PhilO

New online currency exchange system

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This might be of interest to some Forum readers:

http://eu.techcrunch.com/2011/01/24/transf...rency-exchange/

"TransferWise launches its online currency exchange today, which hopes to give the banks a run for their money, along with disrupting the consumer-end of the money exchange market as a whole. The headline proposition is that the platform gives anyone access to the same mid-market exchange rates that banks get on their interbank market, with TransferWise charging a flat fee of £1 for each transaction regardless of the amount being exchanged."

Skype employee #1 Taavet Hinrikus is behind the new company.

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Interesting, wonder how they got regulatory approval. The reason banks screw you on the spread is because they regulated themselves into this position, and because of collusion (because relatively few firms have the inventory to carry this through). If banks (and post offices, supermarkets, etc.) are stupid enough to keep spreads at 10-30% he will make a killing, but I do wonder about the business model (esp. how does he get his inventory? If I was a bank I certainly wouldn't lend to him at the interbank rate - and will the £1 per transaction scale?).

In most emerging markets there is an active, liquid and competitive black market for currency which - with a bit of shopping around - does bring the spreads down quite a bit. I guess this is the legal version. If there's a need, the market will solve it.

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Well, it's cute but it's just for Euro to GBP and vice versa for now, so the appeal (to me) is limited.

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