Why Facebook has entered the money transfer market

For both casual and serious Facebook users, it’s common knowledge that this particular social media platform has a habit of changing design and user interface elements on a regular basis. Recently, Facebook launched one of the most significant evolutions of its platform to date – the introduction of a money transfer service which allows individuals to quickly send cash to one another at the touch of a button.

Experts have engaged in intense speculation as to what exactly Facebook’s motives may be. After all, money transfer has become a highly competitive domain which is already populated by industry heavyweights such as PayPal. Perhaps anticipating the statements that critics would be quick to make, Facebook has stated that their new transfer services are highly secure, featuring some of the most state-of-the-art encryption and security protocols in existence today.

Believe it or not, this is not Facebook’s first experience with online payments. The company has long provided users with the ability to store their credit card information on file in the event they wished to purchase a game or other “perk” within the social media platform. Essentially, the new money transfer system is simply an evolution of what already exists. Facebook is not alone in their attempt to secure a piece of the highly lucrative e-payment marketplace. Over the past year, Apple and Google have also launched their own payment systems which feature similar functionality and transfer-related features.

It remains to be seen as to whether or not this new system will make a serious impact on the current money transfer industry. Given the fact that Facebook remains one of the world’s most profitable and in-demand companies, it is likely that Facebook’s newest addition to their platform will be given the financial and technical support it needs to flourish. It’s also important to note that Facebook’s money transfer systems could also be quickly implemented into the WhatsApp platform, considering the former now owns the latter after a recent $22bn purchase.

Those who are interested in learning more about this particular development can read more on Facebook’s official website. It will be quite interesting to observe how this system develops in upcoming months.

‘Rip off’ money transfer companies under threat in the UK

It is estimated that nearly 10% of the world’s population currently sends money to relatives and loved ones in other countries. Knowing this, it is perhaps easy to understand why so many money transfer companies have sprung up in cosmopolitan cities such as London, and why so many individuals have become outraged by the prices they are being charged to send this money.

According to recent statistics, the annual sum of remittances sent from the UK to locations around the world totals in excess of 15 billion pounds. Over 66% of these funds are sent to developing countries. According to the World Bank, the total sum of remittances in 2014 will equate to well over 278 billion pounds.

The lofty fees that many of these money transfer companies are charging for the arrangement of currency delivery has sparked outrage amongst citizens and politicians alike. Labour MP Tessa Jowell has recently launched an investigation into several of these predatory establishments, stating, “Many people who are trying to support friends and family abroad are being ripped off. Instead of their hard-earned money going towards medical bills, books or to cover the cost of failing crops, huge amounts are being creamed off by the giant money transfer companies who have cornered the market.”

Jowell is hoping to gain support for new legislation which, if enacted, would force local money transfer services to cut their fees by half during the months leading up to Christmas, as this is typically the peak time for individuals to send money to loved ones abroad. It will be interesting to observe how the target companies respond, as this is typically one of the most profitable times of the year for them.

According to Scott Paul, a senior humanitarian advisor for Oxfam, the need for new reforms in this particular market are absolutely necessary. “People all around the world depend on help they receive,” Paul stated, “and remittances are a critical part of their efforts to overcome poverty.” Whether or not these desired changes will be enacted has yet to be seen. What can be certain, however, is that awareness of this particular issue has increased dramatically.

Making the most of your money through multi-currency cards

The world of international travel and business has changed dramatically in recent years. Whereas, in previous decades, business owners could expect to engage in a few, if any, international money transfer transactions or exchanges throughout the year, this particular service has become an integral element of small, medium and large-sized enterprises across the globe.

In fact, a growing number of businesses are now dealing in multiple currencies simultaneously, largely due to opportunities for outsourcing and global collaboration, all made possible through the touch of a button. A multi-currency card is an excellent resource for those seeking to either hold or distribute a large number of currencies simultaneously without having to first enlist the help of a high street bank or private service.

One of the popular “perks” of the multi-currency card is the fact that individuals can buy the currency of their choice at a fixed exchange rate. Instead of worrying about price increases or reductions, a currency card allows individuals to “hold” money at the value they originally paid for it, thus enabling them to engage in business transactions and money transfer at a more sustained pace.

For travelers, a multi-currency card may be particularly useful, as it reduces the need for international ATM use which often results in substantial financial penalties. Additionally, it helps reduce the likelihood of identity theft and stolen cash while abroad.

A number of services are now beginning to spring up which are directly related to the multi-currency phenomenon taking the world by storm. Caxton FX, for example, is now offering users the ability to hold up to 24 different currencies at any one time. A new prepaid Mastercard is also available which allows for stockpiling of 15 different currencies as well as topping up via your preferred bank account. Moneycorp has also begun to offer a new prepaid card, dubbed the Explore, which allows customers to load up to 14 different currencies before and during use.

