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Raw deal on small foreign exchange deals, say experts
Lloyds List DCN by Wayne Flower, 06 December 2001Small businesses and consumers lose 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.OzForex managing director Matthew Gilmour recently made 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 to send to the United Kingdom by telegraphic transfer. The results showed the best provider that day charged a margin of around 1.2% on the underlying "Interbank" rate, with the worst provider charging a margin of more than 2%. Each 1% of margin equates to around A$230 of extra cost on the 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. "They get to stand in queues and deal with staff who often know little about foreign exchange." OzForex claims to be the "Aussie Home Loans" of the foreign exchange industry. The company claims it can bring a better deal to small customers, which the banks and other large industry providers may neglect. Since April 1998, the Sydney based company has become one of the world's leading online forex services, with more than 100,000 visitors a month to its website www.ozforex.com.au. Foreign exchange is not a level playing field, Mr Gilmour said. "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. Mr Gilmour said OzForex aims to bring both the service and the pricing enjoyed by the 'big end of town' to smaller businesses and individuals. Wayne Flower Original Article  Back to Media Centre |
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