Do you know what the actual foreign exchange money conversion rate is?
You probably know what conversion rate your bank is charging you, but did you know there is another "higher" rate known as the market rate?
In fact, the market rate is the only real rate to convert your hard earned money to a foreign currency, because it is the midpoint between supply and demand. And the FX market rate changes all the time.
Every other rate you are being quoted has an added “FX markup.”
For example, if the FX market rate for AUDUSD is 0.7370 and an average bank quotes a conversion price of 0.6970, they are charging you an extra 5.5% margin.
Where does this "expensive" rate come from?
The average Australian banks all have similar rates because there is not enough competition.
If you want to experience this frustrating experience call the bank, and ask these 3 questions.
The 3 Foreign Exchange Questions Your Bank Doesn’t Want You To Ask
1) How much profit is the average bank making off my transaction?
Let’s take a look at how the average bank might answer these questions. First, the employee will tell you that this is the rate your ‘retail’ payments are exchanged and you have no choice unless you convert millions of dollars. The transaction fee is just the cost of sending your money across their opaque network of correspondent banks. In essence, they will not answer your question.
2) How do you set your FX rates, and why do you only do it once a day?
After you ask how much the bank makes on a transaction, the employee will probably tell you that they set their rates once a day and the FX money conversion rate doesn’t change.
3) How can you offer different rates for different transaction amounts?
The banks want you to believe that they set their rates based on the market rate and make no profit but if you make a larger transaction you can get a better rate.
How does that make sense?
There’s only one market rate at any given point in time so how can the bank be charging two different rates without making a profit?
Clearly, there is something going on.
It’s important to remember:
There is only ONE foreign exchange rate, the market rate!
If you’re paying more than the market rate, you’re being charged an extra fee, whether the banks admit it or not.
While these fees may seem small, a 5.5% margin isn't. That’s an extra A$400 for sending A$10,000 in hidden fees!
For years, the traditional Australian banks have been your only source to convert and send foreign money transfers.
However, one recently launched company designed to challenge banks at one of their core services is Sydney based Flash Payments, a cutting edge fintech startup, engineered from the ground up to deliver transparent foreign exchange transfer services, without hidden fees.
Flash Payments provides fast, secure and highly competitive foreign exchange conversion services as an alternative to the existing opaque, siloed and inefficient banking networks.
Using the innovative Ripple technology platform and XRP, Ripple's digital currency, Flash Payments delivers extraordinary transparency, speed and transactional control to users.
Coupled with an exceptional user experience by delivering extraordinary user control built into the latest technology, Flash Payments is setting a new level of service standard.
With Flash Payments users pick the date; pick the rate; send funds like an email; track transfers like a package; all without any surprise charges. There are none.
This is in stark contrast to the banks, where global payments cost more, take more time, and the routeing is opaque.
So, whether you are a business or an individual you can now skip the banks and take control of your foreign exchange transfers.