As can be seen, there are no shortage of options when it comes to selecting a multi-currency card. Hopefully, these products will become an integral element of international business and travel in upcoming years.

World’s First Wearable Money Transfer Watch

As the idea of the “smart watch” quickly begins to take hold of consumers’ imaginations, a number of entrepreneurial-minded companies and individuals have become to find new and innovative ways in which these products can further facilitate daily professional and personal needs.

International money transfer has long been considered one of the most cumbersome elements of traveling or multinational business, due in large part to the lack of a convenient and powerful transfer system outside of real-world, brick and mortar banking institutions. All of that is about to change, however.

Recently, the global money transfer firm World First announced that they would soon be marketing the a new app which they are billing as “the world’s first international payments app for a wearable device”. According to the developers, this new app will allow for seamless and near-instantaneous transfer of funds for both professional and personal use across multiple currencies.

Featuring a number of flashy voice commands and innovative swiping features, the new app developed by World First allows customers to buy and sell international currency, as well as engage in transfers of all sizes, in less than 60 seconds, all from the comfort of their own wrist.

This, of course, will serve as a welcome addition to the arsenal of on-the-go business professionals around the world, many of whom simply do not have the time to stop in and engage in person-to-person transactions with banking institutions. Given the fact that many of these organisations also levy hefty commission fees against customers, the attractive rates offered by World First will likely be very appealing to those who have not yet been acquainted with them.

This all assumes, of course, that wearable technology will truly become the next “hot” item on the marketplace. The public still appears relatively divided on whether or not these products should be popularized. According to a recent UK survey, more than a third of those polled stated that they would be embarrassed to wear this particular type of technology in public. Opinions are likely to change substantially over time, however, and the new wearables being developed by major software companies around the world should withstand the test of time. For customers of World First, this will definitely be welcome news. More information about World First’s revolutionary new app can be found by visiting their official website. The company has stated they are currently in the process of developing a similar app for the Apple watch.

Facebook’s newest money transfer software could bring benefits to africans

Along with the recent news that Facebook is planning on further developing, refining and extending their money transfer service which has recently found its way into the social network’s messaging platform comes a series of intriguing development opportunities for nations around the world who could use these innovations to further their own economic agendas. In Africa, for example, Facebook’s announcements regarding the future of online payments has been met with extreme enthusiasm, due in large part to the fact that the relatively scarce number of competitors within the African money transfer market has allowed those with a foothold to raise prices and fees without fear of competition.

Internet penetration within the African continent has always been a deterrent to investment from high-tech companies. That being said, an increasing number of individuals within Africa are gaining access to internet connections, making the long-term viability of Facebook’s mobile payment system in this region of the world seem all the more assured.

If Facebook were to solidify their presence within this particular arena, Africans would not only benefit from the new services provided to them, but also by the resulting decrease in fees that Facebook’s competitors would be forced to adopt in order to retain their pre-existing, likely disgruntled customer base. Price wars have always worked in favour of the consumer, and this particular scenario would likely be no different.

Given the fact that the African currencies have long been dramatically undervalued compared to their Western counterparts, the fees charged by pre-existing payment services have often severely hampered the efforts of Africans attempting to send money to one another or relatives abroad. This period of exploitation is, however, directly threatened by the affordable and efficient services now offered by Facebook to all users.

Although there is little way to predict what exactly the future will hold for Africa’s internet infrastructure, many experts believe that Facebook is only one of companies who will likely be attempting to further their agendas within this relatively untapped marketplace. First-mover advantage is very real, which means that Facebook’s money transfer system will likely become a popular tool relatively quickly. Whether it is able to maintain this advantage over time, however, has yet to be seen. More information will likely become available in upcoming months as the system continues to gain exposure and visibility with the general public.

Foreign Currency Kiosks to be launched in Tube Stations

Currency exchange has always been somewhat of a problematic issue, due in large part to the fact that so many complaints and criticisms have been levied against allegedly predatory practices occurring in both independent exchange brokers as well as more reputable high street banks. Central to these complaints have been issues of accessibility and affordability. For some, currency exchange is an absolute must, as money must be transferred to friends and relatives around the world. For business professionals, instant access to currency exchange solutions can shave off hours of commuting to their preferred foreign exchange service.

Recently, it was announced that “Fourex” machines would begin appearing in tube stations across the London Underground. According to information provided by the machines central creators, Jeff Paterson and Oliver du Toit, commuters will be able to instantly convert over 150 different currencies into British sterling. This is likely to be welcome news for the myriad of tourists who visit London throughout the year and are caught without the money they need for shopping and tourism.

Unique to the Fourex machine is the ability to return currencies that are no longer in circulation, including the Peseta and the France. Additionally, the machines will not levy commission fees against users, meaning that some may find this service much more agreeable and attractive than others in the foreign exchange industry today. Although individuals will likely receive relatively low exchange rates for now defunct currency, the ability to return this money for usable financial resources will likely prove to be invaluable for many.

