Banks making huge profits from FX margins

It’s no secret that banks, including the big four of Australia, are generally the ones in control of the money. Australians overwhelmingly use one of the big four to bank with. Banks who make massive profits from their customers. And consumers are quickly learning that if they want to perform online currency transfers, then these banks take to take big chunks of change as a fee.

Typically, banks make it hard for you to find the exchange rate you’ll be dealing with when it comes to transferring money. Some organisations like Paypal even withhold it until you’ve sent a payment. But one thing’s for clear—you can be sure you’re not getting the same kind of rate that the banks are using between themselves.

Interbank rates are low, sometimes even non-existent, as banks sell and buy currency from each other. It’s partly out of professional courtesy and partly because they have the resources to make international payments earn them plenty of money when they sell them to their consumers. Customers who use banks to transfer the money to overseas bank accounts, to help a family member, pay for tuition fees or even just pay for a holiday rental home, are paying an extra fee on top.

This fee can be commission-based or a flat fee, but either way the customer is paying for the privilege of sending their money somewhere else — paying twice, in fact. Understandably, knowing this means that people will search for replacements.  Thanks to the internet age, we have them.

Peer to peer currency networks

Peer to peer currency exchange works well online. You send your money to a central organisation, preferably one that has been checked to be performing to a high standard and has good reviews by other users. They find a buyer for your currency, and inform a seller of the currency you’re looking to buy that they have someone for them. In this way, customers can avoid paying hefty fees or seeing their neat pile of cash be carved up before it gets sent off internationally.

More and more of these currency exchanges are springing up around the internet, and all work slightly differently to get a good rate for their customers. At AquireFX, we take the midpoint between the buying and selling price of the two currencies, then add a transaction fee based purely on how much money you’re converting.

This is how big businesses do it, and how you can avoid extra fees. We encourage our customers to use independent exchange rate data providers to ensure that we are using real rates set by different market makers.

We cut out banks and brokers, so our fees are less and the time you spend waiting for your currency to land is often cut down to days rather than weeks. By simplifying the whole process, we’re helping to break down barriers, increase business done globally, help people send money to friends and family, and turning the world into a more connected place.

Banks may be worried that peer to peer currency networks are eating into their profits, but we say it’s an incentive to give customers more of what they want. The old ways that banks work must change, and if we can help make that happen then we’re happy.