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Ask HN: How do you change money?

1 points by amac ↗ HN
I am interested in money changing and foreign exchange, I'd like to do something in the space. I'm asking; if you're thinking of or going on vacation, how and when do you change money? Do you use a dedicated forex company or your bank? Do you do it at the airport? Do you use a fx vending machine?

It's clear that the process of managing money is changing from an analogue to a digtal one. We know it's changing payments (Square, Bitcoin etc) - but money changing?

9 comments

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pathy
The answer does depend on where I am heading but in my experience I usually exchange a smaller amount at home (at a forex company) and later just withdraw from ATMs. This is especially convenient if you got a debit/credit card with no extra charge (beyond exchange rates) for withdrawing outside your country.

Exchanging at airports is usually a bad deal, worse rates than else where in my experience.

Forex is a rather regulated field, some countries more than others. There are always concerns about risk (robbery, fraud and so forth). For the most part you can pay with your card, so you no longer have to carry around very large sums of cash.

ddeck
>with no extra charge (beyond exchange rates)

Be aware that the rate is the charge. At the end of the day, everything you pay from mid is a charge and although you're always going to have to pay something, credit cards and some bank networks can be particularly egregious.

pathy
The rates are always terrible, they have to make money. It probably equals out over time but having the freedom to withdraw smaller amounts without an extra charge is convenient. I am not a great fan of carrying around a lot of cash.
ddeck
Agreed, and that's how I do it also. But I'd recommend checking the rate. I have a few accounts and the difference between the cheapest and most expensive is significant (e.g. one bank taking 4% margin, another only taking 1%).
amac
> The answer does depend on where I am heading but in my experience I usually exchange a smaller amount at home (at a forex company) and later just withdraw from ATMs.

Yeah, that's what I do. I'm guessing you use online banking for the forex? or a dedicated forex company e.g travelex?

I've never worked in forex or know anyone in the business - I never knew it was regulated. I assume that kiosk type fx companies use banks for money supply? and that as long as currencies were pegged to global rates, they are free to charge whatever they like?

I do hear lots of people complaining about commission, that's what I guess makes Bitcoin and other P2P options attractive. Maybe forex companies have little choice, especially when you consider airport rents, staff etc.

ddeck
>Maybe forex companies have little choice, especially when you consider airport rents, staff etc.

Yes, it's an incredibly profitable business and the airports know it. Airports will generally offer a monopoly or duopoly license to operate there and charge rent in the millions for busy terminals. That cost gets passed on to the consumer.

I'm not sure what you mean by commission, but ignoring cash management costs, operators can do the conversion close enough to free as to not matter. For example, I can currently sell/buy EURUSD at a rate of 1.35080/1.35085 respectively. That's an effective cost from mid of 0.002%. Anything wider than that is gross margin.

pathy
I tend to go to a forex company if I have to exchange before traveling, never do online banking for it.

I am not sure how the kiosk fx companies does it but moving money around is always a risk. They can probably charge as much as they like but it is that they cannot exchange unlimited amounts, you have to show how you got the money when exchanging above certain amounts. Money laundering regulations makes up a lot of the regulations in that area.

Bitcoin fluctuates wildly though, and exchanging it is hardly quick for the most part. Both brings down the attractiveness for consumer-type fx.

Airports are location monopolies so companies that operate at them have no incentive to provide cheaper services. They can operate at a healthy (for them) margin and the customers will still come. There is a reason those airport sandwiches are expensive!

amac
> Airports are location monopolies so companies that operate at them have no incentive to provide cheaper services. They can operate at a healthy (for them) margin and the customers will still come. There is a reason those airport sandwiches are expensive!

Yeah, airports are going to only get busier right so they'd be a good bet for startups (and more monopolies) in this regard.

bigiain
Most places I visit, I change a small amount of cash, enough for a cab from the airport at the other end and a meal/coffee - usually at the airport on the way out. Apart from that, I rely on credit cards and ATMs. That's worked fine for me over the last 10-15 years travelling from Australia to the US, UK, Thailand (mostly Bankok), Singapore, Hong Kong, & New Zealand. I've occasionally had one of my credit cards (Visa, Visa debit, and Amex) or one of my ATM cards (St George and ANZ) fail to work for me - but get that here in Australia too.