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From the issuing of the first cheque in the 17th century and the original wire transfer in the 1870s to the advent of the credit card and the cash machine, society has had to adapt to the changing nature of moving money, worrying all the time how secure each process can truly be.
The latest change to the public’s money-moving habits is online technology. While early proponents got going in the mid-1990s, according to the Bank for International Settlements, it is since the start of this decade that specialist online peer-to-peer (P2P) operators have been offering consumers a competitive rate of exchange for their money transfers.
Companies such as TransferWise, Moneycorp, WorldFirst, CurrencyFair, OFX, FairFX, Currencies Direct, Revolut and Global Reach Partners seek to attract business with eye-catchingly low commissions, often criticising the big banks for their comparatively expensive transaction costs.
These online operators are predominantly based in the UK, regarded as an advanced marketplace for money digitisation, but also the most fragmented as regulators encourage competition in banking and payments.
Ostensibly, there is a lot to play for. The holiday-maker, the worker sending remittances home, the investor with overseas assets or the business with international operations might have cause to compare and contrast the offerings of these operators in search of a reasonable rate of currency exchange and a low commission.
The remittances market alone is estimated by the World Bank to be worth almost $600bn.
The attraction of P2P money transfer businesses is the ability to cut out the middleman. It would match up, for example, one person holding euros and wanting to exchange them for dollars with another person holding dollars and wanting to exchange them for euros. It also offers a more favourable exchange rate.
Liquidity is a main factor in getting this process to work. There is not much point in online platforms having a multitude of customers wanting to buy a currency if there are few sellers, or vice versa. So it is in the bigger, more traded currencies that the P2P industry operates — although there are times, such as with sterling in the Brexit aftermath, when even the ability to trade in a major currency is frustrated.
Online platforms are constantly looking to innovate, raising capital to launch products and broaden their offering. WorldFirst has recently offered a product for small businesses to open online accounts in a number of currencies, sparing them the need for an international address. App launches are frequent.
There are variations. Some P2P businesses offer more currencies to swap than others; others promote their pre-paid cards, the ability to store money online, their greater geographic spread and, of course, their competitive fees.
But for all the activity, accompanied with vast amounts of marketing, has the P2P money transfer business got much further to go? Mark Horgan, chief executive of Moneycorp, wonders whether the market really is fragmenting.
Money transfer transactions make up only a small portion of the activity of the big high street banks, he says, such as credit card and salary transactions and mortgage payments. Yet the banks still account for 65 per cent of private money transfer payments in the UK and 85 per cent of corporate payments, Mr Horgan says.
“It is still an incredibly concentrated market,” he says. “The crowded bit of the market is the non-bank bit.”
Technology can help online platforms widen their appeal, but acquiring customers is becoming costly, needing spending on marketing. That is one reason why the money transfer industry is seeing consolidation, such as payment services company PayPal buying Xoom; another is the regulatory climate, which is requiring stricter protocols for companies collecting and storing customer data to prevent breaches.
There is still plenty of scope for disruption in the money transfer business through innovation, yet the customer seems unwilling to take advantage. Security issues override cost savings and every tale of digital fraud and hacking reinforces the suspicions of the consumer.
“People are conservative about who looks after their money,” says Mr Horgan. Customers predominantly want to hear a voice at the end of a money transfer arrangement, and while online platforms may compete on price they cannot compete on the record of high street banks stretching back decades.
Mintel research found that while contactless payment last year overtook the use of cheques in the UK, only a third of Britons would be comfortable with a cashless society.
This concern about security trumps irritation at excessive charging. Jared Jesner, founder of currency swap business WeSwap, says the P2P industry has exposed the lack of transparency on money transfer transaction in banks, but governments will not act.
“Protection of money is very well regulated, but pricing is not,” he says. “Consumers within reason don’t care as much about price as they might say they do. Everyone hates being lied to, but people still use banks.”
Disruption in the money transfer business is centuries old. But so is the fear of losing your money.