Comment by Youden | Hacker News Reader

Comment by Youden | Hacker News Reader

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"We always convert your money at the live rate: the rate on Google."

But this is a lie - I checked. At time of writing, you claim 100k GBP is equal to 131390 USD, while Google claims it's 131620 USD, a difference of nearly $300!

Even saying "the live rate" is a lie. There is no one "live rate" (and therefore no "the" live rate). The price depends on your liquidity providers. IBKR shows "the live rate". Revolut shows "the live rate". Wise shows "the live rate". Google shows "the live rate". Despite all of them showing "the live rate", all of them have subtly different prices because all of them are part of slightly different markets.

Claiming otherwise is a lie. It'd be more honest to say "we pass on the prices from our partners without markup" or something like that.

You should also make clear which rate you're talking about. The market has a spread, how do you handle it? Do you give clients the mid-price or do you just pass through the bid/ask?

The "Learn more" next to the rate info doesn't actually tell me anything more as well. I'd expect it to show me a page with more detailed information about your liquidity and how you determine the price. The box I already saw at the top of the page isn't "more".

Hi and thanks for your interest! We use the interbank rate from global exchanges. Both being from fintech, we are aware that it is easy to mislead (and to be misled) in money transfer and its a reason why we built this product in the first place.

We have worked hard not to have any middle-men that mark up rates in our liquidity provision, and are quite certain that our rates are fair and extremely competitive.

I do think that the takeaway from your comment is that we could build out a part of our page that allows a customer to dig deeper to validate this themselves. We understand the sentiment as there is still a lot of mistrust given the opaque nature of the market, and we need customers to believe that we are truly 3 GBP to succeed.

Our core thesis in building this product is that we will win with a fixed fee on larger transactions, given the variable fee nature of the current industry incumbents(either transparently disclosed, or embedded in the FX spread).

Overall your product looks good but aside from a more detailed page, I really think the wording here needs to be changed.

It's verifiably false that you use the same rate shown on Google so you should remove that entirely. If I can't trust you to honestly describe your service, how can I trust you with large sums of money? I wouldn't be surprised if that caused you legal issues too.

As for "the live rate", I think it just needs to be reworded such that there's no mention of a single rate. Something like "we give you the same price the big banks use".

Overall I think your service looks good but based on how that section is worded right now, I'd actively discourage friends and family from using it, if asked. If you updated it to be more honest, I think you'd have a service I'm happy to recommend.

Fees for international money transfer across currencies are always opaque and borderline deceptive.

If this is truly fixed cost, it would definitely be the first, but it's right to be skeptical.

The only reliable way to discover the actual cost is to do a round trip.

Convert a million X to Y, then convert whatever Y you get back to X, and the difference between that and the original million, divided by two, is the real cost.

Naturally this website won't show you that, because you can only convert from pounds but not back to pounds.

"I do think that the takeaway from your comment is that we could build out a part of our page that allows a customer to dig deeper to validate this themselves."

Or you could remove or change this statement, if it is indeed misleading. (But I have not checked this personally).

"We always convert your money at the live rate: the rate on Google."

Trust is important and the right wording does matter a lot.

So if people read this on your website and then check for themself on google and see it is wrong - well sure, expect people to not trust your service.

My first question (with only reading your text here) would be: why and how are you cheaper than the competition?

Right now my takeaway would be: because there are possible dark patterns and hidden fees like suboptimal conversion rates included.

I absolutely agree with you, unless their whole strategy hinges on the fact their prices match google (which their prices literally don't), just change the damned copy on the site.

I think this is actually a good shakeup for Money Transfer, they don't even need to rely on putting Googles name in their marketing to sell the product as so many new startups seem to want to do as an appeal to authority or try to present more stability in their marketing.

We appreciate the critical feedback - keep it coming. It's good to talk about these topics in the open. We'll be sure to work on this to make sure there is clarity around this part of our offering.

> We use the interbank rate from global exchanges.

What, exactly, is that?

Do you mean the rate your provider charges you for the transaction in question? (Do you do your internal FX transactions as one upstream transaction per client transaction or do you group them? That will affect the rate.).

Do your rates have a spread? (Your website makes it sound like you only convert one way, so it’s easy to pretend spreads don’t exist.)

Do you actually believe that the best pricing comes from an interbank rate on a global exchange? That’s an interesting theory.

For what it’s worth, for major currency transactions under normal circumstances, the actual market spreads are tiny and not worth worrying about. Certainly for any transaction of reasonable size for a service like this, they are likely to be in the noise. But FX is not free, and if you let people move $100k at a time, it matters.

