The ExchangeExchange / How it Works
What is the Exchange?
The Exchange is CurrencyFair. It is where every CurrencyFair transfer takes place, where your money is exchanged.
Unlike most money transfer companies, CurrencyFair offer you a choice when it comes to trading currencies: 1) you can exchange right now at the best available rate, or 2) request a higher rate and when it is reached, your transfer will take place.
1) Exchange Now
When you choose to exchange your money instantly with CurrencyFair, you will get the best available rate at the time – as seen in our live calculator.
Where CurrencyFair is different from banks is that we only charge you a rate that is typically as close as 0.5% to the Interbank rate – banks can charge you a rate that is as far as 3% – 6% away from the same rate.
2) Choose Your Rate
If you’re not in a rush to exchange, and are happy to wait for an even better rate, then we give you the option to set your own rate. This approach lets you take more control of your transfer: set the rate you’re looking for, and then wait for the market to match it. This can be a great way to get more money from your transfer, although you might have to wait a bit longer for your trade to be completed.
What does peer-to-peer mean and how does this relate to the Exchange?
Peer-to-peer is the fairest way to exchange money. Our peer-to-peer model – or person to person – allows people to come together directly in our Exchange, cutting out intermediaries such as banks and brokers (and their hefty fees and commissions) from the process.
The traditional way to exchange currency was with banks: the banks would set the rates, with their excessive margins built in, and their customers choose whether to take the rate offered.
CurrencyFair works like this: two people who are exchanging currencies in opposite directions agree on a ‘fairer’ exchange rate – and so they both get a better deal. Our Exchange allows people to choose their own rate and then meet someone who will match it. Our platform ensures the transaction they complete between each other is safe and anonymous. CurrencyFair doesn’t interfere in the rates, as they are set by CurrencyFair’s customers themselves.
How is it different from other types of trade?
The difference is how truly fair the trade is. The rates are set by you and others like you with the need to trade currency. In the Exchange you meet to securely and anonymously exchange currency at the rates you agree.
Why should I use the CurrencyFair Exchange?
When you transfer money using the Exchange, not only are you avoiding the excessive fees and hidden charges of a typical bank or third party, you’re also getting a fairer deal by exchanging currency with peers – people going in the opposite currency direction to you. This means there’s more money in your pockets, and less in the banks’.
Who might this be particularly useful for?
The Exchange is especially useful for people who don’t need to transfer currency immediately, and can wait and get an even better rate.
- An expat working overseas and saving their money; when the rate is right, they plan to exchange and transfer their savings to their bank account back home.
- A retiree who receives regular foreign pension payments in another currency; using the Exchange they transfer a chunk of their foreign pension when the rate is best for them.
- A small business owner paying an invoice from a foreign supplier; they can exchange into the required currency when the rate is good at any time during the invoice payment period, and keep their money safe in CurrencyFair until the invoice is due.
- A family supporting an international student might need to send money to their loved one every term to pay rent or tuition fees. By planning ahead and setting a rate in their required currency, they can take advantage of better exchange rates during the term.
- A foreign property owner may need to pay overseas taxes and management fees due annually; by setting up a trade ahead of time to cover their fixed costs, they can secure an improved rate and get a better deal on their trade.
Give me an example of how I could use the Exchange to make more from my trade?
By using the peer-to-peer model that the Exchange operates on, you can not only get a better rate than you would have been offered by traditional money transfer services, but you avoid paying outrageous commissions and fees. This means more money in your pocket and more money to send overseas.
Legacy currency exchange providers do not offer peer-to-peer currency exchanges, and don’t give the option of setting a price and waiting for the market to move in your favour.
Let’s look at an example of this to understand how much you could save with the CurrencyFair Exchange.
On 7th June 2017, the day before the UK general election, one of our customers placed a trade on our Exchange, requesting a rate of 0.7978 on his USD-GBP transfer.
At that exact time, the real exchange rate was 0.7743. As banks tend to charge fees of around 3%, the price this customer would have received would be 0.7511 with a typical bank (0.7743 * 0.97).
The rate requested by the CurrencyFair customer (0.7978) was inclusive of all fees, which are on average 0.45%.
The day after the election, with markets reacting to a UK hung parliament, the customer’s trade was matched at the rate requested. This resulted in a rate 6.2% better than would have been achieved with a bank at the time of placing the trade.
For a 10,000 USD transfer, this saving equates to £467 more in the customer’s pocket as a result of using the CurrencyFair Exchange.
What fee does CurrencyFair charge for transfers?
CurrencyFair charges 0.25% or 0.3% (depending on the currency pair being exchanged) of the total amount exchanged on each side when customers match each other. In the event that there are no other customers providing a competitive rate for your exchange, CurrencyFair will step in and match with you instead. This results in a charge of 0.4% to 0.6% of the amount exchanged (again, depending on the currency pair).
So depending on which way you’re exchanging, and the activity on the marketplace at that time, you’ll pay anywhere from as little as 0.1%, to 0.6%, plus a fixed transfer fee.
What are the features I need to be aware of?
- As currencies are live, naturally they fluctuate. You are not guaranteed to get your chosen rate in the Exchange but you can always change your mind at any time and exchange your money instantly at the best available rate at that time – which is still a great rate and usually around 0.4% from the rate banks exchange with each other.
- If another customer/group of customers have requested the same rate as you, your funds will be grouped together and thus create a mini queue within that rate bracket. The person who requested the rate first will be matched first, and so on. There is no way for us to know how much of a currency will be available at the time you wish to exchange, considering this is based on what your peers will bring into the market.
- As the matching of trades in the exchange queue is completely reliant on the market, there is always a chance you may be “partially matched”. We provide full information on your transaction, which can be viewed by clicking the “transaction overview” button on the website and selecting the “exchanges” view.
When might the Exchange not be the right choice for me?
If your exchange is urgent and needs to be completed in full, and you do not have the time to wait for a chosen rate, then choosing to “Exchange Now” at the best available rate is a better choice.
How do I use it
Step by Step Guide to the CurrencyFair Exchange:
When you login to your CurrencyFair account, you have the option to view the Exchange on your dashboard under Transactions:
Enter the details of the exchange: the amount and currency you need:
Choose to exchange your money instantly at the best available rate, or set the rate you are looking for and wait for the market to match it.
If you decide to choose your own rate, you can then view the exchange queue and set your rate based on what is being requested by your peers – people just like you – in the queue already.
The “Exchange queue” tab shows the position and the rate requests of other people in the market.
You can use the plus and minus arrow or the dragger to move the rate to the point where you would be happy to exchange.
Once you are happy to request this rate you can select the “Set Up Exchange” button
This will enter your funds in to the “Exchange queue” at the rate you wish to trade at, and show you where you are in the queue using a green tab that states “your rate”.
If at any time you want to leave the queue, you can even switch from waiting in the Exchange queue to exchanging now – just cancel your request and take the best available rate being offered if you need the money to be transferred quickly.