At CurrencyFair HQ, at least once a day we need to explain the same question to customers- how does CurrencyFair work? It can be complicated understanding how we exchange the money- does it go through our own bank account? Is that safe? Do we actually send money around the world?
One odd way to understand CurrencyFair might be to compare it to its historical predecessor, Hawala. The Middle Eastern practise, originating as early as the 8th century, works as an ‘informal value transfer system’ through which goods are deposited with a vendor in one country, whose contact in another country dispenses goods to a similar value.
Hawala was brought about in response to the roaming bandits who would rob travellers on rural roads. The trust-based system created networks of ‘Halawadors’ all over the world, across the Middle East, North Africa and India, and is still practised today. A similar system has also been recorded in China, called ‘flying money’.
How is CurrencyFair similar? In that when using CurrencyFair, your money never actually leaves the country you’re transferring it from. It’s put into a segregated account in a highly-rated global bank, the exchange takes place online, and we send the funds from another account, in another country, in the currency you’re exchanging your money into.
But that’s where the similarities end. While hawala is underground and ‘trust-based’, online exchange means that every step of your exchange is documented, regulated and secure. CurrencyFair is regulated by both the Central Bank of Ireland under the European Payment Services Regulations and by the Australian Securities and Investments Commission. This means that though you are dodging the unfair fees imposed on exchange by banks by using our service, your money remains as safe as it would be in a bank at every stage of the transaction.
It’s a very modern solution to a centuries-old problem. Though these days it’s not highway bandits you need to watch out for, it’s the banks looking to sneak hidden charges into your transfer!