At Fleximize, we’re currently only working in the UK, so we don’t transfer money internationally very often – if ever. But we do know that for many of our clients supplies very often source their stock and supplies from abroad, while products are also sold to international customers. So international money transfer is on your mind. A lot. This post is about how changes in fintech are going to make this easier, cheaper and faster for you.
For those who have to contend with the murky world of transferring money abroad, you know that there are large risks associated with dealing in foreign exchange. The reality is that the fees charged and exchange rates offered by high street banks are not competitive and can seriously eat into SMEs’ margins. In fact, hidden markups can get as high as 5% of the amount you are exchanging! But even when costs are transparent, foreign exchange is fickle — currency fluctuations can be dramatic, making consistent cost analysis difficult.
These costs have to be reflected somewhere. Either the business takes a hit on its margin or prices for imported goods increase – potentially making your business uncompetitive. A lot of people will use Forex brokers, but price comparison can be difficult and the search costs of moving brokers can be pretty high. Despite being an essential component of many SMEs, it has been comically underserved.
In 2014, the customer (whether business or consumer) is more powerful than ever and that is finally being reflected in the revolution that’s taking place in money transfer. While fintech firms can’t do away with costs completely, the world of foreign exchange is getting brighter and brighter as more platforms emerge looking to democratize the process of international money transfer.
Companies like Kwanji and Currencytransfer simplify the process of finding a foreign exchange broker and reduce the cost of transferring money abroad by hosting a comparison of various FX brokers, allowing you to choose the best rate easily and efficiently.
Currencytransfer itself was founded because two business owners were sick of spending an hour or two every week trying to organize their FX payments. If this sounds like you, go on and give one of these platforms a try. Depending on your volume of international transfers, this could easily save you several hundred of pounds a year compared to going through your bank. You can also rest assured that you’ll be getting the best rate around as the comparison engines encourage transparency.
Oh, and the truly excellent news: the FX revolution does not stop here. New platforms continue to appear and the unbelievable growth of services such as Transferwise’s p2p money transfer service suggests that both the consumer and business sectors are going to undergo a real shake-up. There will be another post on Transferwise very soon – just because we love them over here!