How to Choose the Right Currency Exchange Provider

Updated: Jan 26



Anyone who does foreign transactions understands how important it is to choose the right currency exchange provider. Especially when you're looking for a provider that’s reliable in the long run.


The right currency provider must be secure, transparent, and committed to you. And of course, must have the best conversion rates available!


What is a Currency Exchange?

Let's say you're from London where money is in pound sterling. You want to send money to your friend in the US but they use dollars not pound sterling. So, you're going to need to turn that pound of yours into dollars before you send it out. Yet, you don't know how to. That's where currency exchanges come in.


Currency exchanges such as banks, brokers, and FX companies like Bound help people and businesses convert their own currency into foreign currencies and vice versa. They help two parties in different countries exchange varying sums of money. And make it easy for them to send and receive international transactions.


A good example would be when a business makes a payment in a foreign currency to import goods from a seller in a different country. The business will need a currency exchange to convert their country's money into the seller's.


Besides handling transactions and conversions, currency exchanges also offer advice and other services. They help customers solve their money exchange and currency issues.


Some offer specialised services like currency analysis, rate alerts, and FX hedging. All of which and more Bound does for their users.


Currency exchanges are different from FX brokers. These are for foreign currency trades. A foreign currency trader is anyone who trades in foreign currencies for profit. Foreign currency traders access foreign exchange markets through FX brokers. On the other hand, currency exchanges convert currencies and handle international payments.


What Should I Look For In My Currency Exchange Provider?

Always consider the rates and credibility when deciding which currency exchange to use. It is important to make sure that you are getting good value for money and that your funds are in safe hands.


They Must Be FCA Regulated

The Financial Conduct Authority or FCA regulates financial services in the UK. They make providers like currency exchanges operate at a certain standard to maintain customer security and safety.


Any currency exchange you use should be FCA regulated. You should always check if they are. Because this means they follow certain compliance and client fund safety rules. These rules help keep your money safe while it's in the hands of your provider. The FCA regulation ensures that your funds are completely separate from the provider's.


They're Cost-Effective

Compare fees that providers charge against one another. It is a very competitive industry and prices vary all the time. Make sure that you choose a provider that gives you good value for money.


Most currency exchanges build all their fees into the exchange rates. This way they don't have to charge any extra fees. With this, it can be easy to compare rates just by looking at their offers.


This is often confused by how rates change as much as the interbank exchange rate does. Yet, a good way to compare is by contrasting providers from the interbank rates.


While prices are worth considering, the cheapest rates may not also be the best. You must also compare costs considering the quality and credibility of your exchange provider. Some customers benefit a lot from paying more if this means they get regular expert advice and alerts.


They Must Be Transparent

Like I said earlier, most currency exchanges build their fees into their rates. This means you should take a look at where their fees go and how much they cost compared to the actual rates.


Transparency is key in exchanging currencies. It is essential to know your provider's exact rates and any adjustments they make if rates change. You must also have information on where your money is and how it is being handled. The right currency exchange provider won't have any problem being transparent with you on all these things.


They Must Be Fast

Your currency exchange doesn't need to be lightning-fast (unless you want them to be). But, they must be fast. Delays cause a ton of problems. And some can line up problems like toppling dominoes.


The speed at which your currency exchange can handle a transfer of funds is also important. Find out how long their transfers will take before arranging one.


If you're unsure, try speaking with them and see if they can get your transaction done when you need it. Also, note that fast transactions may cost more than slower alternatives.


They Must Have Good Currency Availability

Make sure your currency exchange provider actually has the currencies you need for a transaction. Rates and costs may also differ especially if the provider doesn't frequently transact in the currency pair you need to exchange. Often, more obscure currency exchanges will cost more and take longer to process.


They Must Have A Trustworthy Reputation

You don't want to work with someone you can't trust and/or don't know their thing. A currency exchange provider's reputation is a good way to determine their credibility. It's a reflection of the quality and reliability of their service.


Take a look at their client's reviews and testimonials when assessing their reputation. You can see those on their site, in your search engine, blogs, and on social media.


If they sound pretty new to you, explore their website. See if they're connected with trustworthy and reputable brands. Find out if reputable individuals and/or organisations are talking about them. And if their founders and team are easy to find. Chances are their story, credentials, and experience say a lot about what your provider is. Getting on a call with them also helps if you really need to get to know them more in-depth.


They Go Above and Beyond

It is worth considering finding a currency exchange provider who has additional services to offer. Most of the time, businesses need help getting the right information, advice, tips, and tools in one place. Choose a currency exchange that has more than just conversions to offer. Try looking out for extra value and services such as:


FX Hedging

Businesses that trade in foreign currencies expose themselves to the risks of fluctuating exchange rates. As they change, businesses can see profits and costs vary. At some point, even huge net losses. Because of this, many businesses hedge their FX risk.


Two common ways of hedging FX risks are forward trades and option trades. Trades like these allow a company to lock the exchange rate that it receives at a future date. This gives them the certainty they need for sending and receiving payments at a future date. Just in case rates in the future don't favor them they want it to.


Automation and Tech Advantage

Technology makes many things simple and easy these days. At beyond-human levels, exchanging currencies with a tech-integrated provider can help you transact and trade more efficiently. Today's technology makes it possible to automate trades and transact online. Making it more convenient and effortless to exchange currencies. You won't even need to leave the comfort of your home and office!


Open-source APIs and app integrations help a lot also if you have systems in your business working together. With platforms like Bound, you can easily update your bookkeeping system with your international transactions. It can also be easy to stay updated and keep track of your transactions when you put tech to your advantage.


Automated Hedging

Speaking of hedging and automation, it can be significantly beneficial to automate hedging FX risks. FX hedging takes a lot of time and skill just to get it right and make it profitable. Especially expert hedgers who are deeply invested every time they craft their hedging strategies.


Automated FX hedging can be useful for anyone who needs simpler and more precise hedging. With just a few clicks, your trade's exchange rates can stay locked for a year. And even more than 2 years with Bound.


Free Information and Resources

One thing that a good currency broker provides is free educational resources and material. Guides and informative content like this help people understand the currency market. Including the processes and systems behind it. It is important for you to understand what your currency exchange provider is doing with your money.


Bound loves making FX hedging and FX general simpler and easier to do by giving away articles like these. That explains how currency exchange and hedging works. And explains how to make it secure and beneficial for them. One of the reasons why many small and medium businesses in the UK fail to hedge against risks is because they've misunderstood the subject. More valuable and helpful information from your provider essentially makes them dependable.


The Right Currency Exchange In A Nutshell

At the end of the day, your currency exchange provider must make converting currencies simpler, easier, and faster for you. Especially if they're putting the speed and precision of technology to your advantage.


With an FCA regulation and a trustworthy reputation, your provider should make you feel secure about where your money goes. They must also be transparent about their rates and fees. Every transaction you make with them must be cost-effective. And doesn't leave a hole in your wallet.


The currency exchange of your choice must also have your best interests at heart. Their commitment towards giving you excellent quality of service should also reflect in the value they give away for free.


And as a bonus, make sure they're up-to-date and progressive. Any of the latest news, live rate alerts, and new expert information they get will surely fall onto your lap as well.


List down everything you need from your ideal currency exchange provider. Use that to compare existing ones and see which of them matches what you're looking for the closest. Once you do, I guess all that's left for you to do is extra research and for you to try them out!






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