Online forex services gaining popularity with expats

Banks are being given a run for their money by new online forex services.

Traditional currency exchange dealers including money transfer agents and banks are losing customers to a new-style foreign exchange system which matches clients who wish to sell to those wishing to buy. The increasing popularity of these websites with travelling expats is down to the years of inconvenience and expense of the previously available means of exchanging currency on a regular basis. The proliferation of online sites and mobile phone apps offering the service has made the process cheaper, faster and far easier.

For expatriates living and working overseas but sending remittances back to their home countries, it’s especially good news as the transfers can take just minutes as against days working through the time-consuming requirements of banks, with their bank routing numbers and IBANs enough to ‘confuse a stupid person’ or drive a seriously busy one to distraction. With some programmes, customers can even transfer cash using just the recipient’s cellphone number. If you’re confused as to which is the right provider for your needs, there’s a comparison site at geldtransfer.de which gives an overview of 31 online sites offering the new service.

One reputable provider based in the UK with its strict regulations is TransferWise, which matches up customers wishing to change opposing currencies. For example, a person who wants to convert euros to dollars is matched with another who wishes to get dollars for his euros. The conversion is made at close to or even on the daily exchange rate, and a small commission is charged. The website now boasts three million customers, all benefiting from far better exchange rates than the banks’ and a minimal fee of around 0.5 per cent. Its closest rivals charge a flat fee of three euros.

Another advantage is that leading online customers now have websites in a choice of languages, and several are now tying up deals with major European banks. One reason for the rapid development of the new service is that many potential customers worldwide have smartphones but don’t have bank accounts, leaving traditional and more expensive services such as MoneyGram and Western Union as their only means of exchanging currency or sending remittances overseas. In the not too far distant future, blockchain technology is expected to play a big part in this sector, especially in countries suffering from high inflation.