Use the Power of Currency Exchange Platforms for Saving Money
A startup that wants to succeed today must know the intricacies of currency exchange and transfer options. It’s inevitable that in the era of globalization and technology, you’ll need to make some international money transfers. Therefore, you need to understand that not all currency transfer options are equal. In fact, choosing wisely can save you a substantial amount of money on every transaction. But in order to enjoy this particular benefit, you will need to choose online money transfer platforms as opposed to banks.
Why Your Startup Will Need Currency Exchange Services
Startups of today have to enter a highly competitive market no matter what their specialization is. Technology made it easy to get some attention to your brand. Therefore, today it’s essential to expand your reach to the maximum in order to attract customers. Moreover, the same technology made it easy to maintain different types of communication virtually erasing geographical borders. This allows any business to go global in a variety of ways. This is why any startup can have the need for currency exchange services.
The most common situations when a startup will need to make international currency transfers include:
- Paying your employees or freelancers when building a highly efficient remote team. Hiring remote professionals might help you not only get better-quality experts but also save money as the size of appropriate salaries differs greatly across the globe.
- Paying business partners or suppliers overseas. You should also consider outsourcing some services, like basic customer call centers. Abroad this type of service will be cheaper but this doesn’t mean that its quality will be poor.
- Accepting payments from international customers. No startup today should limit itself to local customers only. In fact, even back in 2017 over a half of startups had some international business. This number has increased significantly, especially with the pandemic, which changed consumer behavior. In essence, any startup that wants to succeed today should seek out international customers.
- Purchasing foreign property or stocks. Nothing prevents startups from becoming investors and traders. As a matter of fact, foreign currency exchange (forex, FX) trading can be a part of your business’ profit diversification strategy.
All in all, there are many reasons why startups will need to make/accept foreign currency transfers. Therefore, it’s essential to choose a method that will allow you to make this process cost-efficient.
Online Currency Transfer Platforms Vs. Banks: How Much Money Can You Save?
The most common way for business owners to do currency exchange or transfer is through banks. However, this method definitely isn’t the most expedient or affordable. In fact, an international bank transfer does not only come with a hefty fee (true for both incoming and outgoing transfers). But foreign currency exchange in these transactions is always conducted using a rather bad exchange rate for you. That’s because banks have a high FX margin, which adjusts the mid-market rate heavily not in the client’s favor.
Moreover, when you make a foreign currency transfer through a bank, you might also pay intermediary fees. This will happen when making a wire transfer to a non-partner bank abroad. In this case, your money will first go to a partner bank, through which it is rerouted to its final destination. The intermediary financial institution can also charge both incoming and outgoing fees for this transaction.
Overall, an international wire currency transfer through your regular bank can cost up to 7% of the transfer volume. Also, remember that even today there are some banks that don’t offer efficient international money transfer services at all. In addition, exotic currency exchange will be more expensive.
However, startups can now use a variety of fintech companies to cut the costs of these transfers to under 1%. Moreover, some of these money transfer companies can offer you exchange at the mid-market rate for large transfers.
Qualities to Consider with Currency Exchange Companies
Online money transfer companies are versatile and offer many useful services. They also have rather varying currency exchange margins and fees. Looking at the XE International Currency Transfer review, you can see that it doesn’t charge any transfer fees. This is common for industry leaders and it also offers below 1% FX margin, which is also average for the industry. The company is a veteran in this market and generally displays all the qualities one should look for in a currency transfer platform.
But there are also companies that offer lower rates and flexible or fixed margins that can benefit your business in different situations. For example, the industry’s most well-known company TransferWise valued at $5 billion offers the cheapest option for small personal transfers worldwide. Therefore, customers of online retail merchants will definitely appreciate this type of payment option.
However, if you need to make large transfers, WorldFirst currently has the lowest margins. This means that making a currency transfer through it might be the cheapest option. However, companies like OFX and Currencies Direct offer margins and rates that depend on the transfer volume. As a rule, these aren’t very cheap for small transfers. But they can be very cheap for high-volume currency exchange.
How to Use Currency Exchange & Transfer Companies to Maximum Benefit
You should also know that a startup can save money through currency exchange companies not only due to cheaper transfers. They also offer a variety of services that help you reduce currency exposure risks. These include currency counseling and guidance as well as hedging.
You’ll need guidance from experts to use hedging tools with maximum efficiency. This can help you save thousands, especially while forex markets are volatile due to the economic crisis.
Not all money transfer platforms offer these services. Therefore, be sure to consider this when choosing the right company for your business.
Bottom Line: Make Your Currency Exchange and Transfers Cost Less
If you look at business startup statistics, you’ll see that many of these companies fail before they even start. The main reason for this is the lack of cash flow. Therefore, it’s essential to cut your costs wherever you can and maximize your profit. Using online currency transfer companies is one of the tools that can help you with this. Most importantly, these companies will help you reduce the risks inherent to foreign currency exchange. However, remember to research and compare these platforms carefully. They differ in service packages and currency exchange rates. Therefore, you need to make sure that you pick the one that will work best for your particular startup.