When shopping in a retail store, you’ll notice that the prices are a lot more expensive than if you were to buy the products wholesale.
The higher prices exist because the store owner buys the products wholesale, but then marks up the prices to cover the cost of staff, insurance, marketing, interior designers, rent and other overheads.
The retail shops then mark up the price even more to make their profit.
Most of the time, shoppers like us don’t mind paying a premium because we enjoy a great shopping experience. Going shopping for new clothes in a dusty old shack wouldn’t be that much fun, would it?
What many people don’t realise is that when using banks to transfer money internationally, we pay large retail fees and expensive exchange rates to a middle man, without any real reason. They don’t add any value or make the experience half as much fun as shopping in a retail store – after all, who gets a thrill waiting in a queue at the bank just to send your money somewhere?
The only reason that banks are still being used for international money exchange is because few people realise that there are better options out there. Until more people realize this fact, the big banks and brokers have no reason to stop charging their expensive exchange rates and retail fees.
In the past, when we were less connected by technology, we depended on banks to exchange currency. It was expensive, but there weren’t any alternatives. And we all know how a monopoly works – when there is no competition to keep them in check, prices skyrocket!
The Hidden Costs Of Currency Exchange
The huge profits that banks make are often hidden because of their confusing exchange rates and sneaky tactics.
For example, some people think it makes sense that they are getting fewer pounds for the euros that they gave the bank – because of fluctuating rates. What they often don’t realise is that they are also paying for that ‘retail shop’- for the bank’s fancy corporate offices around the world, executive bonuses, corporate jets, marketing campaigns and huge profits.
The Good News
The good news is that the monopoly the banks have had over our currency exchange is starting to break down thanks to the rise of the internet.
Even though it’s worth paying retail when it comes to shopping, it’s completely unnecessary when it comes to exchanging currency. Why would anyone want to pay more when they can pay less for an added convenience?
At CurrencyFair, we have found a way to offer you much better international exchange rates and save you up to 90% of the total fees compared to your bank. Besides cutting out the ‘retail shop’ by doing everything online, we are able to cut prices even further using our clever ‘peer-to-peer’ system.
Peer-to-peer simply means bypassing the banks by swapping or ‘money matching’ with people sending money in the opposite direction. It’s really quite clever – your money never actually leaves the country. What happens is you and the other person receive each other’s money in the currency and location you want. It’s all automated of course – so, relax, you won’t be haggling with anyone!
If you want to know how it works a little more detail, see this article: How Does CurrencyFair Work?
When you think about it, the new way makes sense. Maybe in the past we needed a middle man to help us connect, but now that most of us have access to the internet, it’s no longer required.
Want To Learn More?
All you have to do is go to CurrencyFair’s home page and you’re on your way to getting the excellent exchange rates and service you deserve!