How to minimise your forex costs
The forex process is often severely under-scrutinised by import/export companies or individuals in South Africa when making an international payment.
SMEs tend to use their bank directly as it’s the most convenient and any fees charged on forex can be lumped into part of the all-inclusive cost price of the goods.
When digging a bit deeper, this decision is likely costing the company or individual dearly, resulting in a reduction in bottom-line profits in the case of a company.
This lack of scrutiny by clients, combined with a lack of transparency on costing, allows traditional banks in South Africa to charge their clients a small fortune without major pushback.
Co-founders of Future Forex, Harry Scherzer and Josh Kotlowitz, have created a service that reimagines the forex industry by putting the client first.
This is done by prioritising transparency in costing and significantly reducing the fees that many SMEs are paying on transfers.
“When it comes to forex fees, many clients don’t realise how much they’re really being charged, mainly because the banks don’t make it particularly clear or transparent”, says Scherzer, a qualified actuary and CEO of Future Forex.
While most are familiar with the administrative costs in terms of SWIFT or processing fees, for higher value transactions the far larger fee contributor comes in the form of a spread.
The spread, which is the provider’s margin on the exchange rate, ranges vastly depending on transaction size and provider used.
It can be as high as R0.50 per $1 purchased (~3%), or as low as a few cents for large corporate client.
“Let’s say that you’re sending R1 million to America and converting to Dollars. If the spot rate is at R18 to $1, the bank might charge R18.36 per Dollar bought.”
“The spread is therefore R0.36 on each Dollar, or 2% of the transaction value. While the R0.36 per Dollar doesn’t seem significant, the cost of this transaction, excluding the processing fee, is R20 000 in Rand terms.
“It’s become clear to us that the majority of businesses and high-net-worth individuals are being overcharged, and that we can save SMEs and individuals significant amounts of money by reducing the spread.”
“Our business lies in using smart technology, a proven track record, and strong banking partnerships to offer a much more competitive forex rate than our counterparts”, say Scherzer.
Future Forex, an authorised Financial Services Provider (#51884), is powered by a team of over 45 dynamic professionals who provide a premium, single point of contact service.
Each client is assigned a dedicated Relationship Manager who will take you step-by-step through the exchange process. Future Forex’s foreign exchange experts also offer complimentary regulatory approvals assistance where necessary.
“We’ve been able to leverage off our proprietary software and strong partnerships with our partner banks to offer something that most forex service providers fall far short of”, says Kotlowitz, CTO of Future Forex.
“So we’re not only directly saving our clients’ money through lower fees, but our premium service also saves time for business owners and employees, which we all know ultimately equates to increased growth for the business.”
“When operating in the forex space, it became clear to us that there is huge potential for improvement by leveraging our strategic partnerships and the latest technologies, and this improvement has already been recognised by our existing clients ”, says Scherzer.
If you’re looking to minimise your forex fees, start by scrutinising the spread given to you by your bank.
If the rates aren’t competitive or you need help understanding them, reach out to Future Forex, who will be happy to assist.
Future Forex have processed over R11 billion in forex transactions since the beginning of 2022 and strive to continue reshaping the industry for the better.
If you’re interested in making use of their services for your business or personal needs, you can visit their website at futureforex.co.za.
Alternatively, you can get in touch with them on 021 518 0558 or via email at [email protected].
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