Currency Exchange Comparison: Banks Vs Online Services

  • Posted by Paul on July 22, 2014 in Banking Global Economies Global Money Transfer

This post is here to help you carry out a currency exchange comparison – in particular, for comparing currency rates on international transfers between banks and popular online transfer services.

Currency exchange, foreign exchange

Compare Money Exchange Services: Understanding Buy and Sell Rates

Before you go exchanging currency, it’s important to understand that there are really two rates any institution uses in the currency conversion process. There is the buy rate: the rate at which the bank or service buys the currency in question. Banks trade currency on what’s called the ‘inter-bank market,’ a market which the average person does not have direct access to. Then there is the sell rate, which of course is the rate at which they sell that currency. Any time a currency transaction occurs, there is a gap between these two – the size of that gap in large part determines how good of a deal you, as a consumer, get on your currency exchange.

Let’s take currency exchange rates in the UK for example: imagine you want to convert GBP into AUD. There are effectively several transactions happening here. At a bank, the bankers are effectively selling your GBP at the sell rate which is available to them, and buy AUD at the buy rate that’s available to them. However – crucially – these rates are often significantly different from what they actually display to you. This allows them to pocket the difference on these transactions as profit.

Currency Exchange Rates Comparison

What you’ll typically find when comparing bank rates with online transfer services is that online exchange companies offer (although not always) more reasonable exchange rates. Online services by definition tend to have lower fixed costs than physical banks, so they have less of a need to charge high fees and create a big artificial gap between their buy and sell rates in order to turn a profit.

Take OrbitRemit as an example – we’ve managed to eliminate many of the typical operating costs of a foreign exchange company or a bank by creating a streamlined, 100% online service. This allows us to keep fees lower and exchange rates fairer while still delivering a world class product and reliable 24/7 support.

Compare Online Money Exchange Options

If you want to do a quick comparison of how an online service like OrbitRemit measures up, you can go ahead and use our simple exchange rate calculator and compare the result to what you’d get with your bank or another transfer service. The beauty of our calculator is that the rate you see is exactly what you’ll get when you do your transfer, so you know beforehand how much money will come out the other end. You should never use a service that doesn’t tell you upfront the exact fees and exchange rates that will be applied to your transfer beforehand.

 

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