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Small customers get raw deal on foreign exchange, says OzForex
19 November 2001Small businesses and consumers are losing millions of dollars in foreign exchange transactions each year by dealing through Australia's uncompetitive mainstream providers, according to Australia's fastest growing provider of online foreign exchange services, OzForex (www.ozforex.com.au).Managing Director of OzForex, Mr Matthew Gilmour, this month conducted a simple test to shed light on the plight of smaller foreign exchange customers. OzForex canvassed forex quotes from six major providers - five banks and one non-bank - to buy 8,000 British Pounds to send to the UK by telegraphic transfer. The results showed the best provider on the day charged a margin of around 1.2 per cent on the underlying "Interbank" rate, with the worst provider charging a margin of over 2.0 per cent. Each 1.0 per cent of margin equates to around A$230 of extra cost on the British Pound purchase, before additional transfer costs are paid. "Thousands of small and medium-sized businesses around Australia are doing exactly these sorts of transactions through their banks every week, often resulting in thousands of dollars extra cost each year," Mr Gilmour said. "For the privilege they get to stand in queues and deal with staff who often know little about foreign exchange." "OzForex aims to be the ‘Aussie Home Loans' of the foreign exchange industry. We think we can bring a better deal to smaller customers who are neglected by the banks and other large industry providers." Since its launch in April 1998, Sydney-based OzForex has become one of the world's leading online forex services, with over 100,000 visitors per month. The company's growing client base includes small and medium-sized businesses that import and export goods, as well as immigrants and expatriates moving countries, and individuals investing overseas who want to hedge their investments against currency movements. Mr Gilmour said that unlike the share market, where investors big and small have access to the same price to buy or sell shares, foreign exchange is not a level playing field. "Generally only the banks know exactly where the ‘real' market is, and price transparency depends very much on where you are in the food chain," he said. "Larger corporate and institutional customers can see and deal at professional market rates - but smaller customers have little idea where the real market is, and deal on rates that can cost them hundreds, sometimes thousands of dollars more than necessary on each transaction. While it is fair that smaller volume deals attract a different price, most customers would be shocked at the size of these margins and the dollars involved." OzForex aims to bring both the service and the pricing enjoyed by the "big end of town" to smaller businesses and individuals. Mr Gilmour said this was being achieved by employing highly efficient systems, providing "a vast amount" of information to clients via the website and, most importantly, by making sure clients have access to personal service. As well as enabling customers to arrange foreign exchange deals online, the site provides an array of resources to help people manage their transactions. These include ongoing commentary on market movements, real time currency charts and SMS messaging to customers' mobile phones when pre-set currency target levels have been reached. The website also contains over 300 pages of free currency information, with dynamic content including spot quotes, historical rate data and a variety of calculators. "OzForex is all about bringing better understanding and price transparency to the foreign exchange market, so customers can get fair prices on their deals," Mr Gilmour said. Through Internet marketing and word of mouth, the site is already the largest currency website in Asia with over 4,000 users daily. The site also has syndicated content to over 400 other websites globally including, www.monster.com.au, www.webwombat.com.au, www.property.com.au and www.Austarnet.com.au. This month OzForex also sealed a further partnership deal with Australia's Gift and Homeware Association (www.agha.com.au) to provide foreign exchange services to its 1,200 members. For for further comment contact: Matt Gilmour +61 2 8667 8097 matt@canadianforex.ca  Back to Media Centre
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