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Forex has become a large source of profits for the banking sector. It’s estimated that approximately 80% of South Africa’s annual GDP involves international payments, with the banks raking in profit with every transaction that crosses the border.
Future Forex, an authorised Finanical Services Provider (FSP 51884) best known for reshaping the crypto arbitrage market, has recognized a gap in the local forex market. “We’re shocked by how many businesses and people are still overpaying for forex in South Africa and are actively remedying this for those wanting to make the change,” says Harry Scherzer, CEO.
Banking charges for forex can be a murky minefield, making it difficult to understand exactly what you’re paying for. While the SWIFT or “processing fee” is straightforward, the spread fee can be hefty, particularly on larger transaction values. A forex “spread” is the difference between the rate given to the client, and the market rate. This spread can range as high as 3% but can be far lower for larger corporates. For a transaction size of R100 000 these spread fees alone can add up to R3 000, while the processing fee generally doesn’t exceed R1 000 per transaction. As transactions increase in value, the spread fee increases in Rand terms, becoming the far more significant cost.
“While our processing fee is limited to R500, a large proportion of our savings are attributed to a significant reduction in the spread relative to the local industry standards. As a result we’ve been able to save some clients up to 50%,” says Scherzer. A combination of proprietary software, competitive fees and its strong strategic partnerships have transformed the way Future Forex is able to process forex transactions, with clients reaping the benefits of this transformative approach.
“When we ask companies how much they are paying for forex, they typically know the processing fee, but seldom know the spread that’s being applied to their transactions. That’s because banks typically don’t use constant spreads and the spread is often not clearly disclosed to the client,” says Joshua Kotlowitz, CTO of Future Forex, “A key ethos of ours has always been transparency to clients, and our desire to bring more transparency to this industry was a big motivator to reshape it.”
While big corporate clients tend to receive competitive forex rates from the banks, it is the SMEs and high-net-worth customers who are typically suffering the most.
Another significant barrier to transacting internationally is the ‘hands-off’ approach taken by banks. Clients who are looking for assistance with complicated transactions will usually reach a call centre with mixed results. Future Forex provides a single-point-of-contact by assigning each client an experienced Relationship Manager. “Building trust and rapport with clients is a vital aspect of our business”, says Scherzer. “Many clients want someone to steer them through the technical aspects of making a transfer until they’re comfortable with it”.
“Our goal is to be a one-stop shop for all forex-related requirements. For businesses, we assist with forward exchange cover, trade finance, CFC [customer foreign currency] accounts, and for individuals we assist with any regulatory approvals at no extra cost,” says Scherzer.
Those interested in making use of these services for their business or personal needs or are looking for assistance understanding their existing forex costs can get in touch with Future Forex on 021 518 0558 or via email ([email protected]), or visit its website (www.futureforex.co.za).