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- 5 currencies you'd expect to be able to deal with, but can't.
We'll begin by saying that in light of market changes in the coming months and years this post may be out of date almost as soon as it is published. Also, we'll talk about the difficulties of you and I on 'main-street' to deal in and with certain currencies even though those in the finance and banking sphere may be able to transact in certain countries in a way you and I cannot. This is not a technical post...but, just a short list of those currencies it isn't that simple to work with. Give us a call if you would like more precise guidance. 1. It is difficult to confidently transmit your money to India, converting it to Indian Rupee (INR) before it arrives, happy in the knowledge it will definitely arrive without fees deducted, on the day you expect - we've not heard of this being easily done, ever. It is also not possible for us to agree to exchange INR in to any other currency because we cannot be assured that INR is what will arrive with us from the sending party, whether that be you or a client of yours. Nothing but pure speculation at this stage, but, we would expect broader global proliferation of the Rupee following the UK's exit from the EU. At the moment a variety of different local markets exist. Cash. Tourist. Regional. We wouldn't expect all of these to fade away, but, a unified central banking system that appeals to international or direct capital investment is a must if India wants to court the sort of investment and attention is't BRIC peers are gearing towards garnering. 2. Russian Ruble (RUB) and one's ability to buy it in exchange for another currency, or sell it in to another currency should it be what we expect to receive, has had a very fluid narrative. It is the currency of the Russian Federation, the two partially recognised republics of Abkhazia and South Ossetia. Recent sanctions mean that although it could be done on the supposition the various extremely convoluted compliance requirements are met, it is a currency you won't find yourself able to confidently transact in in the near-term. 3. Nira, the local currency of Nigeria, has a strange relationship with the international banking community. Steps are being taken to make it far more widely available outside the country and across the banking and international free trading worlds and we expect improvements in access to trickle down to the retail space because of the rapid growth Nigeria and many East African countries represents, but, issue over the source of funds and the compliance of it's accumulation, coupled with inconsistent sentiments on the part of the Nigerian Central Bank, mean there is still a way to go. 4. Most Carribean currencies are pegged to the US dollar, or indeed the pound in some instances. Local banks want the internationally liquid dollar and there has emerged a two tier currency market in some territories (British Sovereign or not). This means sending money to these destinations may simply result in the local trading entity asking to receive USD rather than any other dollar derivative. This can be frustrating because, if you're doing building or maintenance work, buying property or repatriating rental earnings (on your home over there or from your business interests), you don't accurately know what the conversion or price point should be. 5. The various iterations of main land and offshore currencies used when dealing with and extracting capital from China mean the process can be confusing, hard and convoluted. Parties involved in business development both in the UK and in China are working hard to codify what is expected of businesses and ex-pats in pursuit of a more fluid banking arrangement and we have certainly see greater numbers of specialist business advisers who can explain the variations on this theme, but, it is still tricky and can be frustrating for individuals and businesses alike. USD is commonly used and arguably this is one of the benefits of globalisation and supply chain advances, but, in our view things can only get easier. #currencies #BIRC #BRIC
- Private Client FX Broker of the Year 2020.
AI Worldwide Finance Awards recognises the companies, and individuals, within the finance industry who have shown excellence and dedication in their field. Aiming to reveal and reward those who have overcome the difficulties posed by the ongoing global economic issues to thrive and prosper. This prestigious award marks the hard work and stellar efforts of those who have helped shape this demanding and dynamic industry, and AI's comprehensive selection and judging process singles out Prime Cap as a true market leader of 2020. The nomination, selection and judging process takes over 3 months, during which time industry experts research, count nominations and analyse all supporting evidence to ensure that only the most deserving and top-performing individuals, firms and products are recognised. Awards are given on merit alone. This means that the number of votes received, size of nominated firms or financial incentives play no part in the crowning of award winners, with all recipients being decided upon through exhaustive and rigorous research and judging process, carried out by a dedicated in-house team. Of PRIME CAP PAYMENTS - With a particular focus on individuals and HNW property-related payment services, Prime Cap's ability to translate the intricacies of global foreign exchange and international settlement activities into simple, practical and extremely valuable guidance has won them notoriety across the sector as the boutique challenger to the private banking and API deliverable FX monopoly. Actively but discreetly courting the UK's private client market, as well as carrying a robust corporate services offering, elevates Prime Cap Payments from the mainstream. "Again our clients have told us what value they place on the way we work and the solutions we offer. Consistent referrals from our peers in the legal, property and financial services sectors show us that we are doing something right. 2019 saw us named the Best UK Deliverable Currency Broker and so to be put forward for a category in the 2020 awards, let alone to win versus some significant players in the UK deliverable currency space, means a lot to me and the team." Jamie Lesinski | Founder & Managing Director
- How long does it take to complete a transaction?
