The upstarts challenging banks in the forex market

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Few pay much attention to the hidden costs of forex, or know they can negotiate a cheaper rate with their bank – if they’re willing to put in the time and effort. Moneyweb

It’s reckoned that 80% of SA’s R4.6 trillion GDP has a forex component, meaning money that either flows into or out of the country. This is a gold mine for the banks, since they get to toll most of this money each time it moves. The five major banks – FNB, Standard Bank, Absa, Nedbank and Investec – are believed to make a combined profit of R15 billion a year from forex. Smaller clients are paying 2-3% in forex transaction costs, which explains why newer entrants charging 1-1.

“Our proposition is that we will give you a better rate than the banks, sometimes as much as 50% better, and our fees are transparent and once we have agreed on a pricing structure, we will stick with it. For companies and individuals that transact frequently in forex, that’s a huge saving over the course of a year.” The opacity in forex costs works to the advantage of the banks.

 

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