Here at Prime Cap we try hard to acknowledge and honour the pioneering and innovative work done by peers of ours operating across the different strands of the payment services sector. Some folks do exactly what we do (but not as well) and others do something a bit differently...and it's those we want to tell you about in this post.
We're content that we know our market (very well) and that our brand of straightforward advice and aggressively priced rates will sing to some folk, but mightn't speak to others in the same way...and so, it is hugely important that we be seen to share with you the benefit of our understanding of the payments market and the ways you can use what is out there.
Here are three ways that someone moving abroad, for the long or short term, can save themselves a few bob.
Knowing what the various options available to you are is a really good way to save money.
1 - What is a company of the size and capability of Prime Cap useful for?
Well, the likes of Prime Cap (the non-bank broker) come into their own on payments exceeding £10,000 in size (and we don't mind being quite clear about that).
Generally speaking, we charge between 0.1-1% which we 'bake in' to the rate of exchange we use for your transaction.
The more you exchange, the more competitive we can afford to make our rates.
It won't cost you anything to register with us, but, because of the level of detail we have to go into from an anti-money laundering verification perspective, you might as well 'register' with a firm like us before you relocate even if your payment activity doesn't yet warrant our services. We think it is better to have us and not need us, than need us and have to go through all the registration - a bit like an FX Nanny McPhee.
Because firms like Prime Cap make their money only when an exchange is completed (so we don't have a subscription-based service fee) you can use our insight, advice and (most importantly) connections to set yourself up with all sorts of things overseas...connections with banks, solicitors, settling in services...
We will want to be as useful to you as possible because it 'places us well' to be your go-to when you have an exchange that falls more favourably into our sweet spot.
Now, here is where the point of this post is revealed(ish) -
(Some) Companies like Prime Cap can and do offer customers the ability to exchange smaller amounts of money.
The issue we face though is that there are companies out there (referred to directly in point 2, below) that are geared up specifically to cater for smaller payments.
These companies have a huge number of customers which means they can drive down the cost (of things like the sending of a payment) to levels that we cannot quite compete with.
One of the main reasons why we tend to introduce or suggest competitors of ours to our clients is because we believe in 'better the devil you know' and that our value and credibility in the eyes of our customers is/are fortified by getting ahead of the questions we might be asked relating to smaller payments. For one thing, we know that the apps offered by the likes of Transferwise and Revolut are far more convenience focussed. Huge amounts of money have been spent on making them so...and the market for smaller payments, remittances and so on is far bigger than the market for £10,000 (plus) transactions, which is why that level of investment is justified over the longer term.
Anyway, we can offer the same rates and similar capabilities on smaller payments, but, these businesses are geared up and modelled specifically to excel at smaller payment activities - less so larger transactions...just bear that in mind throughout your currency exchange journey.
We would rather we told you about these alternatives (and you thought us all-knowing) than you stumbling across them, being wowed by them (without us knowing) and us being blind-sided when it came to pricing you for any exchanges.
2 - What are payment apps useful for, and what can I expect from them?
This rather depends on how you spend and where you earned once you've moved.
There are two main non-bank small payment 'brands' out there at the moment. You may here us talk about them a lot on social media.
We refer to #Transferwise and #Revolut a lot because we want clients to see us as a value leader and, sometimes, that means telling you where to get the best value for money, even if it is not us, but, there are noteworthy differences between these two companies and, their suitability for you depends on a couple of things:
A) How regularly are you going to be exchanging money?
B) What sized exchanges do you expect to be conducting?
C) How long are you going to be requiring currency exchange capabilities?
and D) Where are you going?
A) How regularly are you going to be exchanging money?
Transferwise charge you 0.35% (variable) on every exchange, but, they do not charge you a money 'volume dependant' fee. You'd get the same percentage based fee regardless of how much you exchange(ish).
