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If you go on holiday to Spain or Portugal, you can use euros to buy goods and services. However, when you go to the UK or China, then you will need the currency that they use in their respective country. In order to get notes or coins, you need to use a brokerage service to do so and this costs money. This matters for tourists when they’re travelling between countries, but it can have a much bigger effect on businesses who are exporting into countries and charging in the local currency.
Up to recently, people and businesses didn’t have a choice about where to transfer their money as they had to use a bank. However, in the last decade, some companies have appeared that dramatically decrease the cost of this and Ireland has some super businesses in this regard.
For example, TransferMate and CurrencyFair, can save you about €100 per $5000 transferred. Sometimes, it can be even more than that. Can you imagine how much this saves a company who is selling millions every year into the US?!
What is the impact of this on the economy?
- Increased profit margin for companies
If businesses are making these savings, they can use them to give higher salaries to staff, reinvest them into marketing to gain more customers or hold on them in profit and then pay more corporate tax to the government.
- More pressure on the market to innovate
These companies are “disrupting” the traditional market of going to the bank to get your currency. As a result, since banks are losing business to these companies, it puts pressure on them to come up with new ideas. For example, An Post have come up with “An Post Multi Currency FX card”. This improves the service choice for Irish consumers and businesses
- Impact on the community
As these companies succeed, they bring benefits to their communities. For example, TransferMate has created high quality jobs in Kilkenny which is helping rural Irish economic development. CurrencyFair has sponsored this year’s Asian GAA games – an event that takes place annually in one city in Asia bringing 1000 GAA players from all over the region for a football, hurling and cultural festival.