There are many reasons why you might need to access foreign currency services and your initial reaction may be to turn to a travel agent or your bank to get the transaction completed.
Whilst you may well be able to access foreign currency services from both of these types of provider, in the vast majority of cases you would be better off using an online foreign currency broker.
Foreign currency brokers are specialists in sending money overseas and offer convenience coupled with cheaper transfers and lower charges. If you haven’t used their services before, these frequently asked questions might help explain just why they are so popular.
1) Are online services safe to use?
Before you even begin to look at the exchange rates, you will undoubtedly want to seek assurances that your cash will be safe. After all, handing over money when you have no guarantees about how safe it is likely to be isn’t a good idea!
The good news is that if you pick a foreign currency provider in the UK, you can check to see if it has been authorised and registered by the Financial Conduct Authority, the regulator.
Currency brokers should give you a good exchange rate.
It’s important that you look for both of these – a company which is only registered and not authorised will not have had to pass the same rigorous checks.
If a company has been both registered and authorised by the FCA, they will have been subjected to some of the most stringent checks possible, will have to submit ongoing evidence and documentation and will need to pass audits on a periodic basis. As part of this, they are required to show robust and secure cash handling processes and to ring-fence their clients’ cash, meaning they are not permitted to invest or trade with money that isn’t their own. They will also be required to hold a certain degree of capital at all times.
2) Why are you cheaper than the banks?
Whilst we all love a bargain, when we are offered something which is surprisingly cheap our first reaction may be one of suspicion. We want to know what’s missing, what aspects have been skimped on in order to save the money…
When it comes to foreign currency brokers, whilst they are substantially cheaper than banks, this is because they simply have the economy of volume.
Currency brokers don’t have their knowledge or services diluted by dabbling in a large range of financial transactions, or other type of savings, investments or accounts. By specialising solely in foreign currencies, the staff are experts and the sheer number of transactions which are processed every day means the savings can be passed on to customers.
3) What countries can I send money to?
Other than those countries where transactions are banned because of international sanctions, money can be sent to more or less any destination on the planet.
Although euros and the dollar might be amongst the most commonly requested type of currency, if you need the Brazilian real or the Indian rupee, your currency broker can make it happen for you.
For some of the higher risk countries, you may have to submit more information in order to remain within the confines of the law, but your currency broker will be able to help you with this.
4) What exchange rate will be used?
The rate that the banks use to exchange with each other is known as the interbank rate, but this is not available to the general public.
A foreign currency broker will offer the most competitive rate to the customer, and although this won’t be as good as the interbank rate, it will as close as you can get. Typically this is about 5% more competitive than the rates being offered by banks.
You won’t often see the rates published on a foreign currency broker’s website; this isn’t because there is anything to hide but because the market is rapid and changes constantly. The companies that quote fixed online prices rarely offer good value for money.
5) Aren’t currency brokers only for those making large transfers?
Foreign currency brokers have the reputation for only being available or willing to assist those who are making large transfers, or who are planning on trading. This is absolutely not the case.
Of course, as there are cheaper rates available, the larger the transaction, the more money you will save by using a broker. For example, if you are buying a house, getting 5% more on the exchange rate could leave you with thousands more in your pocket!
However, this doesn’t mean that if you need to make a small transfer, the service is not available. Brokers are structured to help anyone who needs to make a foreign currency transfer, large or small. Because banks charge for their services, there is typically a small fee if the amount you are sending is small but brokers often waive this for larger transactions. Even if there is a fee to pay, rather ironically it is usually substantially less than if you had made the transfer directly through the bank yourself!
A currency broker can help you send money to a foreign country.
Another consideration is that different countries have different processes, and in some cases this means large fees can apply. Currency brokers are experts in understanding how this works and finding legal ways to either circumvent or avoid these charges as much as possible, saving you even more money.
Currency brokers are an absolute mine of expert information about the best ways to send money overseas, and offer a fast, efficient service as well as the best rates on the market. Although they also offer corporate and trading facilities, they are also perfectly placed to help customers who want to make sure they get the best deal on smaller transactions too.