I recently talked to a business owner about handling his foreign exchange business. One of his comments was that he prefers to do business with his bank because he trusts them rather than a currency exchange service provider. I asked him why is that? He said that he had heard of an incident in the last two years where another company had lost quite a bit of money through a Money Service Bureau. He feels he is protected through the bank much better.
Let me just say that if the transaction goes south, a bank will provide no more protection for currency exchange than a good foreign exchange bureau does. The maximum protection offered by a bank for currency exchange is $10,000 CAD. Also, since the bank will have obtained a letter of credit from your company, you may be on the hook for more or your credit may be affected.
Admittedly there are currency exchange bureaus out there who operate like fly by night businesses. If they don’t have the proper controls in place, your transaction may fail. This is where reputation and capability come into play. Currency exchange bureaus must take precautions because they act as an impartial referee for two parties. If the currency exchange bureau can’t ensure that both parties live up to the transaction, somebody is going to get hurt.
How do you find a good, reputable currency exchange bureau? Just like everything else, you shop around, ask questions, ask for references.
A good currency exchange bureau will save you time, money and make life a lot more convenient. Banks serve their purpose but would rather not offer some of the fast customized service you get at a good currency exchange bureau. And to top it off, a good currency exchange will likely get you a better rate.
