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EURO EXCHANGE RATE

A comparison site is not the key to saving your business money on euro exchange

If you own a business, NGO or any other kind of enterprise or operation that involves regular international transfers or currency exchange, you probably don’t get the best euro exchange rate you could. And you wouldn’t be alone. Tourists and individuals or businesses and organisations that make the occasional euro transfer or exchange also almost always cost themselves money that would be in their pockets or bank balances if they were only aware of the open secrets to locking in the best euro exchange rate.

And once a transaction reaches a value of thousands, tens of thousands or even hundreds of thousands, not getting the best euro exchange rate starts getting expensive. The worst part is most, even businesses that make regular euro transactions are unaware how much the best exchange rate would save them over time and on a single transaction. Over the past couple of years the traditionally stable pound has become a lot more volatile. As the UK’s currency, it has become a lightning rod for Brexit sentiment. The heightened dynamism of exchange rates that has resulted makes securing the best available even more crucial than it has been historically.

So let’s right that wrong and highlight the mistakes you are probably making or have made and the open secret to making sure you do get the optimal euro exchange rate next time.

Common Misconceptions and Mistakes Around Best Euro Exchange Rate For a Business

The large majority of UK-based businesses or individuals making significant currency transactions make one of the following mistakes that prevent them from securing the best euro exchange rate:

  • Use their bank
  • Use an inappropriate fintech currency transfer service
  • Refer to a retail euro exchange rate comparison site

None of the three, across the full range from downright awful to less than optimal, will not get you the best euro exchange rate for regular or major one-off business currency exchange and transfers. Let’s take a closer look. I’ll use the spot pound sterling to euro exchange rate as it is today – 1 GBP:1.12398 EUR. While it may well be slightly different to whenever you read this, the weaknesses of the four pound to euro currency exchange and transfer service mistakes will almost certainly hold true.

Will Your Bank Offer The Best Euro Exchange Rate?

In a word, no. In fact, there is a reasonably high chance your own bank will offer you one of the worst euro exchange rates of all the options available. And the additional transfer taxes applied on top will make this option even less attractive.

The table above comes from the Halifax, one of the UK’s biggest banks for individual and business accounts. So, if you were to exchange £75,000 for euro via Halifax today the chances are you’d be paying 2.4% on the spot exchange rate of 1.12398. That means for £1, you would get €1.097.



 

£75,000 at the spot euro exchange rate of €1.12398 = €84,298.5

£75,000 at the Halifax euro exchange rate of around €1.097 = €82,275

The exchange rate offered by the bank costs you €2023.5 on a £75,000 euro exchange and transfer.

Barclays, see calculator below, is even worse. It’s offered euro exchange rate of £1: €1.0639 means you would receive €79,792.5 for your £75,000, costing you a total of €4506. Neither are anywhere near the best euro exchange rate you could get for exactly the same transfer. Transfer taxes are also relatively high. Halifax, for example, charges a flat £9.50 and the receiving account will also charge between £12 and £20, adding between £20 and £30 to the overall cost, above the exchange rate spread.

Will A Fintech Offer The Best Euro Exchange Rate?

Over recent years, a wave of new fintechs have entered the currency exchange and transfer space. Paypal was the first major international fintech payments platform and newer arrivals include TransferWise and Revolut.

These fintechs have been great for retail consumers. They are usually far more convenient to use than banks - better user experience and less bureaucracy. And also, under the right circumstances, offer a much better euro exchange rate and overall transfer cost than banks. Unfortunately, when it comes to securing the best euro exchange rate for a business transfer, circumstances are usually not right. These fintechs target the retail market and in most cases offer the best exchange rate and overall cost for small currency exchange and transfer transactions of up to several hundred pounds.

Services such as Paypal and Stripe were built for ecommerce and not for currency transfers. Transfers that involve currency exchange can be very expensive. Paypal, for example, charges a 2.5% fee on top of the exchange rate they offer, which is in turn provided by their banking partners. This adds up to a hit of around 5% BEFORE STANDARD FEES. So, should you choose to transfer £10,000, converting it into euro, the cost should be expected to exceed £500. That’s not what you want.

Other currency exchange and transfer specialist fintech platforms, like Transferwise and Revolut, offer much better conditions and among the best euro exchange rates you will encounter. Usually just above the spot price. See the below TransferWise offer. The euro exchange rate is very good £1:€1.226. Against the spot rate of €1.12398, that’s a total cost of just €103.5 on the exchange rate. But the transfer fee is relatively high at £262.34.

 

Services like TransferWise match currency exchanges made by different users of the platform. This allows them to keep their exchange rate, either for the euro or any other currency, at very close to the spot rate. But they do charge a fixed % as an additional fee. For small transfer of up to several hundred pounds, this makes little difference to the overall cost. However, for larger euro exchange transfers, like most business transactions represent, that fixed % adds up to a not insignificant sum of money.

