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For years, bank customers in SA have griped about the excessive costs of sending and receiving foreign exchange: an average 2-3 percent of the transaction value unless you’re an A-list client.
Customers have put up with this for far too long because they lacked an alternative. Paying 2-3 percent on every forex transfer positions the banks as toll collectors on every cent that moves across our borders. A few years ago, this was reckoned to make the major banks upwards of R15 billion a year — at almost no risk.
Future Forex has disrupted the oligopoly in this space, charging 30-50 percent less for forex than the banks while offering a level of personalised service the banks have long promised but never quite delivered.
Losing such a significant portion of your funds just to move them to an offshore bank account seems absurdly unnecessary given the technological advances that should make this a cinch. So why are these bank charges so high?
“For one thing, it is difficult for most customers to work out exactly how much they are being charged by the banks, since most of the costs are buried in the buy and sell prices. The wider the spread between these two, the more you are paying,” says Harry Scherzer, CEO of Future Forex and a qualified actuary.
Some costs are more visible, such as the SWIFT fees, which usually vary between R500 and R1 000. Some banks will also add a “commission” fee, but the real damage is in the hidden spread. Banks are neither transparent nor consistent in how they charge this fee, but few bother to question it.
“We spend a lot of time educating customers on how the banks actually charge for forex, and in truth, it can be exceptionally misleading,” adds Scherzer.
Future Forex charges roughly 50 percent less than the banks on forex for individuals and as much as 30 percent less for businesses, though this depends on the size of the transactions and other factors. -Moneyweb
Online Reporter