Author, Mike Smith
Last Updated on August 2nd, 2024
Below I will explain what a currency exchange specialist is and how they operate. I will cover their costs, how they differ from banks, and the situations when it is best to use them.
What does a currency exchange specialist do?
A currency exchange specialist helps individuals and businesses make international money transfers from one country to another.
They buy and sell global currencies in bulk to make transferring money overseas efficient and cost-effective.
Due to their specialism, they provide a safe, efficient, and often cheaper alternative to banks.
However, don’t confuse a currency exchange specialist with an FX broker.
FX brokers provide online trading platforms so people can speculate in the movement of currencies to make a profit. It’s similar to trading platforms for the stock market.
Whereas a currency exchange specialist moves actual money from one country to another.
They are also known as currency brokers, foreign exchange brokers, or money transfer companies.
These phrases are often used interchangeably. Be aware of this while you’re shopping around.
How do currency exchange specialists make money?
A currency exchange specialist makes money from the exchange rate they offer. Some also charge fees.
Their profit margin is built into the rate of exchange offered to customers.
By buying currency at a high volume, they’re able to deliver highly competitive exchange rates.
On top of this, some can waive any transfer fees.
It’s always worth checking if your provider charges fees, as this can complicate the cost of moving your money.
As currency exchange specialists are volume-driven, they are often better placed to cater to large international transfers.
What are the differences between currency exchange specialists and banks?
1. Better exchange rates
Broadly speaking, a currency exchange specialist can offer better exchange rates than banks.
Some of the major banks have huge exchange rate margins.
They can charge around 3%-4% more than a currency specialist.
This works out a lot of money when transferring large sums.
Currency exchange specialists are designed to achieve the very best rate possible for clients.
An additional problem is that most banks make it very difficult to find out what their exchange rate margins are!
You often don’t find out the rate you are getting until the last minute.
The bottom line is, you’re far more likely to achieve a lower exchange rate by using a currency exchange specialist.
This could potentially save you thousands on international transfers.
2. Lower transfer fees
You may have seen that many banks add annoying transfer fees for international transfers.
Transfer fees from banks can range from £10 to £25 per transfer.
As banks are already taking such a high margin on international transfers, it’s pretty staggering that they continue to make clients pay extra fees.
Customers can get stung by this as banks sometimes don’t make these fees apparent until the very last moment.
And if you’re doing international transfers regularly, these fees soon stack up.
Currency exchange specialists, on the other hand, tend to have a more simple fee structure.
There are even some, such as ourselves, that don’t charge any fees whatsoever.
This not only reduces the costs of making an international transfer but makes it easy to understand how much money you will receive.
3. Personal service
Currency exchange specialists aim to make the process as easy as possible for the client.
Banks offer countless financial services – such as mortgages, savings accounts, investment, and insurance products.
The reality is currency exchange is not a bank’s highest priority.
This means the support or guidance from banks on international currency transfers is often minimal.
I’m sure we’ve all had those experiences with banks where they can be cumbersome and laborious to deal with and it can often be difficult to speak to a real person.
When you’re making a large international money transfer, you don’t want to risk any mistakes from sub-par service.
A currency exchange specialist is usually the polar opposite of this and solely focuses on international currency transfers.
Therefore, you’ll find brokers can be more efficient, agile and can offer a much more personal currency exchange service.
They provide a helpful service where big banks typically fall short.
Are currency brokers cheaper than banks?
Generally speaking, currency exchange specialists are cheaper than high street banks.
Banks often advertise themselves as having ‘no fees’ or free transfers.
Don’t be fooled by these phrases.
If you were to compare the banks’ commercial exchange rates against the true interbank rates and calculate the margins, you would see there is a big difference.
This is where banks capitalise on customers that don’t shop around and compare exchange rates.
For example, on transfers of £100,000, banks could take a whopping 4% in some cases.
This means a potential £4,000 at risk of being handed straight to the bank.
Alternatively, a currency exchange specialist can typically offer exchange rates much closer to the interbank rate.
This could leave you £1,000s better off.
What is the best way to exchange currency in the UK?
When you exchange currency, it depends on whether you need travel money or want to send money overseas.
In general, the best way to exchange currency for travel money is to use one of the big UK supermarkets, such as Tesco, Sainsbury’s, or Asda.
Whereas if you are looking to transfer money abroad, it is best to use a currency exchange specialist.
As they conduct many high-volume international transfers daily, they can be more market responsive and cost-effective than banks.
Some will also provide you with a much better service.
You’ll typically find that they are much more willing than big banks to take the time to understand your transfer.
Often, this allows them to deliver support and guidance specific to your situation.
They can help you with setting up payment details, providing alerts when the rates move in your favour whilst providing clear explanations about the process, and helpful information throughout.
Make sure you find the best rate you can whilst getting the most helpful guidance possible.
When is it best to use a currency exchange specialist?
A currency exchange specialist is usually the best option when you need to transfer large amounts of money overseas.
Banks often limit how much money you can send daily.
Whereas, currency brokers and specialists don’t tend to have any maximum amounts.
When you’re transferring a large amount, securing a good exchange rate becomes even more critical.
You could potentially lose thousands through a bad rate or bad timing.
The larger your transfer, the more that’s at stake.
I have yet to find any bank that is highly competitive on exchange rates. So I think you are best to find an alternative provider that can reduce your costs.
Benefits of using a currency exchange specialist
Here’s a summary of what separates a currency exchange specialist from a bank:
- Purpose-built currency exchange service
- Exchange rates closer to the interbank rate that could save you money
- Personal service tailored to your transfer
- Support and help in carrying out your international currency transfer
- Alerts when your exchange rate moves favourably
Are currency exchange specialists regulated?
Some currency exchange specialists are regulated by the FCA and some are not.
The FCA (Financial Conduct Authority) is the governing body that regulates financial organisations in the UK.
The role of the FCA is to ensure that companies meet UK industry standards, including rules put in place to protect client money.
Therefore I would highly recommend checking that your provider is regulated by the FCA.
You can check whether a company is regulated by searching the FCA register.
Are all UK currency exchange specialists the same?
While most currency exchange specialists operate using broadly the same principles, they’re not all the same.
Each currency exchange specialist sets its exchange rates.
Whilst you can expect the exchange rates to be an improvement on those of the banks, some currency exchange specialists will be better than others.
Remember, the smallest variance in the exchange rate can make a significant difference to the final converted amount.
Compare exchange rates from as many currency exchange providers as possible, not just the banks.
Also, some specialists provide a better service than others.
Some currency specialists may force you to use an online platform to make your international transfer.
This may not be the best option.
Online platforms put all the pressure on you to conduct the transaction yourself, without any help or support.
When you’re making a transfer with thousands at stake, it’s quite an undertaking to do yourself and it can be easy to make a mistake.
If it were me, I would want accessible support and guidance from a real person.
Other providers like Key Currency, will assign you a personal currency exchange representative who you can always contact over the phone.
This reduces the risk of making a costly error.
Just as it is vital to do comparisons to find the best exchange rate, finding a broker that will deliver quality service could also be invaluable.
Key Currency: Who we are
We are a British-based, privately owned currency exchange specialist.
Our headquarters are strategically based outside of London.
This helps us offer you more competitive exchange rates and provide an antidote to currency exchange companies owned by large corporates.
We also assign you a currency exchange representative who will guide you through the transaction.
This means you don’t have to manage the transfer yourself on an online platform.
It takes the pressure off you and makes your transaction as easy as possible.
We have received a 5-Star “excellent” rating on the customer review site Trustpilot based on over 2,000 reviews.
