Peer to peer foreign exchange and currency brokers work by matching up buy and sell orders from a pool of clients in different countries.
A bit like an international stock exchange but instead of allowing customers to buy and sell shares of companies they can buy and sell currencies online.
They have gained popularity as people who convert and transfer money online are generally savvier and are looking for cheaper alternatives to the banks.
The banks make money on foreign exchange by the difference in the price they buy international currency and the price at which their clients buy it.
You can learn how to compare exchange rates here.
Peer to Peer FX (like Transferwise) companies don’t do this, instead, they match up buyers and sellers as close to the mid market price as possible. A bit like betting exchanges they just match orders – come take a commission, some add it to the spreads.
Most peer to peer currency companies need some liquidity from currency brokers and prime brokers though as often there are not enough matching orders from corresponding companies to make the process work.
If you are sending a small amount of money abroad peer to peer foreign exchange brokers like TransferWise may be a cost-effective solution, but for larger personal amounts of if you need a foreign exchange specialists to help with your international payments, a traditional currency broker like Currencies Direct may be the better option.
Richard is the founder of the Good Money Guide (formerly Good Broker Guide), one of the original investment comparison sites established in 2015. With a career spanning two decades as a broker, he brings extensive expertise and knowledge to the financial landscape.
Having worked as a broker at Investors Intelligence and a multi-asset derivatives broker at MF Global (Man Financial), Richard has acquired substantial experience in the industry. His career began as a private client stockbroker at Walker Crips and Phillip Securities (now King and Shaxson), following internships on the NYMEX oil trading floor in New York and London IPE in 2001 and 2000.
Richard’s contributions and expertise have been recognized by respected publications such as BusinessInsider, Yahoo Finance, BusinessNews.org.uk, Master Investor, Wealth Briefing, iNews, and The FT, among many others.
Under Richard’s leadership, the Good Money Guide has evolved into a valuable destination for comprehensive information and expert guidance, specialising in trading, investment, and currency exchange. His commitment to delivering high-quality insights has solidified the Good Money Guide’s standing as a well-respected resource for both customers and industry colleagues.
