that sends money internationally should consider putting its bank to the test.
Sean Barrett is a co-founder and director at CurrencyFair with over 15 years experience in foreign exchange. Based in Newcastle, Sean heads up CurrencyFair’s Australian operations.