Once your money has arrived with the authorised payment institution chosen to facilitate your transaction, the speed with which currency is released to your chosen beneficiary (or beneficiaries) depends on a number of factors. We can usually arrange for the release of your money on the same-day as the exchange itself, but this is not always possible or desirable. Same-day clearance of funds can only be guaranteed provided your money arrives with the authorised payment institution before the release window for the currencies you are exchanging, and on or after the 'value date' stated on the payment confirmation emailed to you at the time of the booking. In certain circumstances, you can request a specific value date. Additionally, when exchanging certain currencies or transmitting to and from countries in certain time zones, the ability to credit funds 'same day' may be affected. We will always endeavour to make you aware if and when this is the case. Our online system informs you if your payment can be made 'today' and if you are dealing by phone your broker will update you as to any relevant information in that regard, however, authorised payment institutions are not able to release purchased currency before the stated 'value date' even if your base currency has arrived. The time it takes for your bank to get funds to the appointed API can vary depending on where the bank is located. Again, we will inform you of the details you need to bear in mind when sending funds from different time zones. Be assured that we will afford you sufficient time to settle a transaction. In some cases, banks impose a daily limit on how much you can transmit. We will always take this into account when establishing the terms of a contract and, if you need to split up the number of transactions or to send smaller sums over an extended period, that is not a problem. When it comes to crediting your bought currency to your nominated recipient account there is an element of reliance on the receiving bank to perform their part of the action. No guarantees can be made as to the speed with which the receiving bank will 'apply' funds to the beneficiary account, but, we will always attempt to manage expectations and share any anecdotal evidence as to the speed of such application.
- How do I pay for a transaction? What do I need to do?
We ask clients to instruct their bank (or the bank of the person sending the base currency - if you are receiving money from someone) to electronically transmit the currency they're exchanging to the appropriately denominated, FCA regulated, segregated client trust accounts of the authorised payment institution appointed to facilitate any transaction. The information required to do this is issued to the client at the appropriate time directly from the API conducting the exchange and does not necessarily have to be issued once a rate of exchange has been confirmed. So, you are welcome to credit funds 'on account' before you have agreed a rate. Whether money needs to be sent onwards or simply held, the terms of the contract struck means that although you need to settle by a specified date, onward payment instructions can be provided subsequently and at your convenience. All segregated client trust accounts are held with Tier 1 banking institutions, so, if your money is held abroad then you may have to make an international payment to the selected authorised payment institution (API) and may incur a cost for so doing. Please bear in mind that you will never be asked to send your money directly to Prime Cap. We are the broker that negotiates the terms and rate of exchange for you, but, the clearance and transmission of funds, in compliance with Financial Conduct Authority (FCA) regulations, is solely the responsibility of the authorised payment institution with whom you register when you decide to engage Prime Cap's services. Please remember, it is important that you instruct your bank not to convert your currency. They need to send it, but not exchange it. Some banks infer that because you're sending to an account abroad you want the money you're sending to be converted to the currency of that country. If your bank does this then the money will automatically re-exchanged back into the currency the segregated account is denominated in and at a rate of exchange over which we have no control. Please rest assured we will instruct you as to the appropriate bank details you should present to your bank in order to settle your transaction successfully It is worth noting that you are unlikely to be able to do a same currency payment via an online banking platform unless you are sending GBP. Online banking tends to be focussed on domestic payments or currency exchange payments rather than the sending of the currency you hold to an account overseas, so, we advise you to speak with your bank to clarify how they conduct such a transmission.
- FAQ: What rate of exchange will you offer me?