In a statement regarding the future of Fourex, co-founder Jeff Paterson stated, “We have been completely humbled by the interest, excitement and investment we have received so far for Fourex, not only from multi-million pound companies such as TFL and Westfield, but from the 436 people from every corner of the globe who invested through CrowdCube”.

More information about this exciting new foreign exchange service will likely be made available in the upcoming months. These machines will likely begin to appear in various Underground stations, beginning with the heavily trafficked Blackfriars, Canary Wharf and King’s Cross stations. The Westfield Stratford shopping centre will begin to feature one of the new Fourex machines in August of this year.

Is it possible to never use cheques?

TransferWise founders clearly indicated that they have never used cheques before. Kristo Käärmann and Taavet Hinrikus said that they have never written a single cheque before the internet age. “I can’t recall ever using a cheque,” says Käärmann, who is 35 years old. He further says that “For nine years that I have been in London, I have received several chequebooks during accounts opening. I wasn’t aware what to do with the chequebooks since we hardly used them in Estonia.”

Fellow Estonian Hinrikus and Käärmann, co-founders of TransferWise’ electronic foreign exchange system, have similar experiences. Hinrikus say that “The banks didn’t provide any chequebook, and I’m glad that I never touched one.”

The two were shocked to find that in their mission of preparing the launch of their foreign exchange system in the US at the beginning of this year, cheques remain operational and actively used in the US.

“Americans use cheques a lot,” says Käärmann. “The US financial system uses cheques on a weekly or monthly basis. Americans use banks differently from us. Apart from working hard to meet licensing requirements, there is a need to adjust our product to the American market. ”

This is one of the escalating pains of TransferWire that began as an easy technique of Hinrikus and Käärmann of avoiding foreign exchange bank rates when they arrived in London for work in 2007.

They exchanged between £2,000-£3,000 cash a month. They decided to bank the money in each other’s bank accounts so that they can calculate the exchange rates of British banks. Some other friends joined them and in two years together they had saved banking fee of approximately £10,000-£20,000, which gave them the idea of launching the TransferWire peer-to-peer currency exchange as an online platform in early 2011.

Currently, the business is operating in the same way. It runs some bank accounts all over the world, collects money in one currency from customers and gives counterparties in other currency, pays each country from its accounts.

According to Käärmann, the model has progressed but hasn’t changed. He says, “When we began it was just a simple idea that used euros and pounds only. Occasionally it took some days to make transfers a success. Nowadays, we are using 400 different currencies, and the transfers are very fast. Also, we are the only agent that can transfer money from the UK to France in 17 seconds or less. We have set records on speed concerning international transfers.”

A major decline in foreign exchange in 2015

According to a major survey that was carried out in 2015, turnover in EUR/USD fell by 17% in October 2015, which translates to $640 billion per day. On the contrary, the turnover in AUD/USD rose by 8%.

A survey carried out in the key financial institutions that deal with the foreign exchange by the Bank of England has revealed that a 14% drop in trading volumes has been experienced since April 2015 and a 21% drop since a year ago. The Bank of England measures the vast volumes traded in the markets of global currency.

The survey further revealed that the average daily volume of FX that was traded in the UK in October 2015 was very huge, about 2148 billion or approximately 2.15 trillion dollars. This translates to two-thirds of the yearly GDP in the UK during an average day. This data revealed a noticeable drop in flows as compared to six months ago. However, this drop was still higher at 2481 billion.

Many of the transactions were from Foreign Exchange Swaps that are utilised by the company to circumvent against foreign currency threat in the future, which accounted for 1019 billion in total. According to the report, the huge fall between April and October was in the Spot FX market. It stated that “The turnover in all products dropped over the six months to October 2015. The FX spot turnover dropped by 24% that is $737 billion per day down to 34% during the previous year.”

Regarding the actual currency pairs, the report showed that the currency pair that dropped the most is the EUR/USD. Turnover in many currency pairs dropped. Ideally, the turnover in EUR/USD dropped by 17% in October 2015 to $640 billion every day. On the contrary, the turnover in AUD/USD rose by 8% while that in USD/CNY progressed higher, up by 3%. The largest currency pair currently is the USD/CNY.

There was no informative explanation from the report as to why trading volumes had dropped by a fifth over the last year. However, Jeremy Stretch of CIBC Capital Markets was pointed out by Yahoo Finance as using increased regulation as a factor.

Certainly, the regulation was promoted in many jurisdictions after the Swiss Franc debacle last January, after the SNB eliminated the cap on their currency leading to high losses for several brokers and their clients. This move by SNB led to regulators in the US to increase the minimum margin conditions on several institutional FX transactions, which would have resulted in an immediate drop in volumes as clients would have needed to set aside extra capital so as to receive the same leveraged volumes as compared to last year.

