Bank rival nears $1b milestone
Money transfers can be big money, as Tom Pullar-Strecker reports.
AKiwi company that aims to undercut the banks on international money transfers says it is close to helping people send and receive $1 billion each year.
OrbitRemit, which is based in Wellington and employs 40 staff, also competes with services such as Western Union and Britishbased online money transfer service WorldRemit.
Checks indicated OrbitRemit could roughly halve the cost of transferring larger sums of money to or from major foreign currencies when compared to the banks.
On Wednesday, ASB Bank was offering to exchange £40,000 into $75,060, effectively collecting a margin of $1063 on the transaction – based on the midpoint exchange rate at the time.
OrbitRemit was offering $75,604, a margin of $519, while WorldRemit was offering $75,885, a margin of only $228.
Banking Ombudsman Scheme manager Ciaran Hyslop said it had received a total of 148 inquiries and complaints about bank charges for foreign exchange or telegraphic transfers over the past five years, five of which it had formally investigated.
‘‘Most of the cases were about processing times and concerns from the customer that they did not get the best foreign-exchange rate.’’
Despite that, OrbitRemit chief executive Robbie Sampson said Kiwis generally got a better deal from the banks on foreign exchange than Australians ,for whom the differences between the rates at which banks would buy and sell currencies were higher.
OrbitRemit had a good relationship with the banks which recognised the need to become more competitive and would offer sharper rates to their private banking customers, he said.
But they were not well-placed to compete for ‘‘low value’’ business transferring smaller amounts of money to and from Asia, for example, because of the resources they had to put in when a transaction went wrong.
Banks would hold ‘‘floats’’ in different major currencies meaning they would rarely need to buy or sell currencies to transfer funds – instead relying on movements between different currencies usually quickly cancelling each other out.
But that advantage disappeared when transacting in smaller ‘‘exotic’’ currencies, he said. OrbitRemit also held cash balances in the currencies in which it did business.
OrbitRemit’s biggest market was originally helping people who had settled in New Zealand remit money back to the Philippines, Sampson said.
But it was picking up a growing amount of custom helping people transfer larger sums between the UK, New Zealand and Australia.
It now has offices in all three countries.
In the month of January, OrbitRemit processed 75,000 transactions with a total value of about $80m, Sampson said.
The biggest issue for OrbitRemit had been gaining trust from customers, he said.
‘‘When we first opened [in 2009] it was terrible. More people asked why they should trust us than to do transfers.’’
But that issue had shrunk now the company had 16,000 online reviews and a business relationship with Inland Revenue, he said.
Inland Revenue promotes OrbitRemit as one of four services that people living overseas can use to make payments against their student loans.
ASB Bank did not want to comment on the margin comparison on the £40,000 transfer.
''When we first opened [in 2009] it was terrible. More people asked why they should trust us than to do transfers." Robbie Sampson