Banking institutions mark-up their rates of exchange (for SME business clients) by an average of 2.4%, with the worst offenders incorporating a fee of as much as 3.68%. They 'bake' this mark-up into the rate of exchange which can often mask how much money they are making for the performance of what is a simple and costed action. Prime Cap's aim is to strike a balance between competition and sustainability. We genuinely attempt to work with our client to arrive at a mark-up or fee that our client is content to pay and that sufficiently undercuts our competitors enough to propagate and fortify our reputation as the foremost private client non-bank broker for property-related transactions. On request, and if they prefer, we are content to provide clients with a standalone fee for an exchange rather than a quote which incorporates a margin. This methodology is particularly useful if we are competing against online payment providers like TransferWise who offer the so-called 'real exchange rate' but then charge a fixed fee. One of the benefits of a fixed fee approach is that the client can simply use the online inter-bank rate (the sort of rate they might see published on Google or Bloomberg) for any immediate or quick calculations. They do not have to attempt to estimate what rate they might get. When (and if) we offer you the same style of fee calculation as other companies, we simply deduct the agreed fee from the amount of currency you wish to exchange. All you need to do is ask us to calculate the exchange in this way and we will take care of the rest. If you would like to get a flavour of our margins then please give us a ring on +44(0)203 4175781.
- Moving abroad? 3 ways to save.
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?
- New wave currency services...what's the catch?
The first thing to say is that you will not find a more vocal advocate for 'small payment' service providers than Prime Cap. We regularly and emphatically suggest services like TransferWise and Revolut to our clients and we see these fast-growing businesses not as rivals, but as signposts...front-runners in the marketing and publicising of the merits and value of the non-bank payments sector. That being said, we believe that these providers suit a certain type of transaction, if not a certain type of client. As succinctly as possible, we are going outline just one or two aspects of these populist and popular services that make them limited in their application and value. Publishing the fees they charge immediately enhances the credibility and approachability of these institutions. It is something the banking sector daren't do. Transferwise make no apologies for the 0.35% fee they add onto your costs...and nor should they. It is an exceptionally low margin. But, as you will have seen mentioned across Prime Cap's various social media channels, the more you exchange the less competitive that rate is. 0.35% or £3.50 charge for sending £1000 to Australia is unbeatable. And given how inexpensive it is for TW to 'onboard' a client and the extent to which economies of scale on the account management side of things support their model, vast user take-up and volume makes for a compelling and sustainable business. But, ...a fee of £3,500 on an exchange of £1,000,000, although less than a high-street bank might charge (they would maintain their 3.5% or £35,000 margin) it is not competitive when compared to the offering of independent brokers who have the flexibility and discretion to charge less. And, frankly, this is the undoing of TW and Revolut et al's offering. Supremely competitive, but no more flexible than a banking institution. That 0.35% won't be reduced...ever - and is frequently higher on more 'exotic' currencies. Revolut, like TW, is an extremely competitive way of sending smaller or more regular small sums instantly and for less...but, if a user exchanges more than their tier threshold they are immediately charged 0.5%. Customers can pay monthly for services reflective of the tier or category into which they fall, but, like TW this is where Revolut leave themselves exposed to being undercut. All an independent broker need do is augment their margin to undercut Revolut and the deal is won. From preliminary research, £12,500 gives business users of Revolut unfettered access to mid-market rates of exchange. It is their highest user tier. Something to think on. If you would like to discuss how Prime Cap might better the rates you currently receive, or you would like an impartial appraisal of your currency needs, please give us a ring on 02034175781.
- FAQ: How does Prime Cap work with my solicitor?
Usually we engage with solicitors and attorneys on matters of property acquisition and sale because of the typically larger sums involved, however, provided certain criteria are met and we understand the purpose of a payment, we can work with your appointed legal representative on a number of matters. Evidence of the relationship between our client and the firm sending us funds is all that we require in order to assist with a transaction. When registering a client, we take steps to establish and evidence the physical source of the money arriving with our carefully chosen settlement partners, so, this may involve collaboration with your solicitor to confirm the reason why they are the 'source of funds', and, we ask for details relating to the origins of the money in the first instance; so, for instance, if you are receiving a gift from a family member we will ask you to provide documentary evidence as to the source of that family member's wealth. In cases where funds are arriving into the United Kingdom and require further credit to a law firm or vendor (for instance the balance on a house purchase), we can pay monies directly to the appropriate party. Depending on the authorised payment institution nominated to facilitate the exchange of your money, funds can be sent to your legal or financial representatives from accounts created exclusively in your name. In many cases and with many of the authorised payment institutions (APIs) we work with this is standard practise. One of the key advantages of working with Prime Cap is our significant level of experience in property-related matters. In instances where clients are referred to us before they have sought or engaged legal representation, we are happy to make introductions to our wider network.
- How do I become a client?
