- Can you tell us more about Currency Stream and the services you offer?
Currency Stream’s technology gives consumers the choice to spend in their home currency when making purchases abroad. We believe that should be a fundamental part of any buying decision, i.e. Knowing the actual cost of something when you choose to buy it!! This solution is called Dynamic Currency Conversion (DCC), and our unique model ensures certainty and transparency for all parties at the moment of purchase.
The best example is when you pay for a meal when overseas, using your debit card or even a pre-paid currency card. The waiter can tell you the bill was roughly £100 but can’t confirm the exact cost until the next day or else they can give you a calculator to work out the cost?
Currency Stream’s unique model removes the uncertainty and instead gives you the price in your own currency on the Point of Sales terminal, at the exact moment you are making your purchase and spending your hard-earned money.
- How does DCC work?
Currency Stream’s DCC model is linked to the Foreign Exchange markets directly and in real-time. We lock the price in at the moment of purchase, in the customer’s own currency, so they know exactly how much they are paying in a currency they are familiar with, and the Merchant/Retailer knows they will get exactly the right amount of their own currency.
For payment processors who are in the middle of the transaction, Currency Stream eliminates the foreign exchange risk to ensure everyone has certainty.
Uniquely however, everything else stays the same. Transactions continue to use the same terminals as before, settlement files remain unified from the payment schemes, and reporting is streamlined, with both domestic and international card payments handled consistently.
- What might be in store for the future of the FX market?
We are already seeing two significant trends in the world of FX and sadly they run contra to each other.
The first is the wholesale adoption of FX as a tradable asset class. If you go back 20 years, the FX market was predominantly driven by commercial need. The needs of global corporate customers of the banks underpinned the FX Markets and the bank’s FX desks were generally trying to place customer’s orders into the market efficiently, whilst taking some margin and trading profits on the way. Commercial need was the “dog” and trading desks were the “tail”, providing liquidity for deals to be done.
Today, speculative volume dwarfs the commercial need, and the tail is now wagging the dog, to use an old analogy. From hedge funds to private day traders on gambling sites, the market is driven by people taking bets on the direction of currencies and this speculation drives the price of currencies.
The commercial need is now secondary and often the speculators stack their bets in readiness for a profit opportunity when a large commercial deal is about to be executed (See Nippon Steel deal recently).
This means commercial need is now coming into the market facing excess volatility and a market full of predators.
The Second key change in FX is the fact that every consumer these days is being told they need to think like an FX trader whenever currency is involved. Consumers are constantly told they need to get the best rates, lowest margins, lock in prices, buy currency early, etc. And yet all currency is just the way of paying for a good or a service and FX is just a small element of a wider decision.
No one would buy a jumper in a shop and question the salesperson about the cost of production, overheads of the shop, salaries and marketing costs. We don’t challenge the margin in most other parts of a purchase decision. We look at the product, assess the value and either choose to buy or not.
Sadly because of this new expectation on consumers, many products have appeared that encourage the customer to either pre-load a card with currency or have a separate currency account with your bank.
Only DCC tells the consumer the exact price in their normal currency at the time of purchase when overseas but to truly remove all uncertainty for all parties, you need to connect the live market above with the consumer.
Currency Stream are bridging that divide, ensuring that the consumer can now forget about FX when buying something in a different currency, safe in the knowledge the price they pay is fixed at time of purchase and based directly on pricing from the live FX markets. No more risk and 100% certainty.
- Since launch, how has Currency Stream evolved?
We are constantly evolving as a company and having come into the DCC space as a disrupter we continue to do things differently and evolve as the market changes.
A good example of this is how we have taken our risk management engines that initially were created to ensure all FX risk was managed in real time and with 10 years of experience in doing so, these are now generating positive returns for our customers and adding to the margin available whilst continuing to ensure the Consumer is getting the very best rates and experience.
We also have identified pricing models that ensure different consumers and use cases require different experiences, that generate even greater consumer satisfaction but also enhance margins.
The ways in which consumers pay will continue to evolve and we are flexible and adaptable to these new models because we are always interacting in real-time and yet are not part of the flow of funds.
