CurrencyFair has joined the field of tech-savvy companies disrupting the international currency exchange market. Read on to see my CurrencyFair review.
Most of the products I sell via Amazon UK are imported from China. For anyone starting an import business it raises several important questions around paying suppliers located in a different country –
- Which currency does the supplier need to be paid in?
- What’s the best mechanism to pay the supplier i.e. bank transfer, PayPal etc?
- How do I ensure my funds are transferred reliably and safely?
- How do I get the best exchange rate?
Using PayPal is a tried and tested method and is my preferred approach when paying for samples and when working with new suppliers. However, when paying for large orders i.e. £1,000+ PayPal’s fees soon start to add up.
A bank transfer directly from your UK bank account to the supplier also works well. I’ve found that payments to a Hong Kong bank account typically takes 1-2 days. The fees are better than PayPal but again you’re not getting the best possible exchange rate.
Thankfully, there a now a number of established online currency transfer services which make the whole process easier as well as saving you money.
Of these I first started out using TransferWise back in 2014. At the time my then fiancé and I were organising our wedding in Greece. This meant we needed to pay several different suppliers located in Greece in Euros. Despite some initial apprehension I was impressed by the ease of use of their website and how slick the whole process was. The bonus was that I was getting a much better exchange rate than from my bank and thus saving money too.
Now, all of my Chinese / Hong Kong suppliers all require payment in USD. This is fairly typical but currently TransferWise doesn’t offer the ability to send USD to non-US accounts –
The good news is that one of TransferWise’s competitors, CurrencyFair, does provide this ability. This means that when I need to pay a Chinese or Hong Kong supplier in USD I can use their service.
Let me give a quick example of why this is a good thing.
Say, I need to pay a supplier $5,000 USD for a shipment of super widgets. Previously I would arrange an online bank transfer via my UK bank account. Below you can see that my bank (Barclays) will offer me an exchange rate of 1.28 –
There’s also the bank’s transfer fee of £25 to include. So, all in that’s going to cost me £3,916.35.
Instead, I’m going to use CurrencyFair. By entering $5,000 into their online calculator I can see it’s going to cost me £3,818.68 at an exchange rate of 1.31 –
Compared to making the transfer via my bank using CurrencyFair will save me £97.67. This is an immediate saving and positively impacts my profit margin.
With the strength of UK Sterling (GPB) having decreased over x % against USD since 2014 getting the best exchange rate has become increasingly important.
I’ve used the example of paying a supplier for goods. But equally, if you need to transfer funds to friends or family in a different country or anywhere you need to transfer funds in one currency to another account you’ll still benefit.
How does Currency Fair work?
CurrencyFair is a peer-to-peer exchange service. Essentially it is a marketplace where CurrencyFair acts as the broker between buyers and sellers to exchange currency at mutually agreed rates.
Sound complicated? It’s actually really straightforward. There are 3 key steps –
- Send In – send your money into CurrencyFair via a bank transfer or Internet banking i.e. GBP
- Exchange* – once your money arrives in CurrencyFair exchange it to your desired currency i.e. USD
- Transfer Out – Once your money is exchanged send it to the recipient
In my experience the sending in and exchange can be completed in the same day. Transferring out typically takes a further 1-2 business days.
* there’s a couple of options when exchanging your money. You can either exchange instantly at the best rate available at that time. Or you can choose a better rate and wait for it. Personally, I’ve always gone for an instant exchange. But if you’re better organised than me and not in a rush you can set a better exchange rate and wait for it to match in the marketplace.
The fees can vary between 0.1% and 0.6% of the amount being exchanged. Plus an additional fixed 3 euro transfer fee.
On average you can expect to pay 0.4% depending on the currencies being exchanged.
Overall, I’m a big fan of CurrencyFair and wish I’d discovered it sooner. For me the savings from regular transfers soon adds up and has helped soften the impact of GBP performing badly against USD over the last few years.
I’d love to hear whether you use CurrencyFair or other similar services and how it’s benefited you. Feel free to leave a comment below.
Here are some additional links if you’d like more information and reviews of CurrencyFair –
- TrustPilot reviews
- Which magazine – New providers beat banks on international payments
- The Guardian – Taking on the big four banks
- The Economist – Over the sea and far away