WHAT HAPPENS AT THE START OF THE PROCESS? The process is simple but varies depending on who and where our prospective client is located. Sometimes it is very obvious (to us) what we need to collect, and the information we need to gather to satisfy the regulatory compliance requirements of our FCA regulated 'market-makers'(who are the institutions from whom the currency is bought). In other instances, the registration process evolves as we gather more information and detail. It all starts with us choosing the appropriate 'market-maker' for the brief. And to do that we have to talk with the client (or, initially, their representative). This is one of the reasons why we will not accept random submissions of our publicly accessible online registrations forms. No application progresses unless our team have assessed both our suitability for the client and their potential compliance with regulations that govern the activities of our market-counter parties. Usually, the jurisdiction in which the client resides determines which market-maker we opt for because certain Authorised Payment Institutions have licenses to sell, trade and operate in certain global markets and others do not. Equally, some of our market-makers might not be prepared to work with customers looking to move money in a certain direction, or with (or without) certain hedging requirements. Our team's initial role is to assess circumstances and to work out which market-maker best achieves the objective in the quickest and most economical manner. Once we have chosen a market-maker, and we do tell our clients whom we think is best suited to serve as market-maker for their trades (but it won't make any actual difference to the client), we send the applicant a tailored link that takes them straight to the appropriate online registration form. The form takes only a few minutes to complete. It can be saved and you can come back to it if you don't have all the information it asks for to hand and you can send a copy of it to someone else for them to add to it if it is a joint application, for instance. The FCA authorised payment institutions (APIs) we work with (whom we refer to as our 'market-makers' or market-counterparties) all have the same minimum requirements when it comes to verifying the address and identity of an applicant, but, some have additional elements to their registration - we are the ones responsible for telling the client this, so, you only deal with us and your broker at Prime Cap. Requests for additional information from our market-makers may be issued because they have heightened risk awareness, they deal in other markets that insist on enhanced due diligence (EDD) or they rely on different technology for verification (some might be manual and other use AI, for instance). We will personally explain what is needed and email or call you to confirm what additional information we need to present to the API in order to progress your registration. The process of verifying your details and collecting the additional information and the amount of time it takes for each API to satisfy themselves that they have a sufficiently detailed and compliant overview of the clients and their requirements varies from institution to institution and, in fact, from case to case. We do not register clients with more than one market-maker. Usually, we aim to have an especially vanilla client registering with our main-stream major currency market-maker registered within 24 hours. This is a guide so we do try not to guarantee this. One of the main reasons we suggest a client register well before their intended date of exchange is because we want to make allowance for any elongation in the onboarding/registration process. All the way through the process we try to remind the client of both the reasons why the additional information is necessary (from a regulatory perspective) and from a savings perspective...so if someone is going to save £2000 by waiting a week for us to complete the onboarding, then we are always ready to remind them of that and, when framed so, a week becomes more palatable. WHAT SORT OF ADDITIONAL INFORMATION MIGHT WE ASK FOR? As suggested, not all of our market-makers (the regulated institutions tasked with the buying and the selling of the wholesale currencies you are exchanging) have the same expectations when it comes to verification of a client. They all have the same minimum requirements, but, the stringency with which they are translated and what a client is actually expected 'to do' varies. By way of an example... Some market makers can electronically, automatically and immediately verify an identity document (a picture of a passport, a drivers license or a European ID card) when it is uploaded during the registration. Other do not and instead accept a scanned copy. Some market-makers ask for certified copies of ID documents. All documents relating to an individual applicant need to be dated within the last three months. For business applicants, there is a tendency to attempt to verify details using publicly available sources. So, whether or not a business has a website is taken into account and can serve to support the case that the business is engaged in a certain industry or activity. Many currency companies emphasise the speed with which a client might be registered. We tend not to say it is speedy or instant, but rather that you will be kept informed and that we may need additional information. We do attempt to make the process as swift as possible, but, Prime Cap works with a number of market-makers and if the price of the far superior rates of exchange we negotiate for our clients is a wait of between a day and a week for the compliance boxed to be 'ticked' then we think it a reasonable trade. The speed with which the client needs to transact is in fact one of the aspects of our initial assessment that informs which market-maker we register the client to. If you would like to discuss any of the above then please do not hesitate to call us on +44(0)203 4175781. In the event that we do ask for certified copies of any personal documents, one of the many solicitors we work with on a regular basis (or indeed your own) is well placed to assist with this task. WHAT HAPPENS WHEN THE REGISTRATION IS COMPLETE? We will automatically email you with a welcome message and provide you with details of your unique client reference with us. Within the welcome email is an invitation to activate your online Prime Cap platform. A further explanation may be necessary (from us to you) to explain how to use the online system. But, from the time the registration is complete you are at liberty to instruct us to buy or sell your currency. There is no fee to register as a client and no commitment comes into force for the purchase or sale of any currency unless and until you expressly instruct us to carry out your bidding on either a recorded telephone line, via email or over our secure online platform. We hope this was informative and we look forward to hearing from you once you've made your decision.