The elimination of the Franc’s cap resulted in several brokers being bankrupt as many traders lost their trading capital as well. This too might have had a small impact on trading volumes. Another reason that led to the drop in FX trading volumes is the dollar’s appreciation. This is because trading volumes are reported in dollars and the stronger currency translates into a reduction in overall volume as compared to using a different weaker currency to report the turnover. However, while this explains the drop in volumes during the year, an increase in the value of the reporting currency cannot elaborate the 14% drop in volumes from April 2015 as the dollar index merely changed in value from April to October 2015.

According to the BOE’s report, many of the marked drops were in Options Trading and Spot, which dropped from 973 billion to 737 billion between April and October. Spot Forwards and Options are the most preferred tools of speculators that explain why the trading volumes dropped extremely during that period.

The UK remains the key leader in the world of foreign exchange in line with trading volumes with a total turnover of 2148 billion in October.

Analysing Premier League clubs exposure to foreign exchange

There exists a single factor that is usually not recognised when the very rich clubs that belong to the English Premier League use millions of pounds for the period of the transfer window, that is, their exposure to foreign exchange.

The aspect of spending £50m on superstar midfielder may not be the most exciting aspect, but similar to all businesses, the forex is one crucial factor that requires closer attention by those who work behind the bars at football clubs. An extreme rate can simply cost millions of pounds.

In the current transfer window and economic wrangles in China, the global equity market rejects and lows in commodities have inflicted chaos all over financial markets. The Sterling has experienced great losses dramatically in the conversion from pound to euro mostly as the rate drops to a 12-month low due to plunging risk sentiment.

Since the clubs usually pay the players using the selling club’s local currency, extreme rates for pounds indicate that buying players from Europe are a huge investment by like ten percent in some cases. In the same line, the buying power of Europe has been boosted significantly.

These ridiculous rates will cost British teams several millions of pounds more than when paid in Euros during the summer window as compared to the month of January, which is a panic-buying period. The previous transfer window that closed at the end of month August, the GBPEUR high was 1.4386. Currently, the transfer window has fallen to 1.2888, which is very low.

Those that acted during the summer period are safe for feeling smug, especially when the players’ value has increased in the meantime, For instance, Manchester City’s investment in Kevin De Bruyne. This acquisition would cost significantly more than £55m that was paid during summer. A sharp spend despite it being currently injured.

To make sure that these rates are even worse for the clubs, they should be well informed when they are trading a player back to a continental club after purchasing him from one during the last transfer window, that the loss they are receiving is essential and that it does not cost them too much.

To overlook that Premier League football clubs function in a similar way to another international trading business is easy. Forgetting the currency risk is very expensive.

Could it be the end of Bitcoin transactions in Europe?

The European Commission (EC) is set to bring the anonymous transactions in virtual currencies to an end to help tracking of terror groups’ funding. To foster this, the Commission published an action plan that will help reinforce the fight against terrorism financing yesterday. It outlined information on how criminals are looking for new ways quickly that provide lower detection risk of moving their money.

There is no evidence in the plan that points out to finance terrorism being financed by virtual currencies. However, the Commission is certain that there is a possibility and feels that it is in a position to contemplate regulation as one of the continuing efforts to bring terror attacks to an end.

The plan requires the platforms that deal with virtual currency exchange to operate under the capacity of the European Anti-money Laundering Directive so as to ensure that exchanges can reveal who accessed their services and when they were used. According to the action plan, the Commission will as well inspect whether it is viable to include wallet providers of virtual currency.

Bitcoinistas should not feel like they have been left out by the EC since the action plan requires a re-think of how and when to reveal pre-loaded credit cards’ users, without minimising their utility. This is because many of these users are poor who find these cards useful instruments in financial matters because they work as credit cards without necessarily requiring the card holders to be credit-worthy. Consequently, a central register of bank accounts, as well as account holders, is required to be set up in the entire European Union member states.

Meticulous consideration of all exchanges between states and EU members that are known to be great points for money-laundering has not been left out in the action plan as well. About many government responses to situations raised by technologies, this issue remains of value, but pointless at the same time since virtual currencies create a virtue of privacy.

Bitcoin in its advice says, “To defend your privacy, there is need to utilise a new Bitcoin address whenever you accept a new payment. Also, you can make use of several wallets for various functions. In doing this, you will isolate all your exchanges and associating them with each other will not be possible. Those who send you money cannot view your other Bitcoin addresses and what you use them for. ”

Many virtual currency transactions are beyond EU’s reach in such a way that operators will find ways of cashing in cryptocurrencies within Europe. Cryptocurrencies do not allow terrorists to access funds.

Category: Money Exchange Software