CurrencyFair foreign exchange attracts investors
CURRENCYFAIR, AN online market for foreign exchange transactions, is in the process of completing a funding round of €670,000 raised through a combination of angel investors and Enterprise Ireland. This is the Dublin company’s fourth investment round, having previously raised €980,000 privately.
CurrencyFair is a peer-to-peer online marketplace for foreign exchange that lets people swap funds with each other directly, bypassing banks and the transfer fees involved.
Clients can exchange straight away with other customers if they like the rate, or place their own trade on the marketplace at a better rate and wait to see if another client matches them.
Transactions through the site are anonymous but users have to register their details and need proof of ID and address in order to create an account with CurrencyFair, just as they would with a bank.
When they want to make an exchange, they send the amount into a holding account operated by the company, then go to the site’s online marketplace to exchange with people who are looking for the same currency.
CurrencyFair claims its customers are exchanging at rates usually only otherwise available to multinationals or money market professionals dealing in large amounts. In some cases users get a better rate than the interbank midpoint.
“The internet’s very good for cutting out middlemen everywhere,” said managing director Brett Meyers.
The site currently handles 15 currencies and plans to add more, including Indian rupees. The company has customers in 35 countries. Only 15 per cent of the business comes from Ireland, where CurrencyFair is registered, with the remainder coming from Britain, Australia, the United States and Poland.
The service is aimed at ex-pats, small businesses, students or people making regular payments such as mortgages in other currencies. “It’s not a trading site for people who want to bet on the exchange rate; it’s for people who have a genuine need,” said Mr Meyers.
The service is regulated by the Central Bank.
The site went live in May 2010 and the company says its customers have made total savings of more than €1 million over that time, when compared with what they would have paid in bank charges.
Mr Meyers said this calculation is based on a typical bank’s margin for international money transfers of 3 per cent, which can be up to 2.5 percentage points above the wholesale rate, as well as the handling fee that can be as much as €20 per transaction.
Close to €35 million has been traded on the site since it went into business.