Peer to Peer Currency Exchange

money transfers to Australia

Peer to Peer Currency Exchange is disrupting the international money transfer industry.

We have all now experienced (or at least read about) the peer to peer (P2P) disruption occurring in holiday accommodation (AirBNB), and ride sharing (Uber).  But what about in the finance world?  There is an emerging business model around peer to peer currency exchange that has the potential to save Australian Expats money on their international money transfers.

What is Peer to Peer Currency Exchange

I have previously written about Why I do not use banks for my international money transfers – principally due to the poor exchange rates and high fees.  There are many companies around now that offer online international money transfers at much more competitive rates than your bank – Ozforex / UKForex, HiFx, Transferwise, and Currency Fair.

Transferwise and Currency Fair however have a slightly different business model to the other two (although in practice I am not sure it is that different), and that is there business is based on a peer to peer currency exchange.  Peer to peer currency exchange aims to cut out the banks by providing a platform for those people who want to buy each other’s currencies.

So if Jack wanted to transfer $1000 AUD into Singapore Dollars, and Mary wanted to exchange her Singapore dollars for Australian dollars, then a peer to peer currency exchange would match Jack and Mary and facilitate the currency exchange.  Jack and Mary don’t send their money directly to each other, but transfer their money to the Peer to Peer Currency Exchange firm, who then transfers the money on into the nominated bank accounts.

In the event there is no-one looking to buy or sell the nominated currency, the currency exchange firm will step in and make up the difference.

The Peer to Peer Currency Exchange Firms

Two of the Peer to Peer Currency Exchange Firms I have reviewed are Transferwise and Currency Fair.

1. Transferwise

Transferwise is a P2P currency exchange firm established in the UK, and is regulated by the Financial Conduct Authority (FCA) in the UK.  As a result all client’s funds are ring-fenced in a separate client account.  It has some notable investors, including Richard Branson.  At the time of writing however Transferwise supports people in only a limited number of countries (predominantly Europe).

2. Currency Fair

Currency Fair has an Australian Expat as one of its founders, and is based in Ireland.  It is registered with the Central Bank of Ireland and is regulated by the European Communities Payments System.  At the time of writing Currency Fair does support a larger range of countries and currencies than Transferwise, including UK, Europe, and UAE.  Currency Fair has established a significant track record already, having transferred over 3 Billion euro since starting, and has consistently ranked best in our reviews of the different money transfer companies.

Now, lets look at the pros and cons of using peer to peer currency exchange.

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Pros of Using Peer to Peer Currency Exchange

1. Faster Transfers & Lower Cost Than Banks

In an article I will be posting in the near future, I review a number of the online currency exchange providers based on actual money transfers that I undertake.  Most of the online currency exchange providers (both Peer to Peer and the other non-bank service providers) enable you to avoid using the international banking system, and instead money is transferred domestically on both sides of the transaction).  As a result, your money transfer is generally cheaper and faster than using your bank.

2. Usually Best Option For Smaller Transfer Amounts

The Peer to Peer Currency Exchange providers tend to charge a very small fixed transaction fee, plus a small percentage of the amount transferred.  Whereas companies like Ozforex offer better exchange rates the more money you transfer.  As a result it appears that the Peer to Peer Currency Exchange providers provide better value for smaller transfers, while Ozforex becomes more competitive when transferring larger amounts.  What the cross over point is is difficult to determine and will probably also be currency dependent.

3. Regulated

Like the other online money transfer companies I refer to on my website, both of these peer to peer currency exchange companies are regulated by their respective government financial authorities.

Cons of Using Peer to Peer Currency Exchange

1. Limited Range of Services

One of the limitations however with Peer to Peer Currency Exchange is that they offer limited services, and you receive the exchange rate that exists at the time the transfer is made.  So, for example, when booking a money transfer with Transferwise or Currency Fair, you will receive an estimate of the foreign currency you will receive.  This amount is only confirmed when the company receives your funds in their bank account.

Ozforex, on the other hand, allows you to lock in an exchange rate in advance of transferring your funds to them.  They also allow you to enter into various Forward Exchange Contracts, Limit Orders and foreign exchange options.  These services might be of interest if you want to lock in a foreign exchange amount for a future transfer (eg. transferring money for a deposit on a house).

2. Limited Currencies and Client Locations Supported

Transferwise and Currency Fair are growing very rapidly, but still support a limited number of currencies and client located in only certain countries in the world.  So, before opening an account, check that they support clients in your country of residence and the currencies you are likely to exchange.


I have recently compared six currency exchange options that Australian Expats might consider using for their foreign currency transfers (including peer to peer currency exchange).  You can see the results in this article What are the best options for transferring money to Australia?  One of the conclusions in this article is that Currency Fair and Transferwise under a number of scenarios were the two most competitive options for currency exchange.


Please share your experiences in the comments below.  Are you using the services of one of these companies?  What has your experience been?  Would you use them again?


Disclaimer : The information contained on this website is intended only as general commentary and does not purport to be comprehensive.  No warranty is provided as to the accuracy.  It should not be regarded as tax, financial, or legal advice.  Remember, the value of an investment can go down as well as up, and you should seek professional advice that considers your personal situation and country of residence before taking action.  The Australian Expat Investor may receive a referral commissions for some services and products mentioned on this website.

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About the author


Craig is an Australian Expat and the founder of The Australian Expat Investor. Craig is passionate about investing, and while Craig cannot give personal financial or tax advice, Craig enjoys sharing investing, tax, and other tips for Australian expats to help them to build their wealth while living abroad and get the most out of their time living overseas. Get his free ebook on 9 Financial Surprises That Could Cost Australian Expats Thousands of Dollars

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