CurrencyTransfer reveals how FD’s can beat the foreign exchange trap. Learn how to avoid FX marketing gimmicks and sales tactics.
Without question, ditching the bank and using FX broker for your international payments is a wise move. You’ll benefit from better exchange rates and a more tailored approach to manage your requirements. However…
Almost all currency brokers in the market pride themselves on the specialist one to one service, dedicated account managers and a bespoke solution. In theory, this is great. You’ll have currency risk managed properly and instead of paying 2-5% bank markups on the real rate of exchange, you’ll now be quoted well inside 1%. If you are ‘S’ or even ‘M’ in SME, it’s unlikely you’ll get this level of attention via the bank.
However, buyers beware. It is a crowded market, with lots of salesman, and varying degree of quality out there.
Phony Tactic 1: The ‘reel in’
Every importer, the length and breadth of the UK, has been pitched at one time or another by an FX salesman. FD’s hear the same spiel and it can be hard to cut through the noise.
It is SO, SO important to take with a pinch of salt any exchange rate quotes you receive ‘pre account opening.’ Treat this simply as a very loose, indicative exchange rate. Live, tradable exchange rates can only be offered once you have opened a dealing account.
The ‘reel in’ tactic gives you a fabulous ‘indicative exchange rate’ but when it comes to booking a live trade, you don’t get the same rate quoted earlier. This will be due to a. “the markets move every second” where the reality is b. now it’s ‘the money time’ they need to build some profit into the rate of exchange.
Phony Tactic 2: The honeymoon rate
Some currency brokers will be delighted to make zero, nada, zilch, nothing on your first transaction to simply try and ‘lock your business down’. We call this ‘the honeymoon rate’. The broker then looks to recoup early losses by giving progressively worse rates each time you trade. This is called ‘margin creep.’ At worst, you’ll be left no better off than going to the bank. Take your pick, but be mindful!
Horror story: We heard of one broker who employed ‘margin creep’ on a client. Gradually, the silky smooth salesman became best buddies with the Accounts Manager. The more the company traded, the more the broker showered upon the client thank you notes, flowers, lunches and treats. It came to a head during a management meeting when calculations were made. They worked out they went from ‘flat’ pricing to 4% spreads in less than 24 months. OUCH! Suffice to say, the foreign exchange broker was off the trusted supplier list.
Now for the good news. How to win!
So, how do you cut through the salesman’s patter and find a company that can really assist? In our view, technology is the major catalyst for putting customers back in the driver’s seat. We have a worldview that you should be in control, making international money transfers on your own terms. The rise of financial technology has led to openness, transparency and fairness, with a raft of innovation across industries.
Inside our little revolution, CurrencyTransfer.com was built to eliminate totally the risk FD’s face with honeymoon rates. Quite simply, by aggregating quotes on each trade, we keep our rate providers honest. They know they are in competition, and as a result there is no threat of the classic “quote them flat on the first trade, lob a couple of flowers, and creep up the spreads as they become comfy with my patter.”
So far, we’ve seen international hotel groups, importers and advertising agencies all enjoy our international payment marketplace. They love the curiosity, excitement and cost savings involved in comparing money transfer quotes on each and every trade.
We’d love to help you too.