CurrencyFair is a new peer-to-peer marketplace that is doing to currency exchange what Lending Club and Prosper did for personal loans: disrupt the industry by lowering costs and improving rates.
The difference is that while P2P lending is generally only for people with good to excellent credit, CurrencyFair is available to anybody with a bank account or anyone who knows someone with a bank account.
CurrencyFair: A Lowcost Option
The majority of credit card issuers charge a currency exchange fee, ranging from 3% to 5% for every purchase you make with your credit card. Travelling abroad can get expensive fast, which is why you should always travel with a card that doesn’t charge foreign transfer fees.
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However, even credit cards that don’t charge a transfer fee still profit from every transaction by hitting you with a lowball exchange rate.
It only gets worse if you have to transfer larger amounts of cash, to either make an online payment, buy a house, pay for travelling expenses, send money home, or pay your mortgage with income you earned abroad.
A typical bank will charge you around 3%, and even in more in countries like Australia, where banks can charge up to 5.5%. Send $10,000 and it may cost you anything from $550 to $300. That’s a big chunk of change for what amounts to just sending electronic signals over the internet.
CurrencyFair provides a safe platform where people who want to buy and sell the same currency can agree to a win-win price. With it, everybody gets a better deal than what they would get at conventional financial institutions, including low-cost wiring services like Paypal.
How does CurrencyFair Work?
The beauty of CurrencyFair’s currency exchange and money transfer method is in its simplicity: the money never leaves the country. CurrencyFair works like a financial dating service by pairing you up with users in the country where you want to transfer money to and who happen to also need your currency.
This avoids the fixed costs of wiring money to another country and sidesteps SWIFT, the archaic and cumbersome system still used by banks for international transfers. Although transfer times vary depending on the bank you use, your money will arrive within one or two business days. If you pay the 8 Euro rush fee, it will arrive either the same day (if you do it in the morning) or within a single business day.
How much does it cost?
CurrencyFair charges only 0.15% of the amount sent when there are users willing to match each other. If nobody has a need for the currency you’re selling or there are no users selling the currency you need, CurrencyFair will match with you and charge a fee of 0.4% to 0.5%. Either way the only other fee is a three euro transfer fee.
If your timing is right and the demand for your currency is high, you could even get a better rate than the wholesale rate banks charge each other. If you need an exchange and you’re not in a rush, post a bid for the currency you need and wait for someone willing to meet your price.
The CurrencyFair “Catch”
If you need to move money and you don’t mind jumping through a few hoops to save yourself some cash, there is a lot to like about CurrencyFair. It’s cheap, fast and safe. Although not a bank, CurrencyFair is regulated by the Central Bank of Ireland, and is registered with the Australian Securities and Investment Commission.
But there is a catch for US residents. CurrencyFair can send money to the United States, but it is not authorized to receive business from US residents, and this is not likely to change any time soon. Another issue to consider is that you cannot send cash. You must have access to a source bank account and a destination bank account.
This means you may have to use the bank account of a friend, relative or service provider (think hotel or travel agency), if you need to send yourself cash to a country where you don’t have a bank account. Apart from those two caveats, CurrencyFair is unbeatable in the $1,000 to $100,000 bracket money transfer and currency exchange market.
Find our CurrencyFair reviews section here.
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