Would you use P2P Currency Exchange? 1

Currencies

A P2P platform simply brings together people with complementary currency exchange requirements. So if User A wants to exchange dollars for euros and User B is looking to exchange euros for dollars, they can do so over a P2P currency exchange. By harnessing the power of the crowd, users are thus able to obtain much better exchange rates than they would get through traditional currency exchange mechanisms.

CurrencyFair Ltd, for instance, claims that it can save up to 90% on international currency transfer fees. While £2,000 transferred through a typical bank could cost as much as £100 (£40 in international transfer fees and £60 in exchange rate margin), the same amount sent through CurrencyFair would only cost about £9 (a fixed £3 transfer fee plus £6 exchange rate margin). CurrencyFair charges an average of 0.35% of the amount exchanged as its margin, while TransferWise Ltd charges 0.5%.

The mechanism for P2P currency exchange is straightforward. A client opens an account with a P2P exchange and deposits money into the account. He or she then converts the money into the desired currency by “matching” with other clients on the P2P exchange. The foreign currency is then transferred to an overseas bank account nominated by the client.

Some P2P companies are controlled by FCA rules for example Midpoint and Transferwise whilst other are covered by EU rules such as Currency Fair, so you might want to check who regulates the P2P that you choose.

It can take up to 48 hours to match a deal which could be an issue in some cases.

The cost is definitely cheaper but in addition on large deals you may be able to negotiate further savings.

steve@bicknells.net

P2P – Peer to Peer Lending – is it the solution for lenders and borrowers? 5

Peer to peer lending is a simple transaction between an individual that wants to lend money and an individual or business that wants to borrow money without the use of a third party facilitator, like a bank or a lending company, to manage the loan.  It started in the USA in 2006 with Prosper.

Peer to peer lending is becoming more popular as banks limit lending and consumers find themselves facing difficulty obtaining traditional financing.  Banks, trying to fix their balance sheets, have introduced much more stringent requirements for personal loans than what was required in the past and fewer people have the qualifications to obtain these loans.  Small business owners have been hurt by the contraction in lending as well.  The reduction in traditional lending to small businesses has resulted in a dramatic increase in the number of business owners interested in obtaining peer to peer loans.

http://www.peertopeerlending.co/

Sounds brilliant but the problem has been that the potential borrowers turn to P2P after they have failed to borrow from other sources and this can make the borrowers high risk.

If this issue could be over come and P2P could become mainstream, I think it could become very popular, the lenders get a good return and the borrowers get a fair interest rate and terms. Even one is a winner.

To see how it works in practice take a look at http://www.fundingcircle.com/

Also here is blog http://stevegrice.wordpress.com/2012/01/30/peer-to-peer-business-lending-in-the-uk/ which is very interesting.

It would be great to find out your views and comments.

steve@bicknells.net