How much do you save?

It's a simple question to answer, but the precise figure or percentage does depend on one or two things.

Generally, when we give an illustration of how much a customer can save on their currency spend (or how much more they might receive in the foreign currency they wish to buy) we are assuming the customer would otherwise be using their UK or overseas high-street bank.

If this is the case then we know from years of comparisons that the average high-street bank's 'retail' rate of exchange is 2.4% from the 'market rate'. This means that on average the bank is 'baking in' a fee of 2.4% into the rate they exchange your money at.

So, if you are exchanging £2000 the fee just in the rate is at least £40 (and that does not include the cost of sending money...just the exchanging of it).

If you are exchanging £100,000 the fee is at least £2000 and so on...

The fee applied by a non-bank currency business like Prime Cap will in fact differ depending on a variety of factors. Things like staffing costs, overheads for premises and the ongoing cost of regulatory compliance all serve to determine how big or small the fee is...and this is why the rate offered by Prime Cap might be different to the rate offered by TransferWise, Moneycorp or World First.

Yes, the currency you are buying is always the same and there is a fair argument for the fact that fees cannot and should not differ too dramatically given that the currency is always what is being bought and sold, but, many would argue that there are other aspects to the currency exchange process which mean costs can be lower and that it is reasonable to ask a customer to pay a bit more.

Lawyers train in much the same way and are students of the same subject, but, things like experience, efficiency, acumen etc. etc can mean a sizeable difference in the fees charged. You might argue that 'the better the lawyer, the more money you save overall' and, in some respects, we like to think this is the case with currency exchange too.

If a client was intending on using their bank to exchange US dollars into sterling (for the purchase of a house, for instance) then, on a house purchase of £1,000,000 the customer could quite easily save the US dollar equivalent of £20,000 - and that is with this illustration assuming a bank is being more generous than we know they are.

We do not mean to suggest that a high-street bank is cynically taking advantage of their customer's lack of experience, but, high-street financial institutions show no motivation or inclination to offer what a non-bank company would consider a competitive rate of exchange.

A number of non-bank currency companies have taken to publically and vocally exclaiming their fees. The likes of TransferWise charge 0.35%.

This is extremely good value when you compare it to a high-street bank, but, the 'added value' elements are stripped away to ensure that the 0.35% margin is as flavoursome for that brand as possible, and, we put it to you that a charge of £350 to exchange £100,000 is still too high given you get no experienced currency broker on hand to take you through things...

Furthermore, someone exchanging £1,000,000 is charged 0.35 or £3,500 for what...an intuitive app? This is where the value of these disruptive P2P genZ businesses reach their fullest extent.