Revolut limits your 'fee free' transfer allowance, and then charge you when you need to exchange money above a certain threshold. So, if your needs is changeable you may end us paying for a superfluous service.
B) What sized exchanges do you expect to be conducting?
When you need to exchange larger sums, neither Transferwise nor Revolut offers the tailored rates and advice that will benefit you, however, with Revolut you can link your current account to your Revolut facility which means you do not have to send money...they can debit it (within reason).
C) How long are you going to be requiring currency exchange capabilities?
If you know you will need to exchange more than £1000 (let's say) on a monthly basis then the Premium or Metal Revolut tiers potentially become more competitive than the standard Transferwise fee structure.
Why pay a monthly fee until you know how much you will be exchanging and, even after doing your own calculations, we might be able to look at your planned activities in such a way as to reduce costs by tweaking frequency or cementing a rate of exchange for you.
and D) Where are you going?
Transferwise cannot send money to (or receive money from) certain countries.
If you are going to be somewhere for the longer term then considerations like the ease with which you might be able to open a bank account come into focus.
If you need to send money to a specific person, is sending funds to your own account and then on to the 'end beneficiary', the best, quickest and most economical way of achieving that goal?...or, would a more imaginative structure (like sending your recipient a tailored currency card) work better for both you and them?
These small payment focussed platforms do not offer some of the more derivative or risk focussed tools that we can. You could not use a forward contract, for instance.
Also, there can be limits as to how long they will 'honour' a rate of exchange for, fees over weekends and bank holidays, and amounts they allow you to exchange on a daily basis - all of this can mean that an independent non-bank actually works out best.
If you are minded to, our advice would be to register with TransferWise, Revolut and a company like us. Use us and our quick response time on Q & A to inform the way (and when) you use the other two companies.
You may find that you would simply rather use just one company. That is fair, but, there are things with all providers that you will have to be prepared to compromise on... if that is the path you choose to tread.
3 - Are 'currency accounts' - like those offered by some banks - worth it?
We suppose that they can be, but, it depends on how you use them. If you are staying/living somewhere for a while then setting up a standalone currency account in that country makes sense, however, it certainly isn't a requirement and the 'pros' for doing so are hard to decipher given that the providers you use for your currency exchange may well be able to do the job you require anyway.
We would advise you to adopt a position of scepticism as a default. Some banks are good and charge a fair price for good services. As yet we have not found one that can compete directly with the non-bank sector, but, again if you are prepared to compromise on certain things (speed, cost, visibility and customer service) then banks are by no means the villains of this piece.
One of the primary problems with banks, when it comes to currency exchange, is the fact that their fee is non-negotiable - especially if you are conducting an exchange via online banking. This is also an issue with non-bank small payment specialists, but, their wares are soooo cheap that you probably wouldn't mind not being able to challenge what they offer you (unless the exchange was sizeable).
Again, we find ourselves advising you to look into (at least) setting up or acquiring/activating any multi-currency capability your bank offers you in the country you're moving to.
First off, if what they offer is fee 'to do' then it is a good, secure and convenient way of bench-marking any other provider you've signed up with.
Also, if you are moving abroad for the longer term, your bank would (or would want to) change your address and correspondence details to ensure they have up-to-date records.
This (the fact that your statements would show your new address) is very useful if you later elect to register with a non-bank company because the non-bank firm will request something to verify your overseas address.
Some customers register their UK held bank accounts on investment properties (only one, obviously), second homes or homes of a relative...but, you're not really supposed to do that because you don't live there. Having something that confirms where you physically reside is very handy.
You might make use of your bank's currency 'facility' just to get the ball rolling soon after you have moved...but, make sure to engage one, if not all, of the providers listed above (including us) if you want to maximise cost savings. And, if you just want an impartial chat about your payments, income, expenses etc. then we are at your service...
...seriously! You might think your payment activities are not complex, but, trust me when I say that we will be able to sniff out an opportunity to serve as your broker, so, why not run things by us as a matter of course?