Peer to peer (P2P) Currency Exchange websites provide customers with a cheaper option to transfer their money international because their rates are crowdsourced and only charge a flat commission of approx 0.5% per transaction, in comparison to banks which usually charge up to 5% plus.
The online P2P currency exchange market place, CurrencyFair, estimates that P2P foreign exchange will provide £250bn of currency transfers by 2017 and the market will grow at an annual rate of 500%.
CurrencyFair, who claim to have saved their customers $135m since starting their business five years ago, has enabled holidaymakers and expats to transfer around $2.5bn at a fraction of the cost charged by banks. In the future, CurrencyFair are seeking to attract customers from Australia’s four largest banks, by offering cheaper transfer charges than the 5.5% charged by the banks.
Brett Meyers, the co-founder of CurrencyFair stated that people “don’t realise what rates they are paying to the banks” as margins are built in and believe that they are receiving “free banking.”
According to Meyer, Australian banks are able to charge more because trust in the financial sector is not a problem, unlike in Europe. He said that “Australia never had a banking crisis” and the “sector is not just tech driven, it’s consumer driven. In Europe the crisis lowered trust in banks and allowed them to consider an alternative because they were so fed up with the status quo.”