FAQs
In the following pages you will find comprehensive information and answers to Frequently Asked Questions on all of the currency services listed on the site. If you cannot find the answer to your question here, feel free to Contact Us.
FAQs for FOREIGN EXCHANGE
Below you will find numerous FAQs related to foreign exchange services.
What is the Foreign Exchange Market?
The foreign exchange market is the largest liquid financial market in the world. With a daily turnover estimated to be trillions of dollars each day and accessed by traders in all four corners of the globe, the market itself has no central exchange and is not regulated.
Trading takes place 24 hours a day (except on weekends). Each trading day begins in Sydney and ends in New York on Wall Street. The main sessions are:
- Sydney, Australia
- Tokyo, Japan
- London, United Kingdom
- New York, USA
Trading hours are generally 8 AM to 5PM in each region's local time.
What is an Exchange Rate?
An exchange rate can also be called a forex or FX rate, and shows the value of one currency against another. Currencies are grouped in pairs (for example, the Euro and the US dollar). For instance, you might see that the euro is worth $1.502 – so 1 euro is the same as 1.502 US dollars.
There are two types of exchange rate – the Spot Rate and the Forward Rate. The spot rate is the current exchange rate (check it on a live currency chart). The forward rate is an exchange rate that is traded today but is intended for delivery at a set date in the future.
Who Uses the Forex Market?
The foreign exchange market is accessed by different entities, each with their own level of access. Right at the top you will find the big banks and securities dealers, who deal in what is known as the 'interbank market' (see Interbank spot rates explained). The rates used to buy and sell currencies in the interbank market cannot be accessed by other market players.
Other market users are smaller banks, foreign exchange brokers and dealers, money transfer (remittance) firms, corporations, hedge funds, and finally individual currency traders – known as retail traders. Retail traders can only participate in the forex market via a broker or bank.
A trade takes place between any two parties (entities) at any one time.
What is Spread?
'Spread' means the difference between a bid and ask price of currency pairs.
What is a Foreign Exchange Specialist or Non-Bank Foreign Exchange Service?
A foreign exchange specialist is also called a foreign exchange (or forex for short) broker. These firms are specialists in the foreign exchange market, providing services for private and corporate clients all over the world.
They offer regular and one-off international transfers, hedging strategies, one-on-one currency advice and even day trading platforms for currency investors. Foreign exchange specialists can offer unbeatable exchange rates (much cheaper than at the bank or from high street agents) and typically do not add fees such as commission.
What is the Interbank Spot Rate?
The Interbank spot rate is the rate which large banks use to deal currencies to one another in very large amounts (often well over $1 million per transaction).
Retail (individual) customers will never be able to access this internal rate, although it is used as an indicator – it is the rate that you will see when you use the Currency Convertor, the rate that is displayed on currency charts.
In looking for a good currency service, the customer looks for a rate that is as close to the Interbank rate as possible. The best rates are generally offered by non-bank currency exchange specialists and money transfer (remittance) services.
Commercial banks generally take a larger portion of a good rate to deal with handling and processing costs – meaning the rate that is offered to the customer is usually inferior.
Can I Fix an Exchange Rate?
Foreign exchange specialists can offer exchange rate fixing for a set future date. This will usually be called a 'Forward Contract' or 'Forward Transaction'.
Most firms will offer forward exchange rates to their private and clients for up to 1 year in the future. Fixing exchange rate is a great way to guarantee a good rate or avoid being exposed to a poor rate.
In What Way do I Save Money?
A foreign exchange specialist will offer you a saving on an international currency transfer by offering you a better exchange rate than the bank.
If you are unsure, then ask your bank for a quote – then ask your foreign exchange service for a quote on the same currency transaction, and compare the difference. Most forex specialists can guarantee that their rate will be superior.
Is there a Fee for Intenational Payments or Wire Transfers?
Most foreign exchange specialists will charge a fee on international payments or wire transfers if the amount you want to send is below a certain amount (set by them). The most common benchmark is $5,000 – below this amount and you might be charged up to $20 per transfer.
This fee is still likely to be better than that offered by the bank – plus the exchange rate you are given will also be excellent. To get the best deal for smaller transfers, shop around and compare offers. Don't forget to look into remittance (money transfer) firms.
Will I have to Pay Commission?
Your bank might charge commission for an international transfer, but a non-bank foreign exchange service rarely charges commission fees. The more clear and transparent a firm is about their fees, the better.
Are Foreign Exchange Services Regulated?
If you plan to send and receive money between currencies, regardless of how much or how little, you will want your money to be in safe hands. A good foreign exchange service is regulated and monitored by the central regulating body for financial services – they will display this information on their website. If you are not sure, then you can ask directly.
By being adequately regulated, a financial service carries out measures to prevent money laundering, which is a financial crime. They will also ensure that there are measures in place to ensure that if the company were to go bankrupt, their customers will not lose large amounts of money. This is known as having liquidity in place.
How Long do International Transfers Take?
Most transfer services quote the length of a transfer. Most commonly a transfer takes between 1 and 3 days. Transfer time depends also on the currencies that you are buying and selling and which bank you have an account with.
What is Hedging?
Hedging is the practise of protecting your money against future fluctuations in the currency exchange rates. Foreign exchange brokers offer hedging strategies to private and corporate clients as a way of limiting risk from adverse rate changes.
FAQs for TRAVEL MONEY
Below you will find many commonly asked questions and answers around the topic of Travel Money.
Is Online Travel Money Cheaper?
Generally, yes. Online travel money services can offer better exchange rates because they have lower handling and processing costs to deal with. Additionally, they rarely charge commission fees (though always check this in advance). It is now generally accepted that airport exchange bureaus offer less attractive rates than online firms.
How Do I Choose a Travel Money Service?
You can start by comparing the latest exchange rates offered – these are usually displayed on a travel money firm's website for each currency. Or you can use a price comparison website to find all the information in one easy format.
Another factor to think about is what a travel money firm offers in terms of security (can you contact a helpline if your travel money goes lost or stolen?) and how many forms of travel money they can offer (cash, traveller's cheques, prepaid card).
Can I Order Currency in Advance?
Most travel money firms will allow you to order foreign currency up to 21 days in advance.
What is Buy Back?
Many travel money firms offer 'commission free buy back' – this means they will buy any unused currency when you return from your travels at no commission. This is useful, although you might simply choose to hang on to any unused currency for your next trip.
Is there a Limit to the Amount I Can Order?
Generally, travel money services do put a minimum and maximum cap on how much travel currency you can order over a 24 hour period. Travelex, for instance, won't allow more than $5,000 per day and no less than $250.
How Can I Pay for Foreign Currency Orders?
Most travel money firms take payment via credit/debit card, BACS, Bpay or bank transfer. Check in advance to make sure you will be able to pay for your currency.
How Do I Receive my Currency?
Once your travel money order is placed and paid for, you can usually arrange to have it sent to a convenient location for pickup. Typically, this will be your nearest branch of the same travel firm or another high street travel agency.