02 Aug Know how much you lose in an Fx transaction
Foreign exchange is not always a top priority when we ready for an international trip.
Most of us just walk into any one of the Singapore Money Changers near our work, in a mall or those found strategically around in airports to get the cash we need. There are so many other important things to take care of before taking that flight!
Moreover, the seemingly complex calculations involved in forex transactions also often puts us off looking too closely to see if we are getting a fair deal.
But you’ll realise, with just a little attention, that transacting with money changers, more often than not, costs more than it should. Commission, charges, spreads – they may seem small but add up, resulting in actual losses for you.
Understanding Foreign Exchange in Singapore Via Money Changers
Let’s take an example to understand this better.
Say, you are taking off for a much deserved vacation to the beautiful beaches of Thailand, and so need some amount of Thai Baht(THB) in ready cash.
At the time of writing, the live rate – aka the one used by banks – shows that 100 SGD would get you 2,380.59 THB (source xe.com). If you head out to street money changers the most likely exchange rate you’ll get: 2265 – 2268.50 THB for 100 SGD.
So you lose upto 115 THB per transaction over the live rate with money changers!
Indeed, this is normal. Losses of around 5% on each side are pretty common in transactions across currencies, going up to 10% depending on market conditions. Using airport money changers causes even more losses as their rates are more expensive that those of street money changers, leading to a further cost of upto 3-5%, per transaction.
If you are thinking – well, such losses are an unavoidable part of international travel, not so.
Tech-Driven Innovations Offer Alternatives
Thanks to a range of technological innovations, we have options other than traditional money changers today. Choices range from online money change to P2P money exchange.
While online money changers save us the hassle of visiting a money changer, they are still not the most cost effective option.
To continue with our example, a quick check on one of the online money changer sites shows that we would get 2361 THB for 100 SGD. You can see the further loss you’ll bear if you use such services.
Cut Out The Middlemen With Peer-to-Peer Money Exchange
Peer-to-peer platforms for money change are a recent introduction but are fast gaining popularity due to the range of benefits they offer:
- Lack of any extra charges: P2P services eliminate the need for middlemen as the parties interact directly. This also does away with charges like commission or spreads.
- Transparency in transactions: Money Exchange Apps like MeX use live exchange rate (as seen on reputable sites) for the transactions, making the calculations fair and transparent.
- Safe and legal: Since the P2P platform is acting as a facilitating service, its use is currently legal. Additionally, safeguards like verified profiles are inbuilt to protect users.