What global exchanges? FX is all OTC.

Check out CBOE FX (https://fx.cboe.com/) and EBS (https://www.cmegroup.com/trading/market-tech-and-data-servic...). Settlement and trading of FX may often be OTC, but that doesn't mean there aren't exchanges or aggregated marketplaces.

Ok. So what you really mean is that you (or your liquidity partners) participate in multi dealer platforms so you have a large number of trade desks to work with. But even adding the big players together like Integral, CME & CBOE gets you to what less than 1% of the daily fx liquidity?

That’s fairly far off of the expectation you set by saying you offer “the interbank rate”. Which is a pure marketing fiction.

For context the FX desk at JP Morgan by itself provides about the same volume as any of those aggregate platforms.

[later] fwiw I don’t think how you get to your rates particularly matters so long as they are competitive and your service seems like a valuable addition to the mix of consumer options. I get hung up on this because the fx market is notoriously opaque because the major players want it to be and I think leading people to believe there is some sort of benchmark rate adds to that morass.

Hi pkavanagh. What countries do you support? I live in Israel, can I send and receive money from Europe? Turkey? The US?

I really don't want to sign up to the newsletter, this is basic information that in my opinion should be freely shared on the web site.

Hi dotancohen, we currently support sending GBP from the UK into the following currencies: EUR, USD, AUD, CAD, CZK, DKK, NOK, PLN, SEK. Looking forward to supporting EUR outbound in the near future, and then we'll go from there.

So the sender must be in the UK. Are there geographic restrictions on the receiver as well?

Hi Pkavanagh and thanks for replying to comments in this thread - 3 GDP fee on up to 1M transfer - are you able to disclose more of the business model here?

The business model is that our costs are fixed at much lower than 3GDP, and so we can offer that price profitably.

The important thing here is: the live rate is not the live rate

It is the avg. of the "live rate for buy" and the "live rate for sell"

This is what google shows

But every provider has a spread. As tiny as it might be

(Not to mention volatility, difference between exchanges, etc)

Google shows the last price which an asset was traded for.

On which exchange?

And if an average of prices on different exchanges, which exchanges are included in the average?

How do you know how Google is doing it?

Morningstar for all currency pairs which are not BTC, ETH, LTC or BCash.

https://www.google.com/googlefinance/disclaimer/

It’s not a lie. It’s that it’s more complex than can be expressed in simple terms. Getting overly technical can be counterproductive.

Im assuming you're talking about "the live rate", since the Google claim is verified to be false.

I'd agree with you if it were unavoidable but I don't think that's the case here. There's no need to make a statement that there's a single rate.

For example: "we give you the best price we can find on the international market, without markup". It still states the goal without raising the falsehood of a single price.

That's because the law of one price is purely theoretical and never applies in real life https://en.wikipedia.org/wiki/Law_of_one_price

There is no such thing as a "live rate" or "market price"

I'm not talking about the law of one price here, just the fact that the global currency exchange trade is decentralised. There's no one exchange that aggregates everything and can give you a single authoritative price.

In other assets, like equities, there often is a single central exchange. If you want to buy CURI for example, it's only listed on NASDAQ, so the price on NASDAQ is The One True Price as far as a normal person is concerned.

There's no such central exchange for currencies.

It’s not even true (anymore) that CURI is only listed on NASDAQ. It’s traded at lots of venues but there is at least a benchmark bid/ask based on US securities law.

In fx it’s the law of whoever has the most information because there is no benchmark market at all. It’s why fx pricing is so hard to do right.

Based on our experience speaking with a number of institutional players, including traders and banks, what we found is that the institutional rates are unbelievably efficient, but the situation immediately gets worse as you move away from these centers of liquidity.

If you talk to 3rd party institutional FX providers, they'll immediately mark up rates because its how they make all of their money.

What you say doesn't really apply to currencies, at least not to major ones.

All currency exchanges track each other extremely closely, because it's extremely easy to arbitrage between them.

OK, sure, but you can look at bid/offer spreads across different market makers to get some sense of how liquid and efficient the overall market is. For GBP/USD, spreads are measured in small numbers of tenths of a penny.

Forex is essentially the largest, most liquid market there is.

FX Prices effectively converge to a single price, because FX is an efficient market with little to no arbitrage that would be visible (thanks to the proprietary trading firms that specialize in it).

It would be fine if the other side transfer rate is the same. 0.18% difference between exchanges could happen.

0.18% difference for USD to GBP sounds like a lot.

That is about 24 pips, if you can find that price difference on exchanges it'd be arbitraged for sure.

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