This means that if you are a business or even individual user making a larger transfer, fintechs will not offer the best euro exchange rate. At least not once additional fees are also taken into account. On the other hand, for smaller transfers, TransferWise, Revolut and the other currency transfer specialist fintechs should probably be your choice for the best euro exchange rate.

Will A Retail Comparison Site Offer The Best Euro Exchange Rate?

Unfortunately, retail comparison sites (those whose target audience is private individuals rather than businesses) will also not get you the best euro exchange rate, particularly in the case of larger value transfers and conversions. Below is the top ranked currency exchange and transfer comparison site for numerous terms, including ‘best euro transfer exchange rate’.

 

As you can see from the table above, the best euro exchange rate offer available for £75,000 will mean you transfer €83,778 at a rate of £1: €1.117. Compared to the spot euro exchange rate of €1.12398, that’s still a cost of €520.5 - worse than TransferWise, which we’ve already discussed as not offering the best euro exchange rate, fees included, for larger value currency exchange transfers.

How Will Offer The Best Euro Exchange Rate For Business Transfers?

We’ve explained and demonstrated how the most commonly used foreign currency exchange and transfer services don’t offer the best euro exchange rate and overall cost for larger transactions. So who does?

The best euro exchange rate offer available to you for larger value currency transfers will come from a specialist exchange and transfer broker that works exclusively with business and larger transfers. This kind of specialist business foreign exchange transfer broker will not only offer you the best overall price for one-off transfers.

If you are a business that makes regular euro exchange transfers, or involving other currencies, your personal account manager will offer you an even better euro, or other, exchange rate than their standard. You’ll also be able to take advantage of other currency exchange risk management tools that will save you a lot of money over multiple transactions. These tools, such as locking in the best euro exchange rate currently available weeks or months ahead of the actual transfer, can also provide additional cost savings for larger one-off transactions.

The image below shows our best offers for the same £75,000 transfer we examined the costs of through less specialised services.

So far, the best deal on the table, that from TransferWise, offered a euro exchange rate that bought €83,900. But there was an additional fee of £262.38, or €294.34. Once that is removed you only get €83,605.66

That costs you €319.34 compared to our best euro exchange rate.

Increase the sum to £100,000 and TransferWise offers you €111,817.74 – a fee of €392.16 = €111,425.58..

That’s also the highest amount you can transfer via TransferWise and most other retail facing fintech platforms for currency transfers.

Our best euro exchange rate offer for the same transfer is €111,900. That’s a saving of €474.42 likely to be further reduced by a personalised offer made by an account manager.

On Top Of The Best Euro Exchange Rate What Other Benefits Does A Specialist Broker Offer?

As well as offering you the best euro exchange rate on larger and business foreign exchange transfers, business exchange specialist brokers also offer a range of currency risk management services. These can save you considerable sums of money, especially at times, like now, when the forex market or particular currencies, like pound sterling during the Brexit process, are more volatile.

GBP/EUR – November 2018

Source: www.XE.com

 

Just look at the pound to euro exchange rate over November 2018. Between November 13th and November 16th, the pound lost 2.65% against the euro. By the 20th it was closer to 3%. For a business making a £100,000 value euro transfer, even at the best euro exchange rate on offer that would mean a transfer made on the November 13th would cost £2650 less than the same transfer made just 3 days later on November 16th. That’s a lot of money just on changes to the euro exchange rate over a few days.

Which is why specialist business currency exchange and transfer brokers offer currency risk mitigation services such as:

  • Forward Contracts
  • Limit Order/Stop Loss Contract

Forward Contracts: this kind of currency risk management contract lets you lock in the best euro exchange rate ahead of a transfer you know you will have to make in coming weeks or months. A euro exchange rate, plus a small premium, is offered based on the current market rates and is secured with a deposit. So if the pound’s strength against the euro weakens over the intervening period until you actually have to make your transfer, it will not affect you. You’ve already locked in the best euro exchange rate based on current conditions.

Limit Order/Stop Loss Contracts: these currency risk management contracts allow you to target the best euro exchange rate you believe is the realistic optimal up until the deadline by which you have to make your business transfer. A Limit Order targets the top end of the market and a Stop Loss the lower end. You, usually with advice from your account manager, will set a target euro exchange rate and your exchange will be made the moment the exchange rate improves and the market hits that target. Or if the exchange rate turns in the wrong direction, a Stop Loss order will mean your exchange is automatically made before the situation deteriorates further.

By using these additional services smartly, you will be able to make additional savings on those you will have already made by choosing the specialist broker that can offer you the best euro exchange rate and fees ratio.

So, stop losing money on your euro transfers or make sure you don’t if you have a sizeable one-off euro transaction to make. Get in touch and get the best euro exchange rate, the best fees and the best currency risk management facilities!

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