- When should I exchange my money?
Whilst the motivation to exchange currencies varies from client to client, we have distilled our approach to answering the question of 'when' and 'timing' into a relatively broadly applicable mantra - "when the rate of exchange allows you to achieve what you want, exchange". What do we mean by this? The two common objectives for individuals exchanging their money are a) to buy as much of a foreign currency as possible for the base currency they hold and b) to pay as little base currency as possible to buy a specific foreign currency amount. Whilst these two concepts may seem broadly the same, they differ quite dramatically. The overseas buyer purchasing in London has a finite number of euros or dollars and knows she requires a specific number of pounds to proceed. Therefore, the rate of exchange must be at at least a specific level to ensure the foreign currency she holds buys the sterling amount she needs. Conversely, someone who has a specific number of dollars or euros, say from a foreign currency denominated income, inheritance or gift from someone overseas, wants to realise, buy and achieve the greatest number of pounds possible. In the second of these two scenarios, whether the client is able to 'do' something or not, whether they are in a position to buy that house (for instance) is not determined by the rate of exchange. They want the most money for their currency...and the first example wants to pay as little as possible to achieve something specific. Regardless of which camp you or your client fall into, trying to guess or predict where a rate is going to go is just as likely to see you worse off as it is better off, so, 'speculating' is a foolish route down which to go regardless of the objective. For the client buying something specific and who holds a finite amount of foreign currency, if the rate of exchange ('right now') means you can buy what you need...then exchange. The absolute imperative and bottom line in this scenario is the achievement of that key objective - namely, ensuring what you have, buys you what you want. If you wait then you risk having too little of the foreign currency and the entire endeavour is moot. This is true even if you see a continued improvement in the rate of exchange. Every minute movement above the minimum rate you require is 'nice to have', but holding off to see some sort of a peak and to trying to 'catch it' is breaking that no-no rule on speculating. You might wake up the following day only to find the entire gain is lost because a politician sneezed. For the party hoping for the most from the currency they hold, consider your own tolerance for loss. How much more do you need to get, as of today, in order for you to feel comfortable exchanging? And, how much of a loss are you prepared to weather before you cut your losses and take what you can get? Part of our role is to help you confront the answer(s) to the questions above. We want to tell you what rate you need in order to be able to afford that house. Equally, we can quantify exactly how many fewer pounds and pence you might receive were any number of things to happen to the rate of exchange; you can then weigh up the pros and cons yourself using contextualised numbers relevant to your intended exchange. Remember though, if you leave the timing of your exchange up to the discretion of the broker, bank or institution you are using for the exchange, not only are you dealing with a company (or individual) who is flouting their own operating regulations (because the company is not permitted to speculate on your behalf) but, you are robbing yourself of the opportunity to fully make peace with whatever rate is used. Who are you going to blame if you see the rate change to something more favourable the minute after the exchange is done?
- 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.
- Importing carrots: some of the unique concerns when dealing with perishables.
Although polly-tunnels and year round growing techniques can help grocers, wholesalers and food retailers alike in stabilising their supply chain and procurement forecasting, the weather, demand, changes to export conditions and freight, shipping and distribution issues can play a massive part in the spending and approach of businesses. Take the recent chicken shortage. Businesses have to react quickly to changing circumstances. They don't want to be over-exposed, but, they don't want to be underinsured. Currency plays a part in this because although a business can formalise their spending by fixing rates, contingencies need to be established and adhered to and this feeds directly in to spending, wastage and foreign currency risk. Carrots are just a vehicle, but, their import and their seasonal, cyclical appeal make them a good one for us to discuss some of the concerns that small scale operations may not have considered, or, perhaps more importantly may not know can be dealt with and at least mitigated using simple, tried and tested strategies as well as more efficient and competitive pricing and processes.