As the temperatures start to soar and summer seems well on its way, many of us will be looking forward to a well-earned holiday abroad.
While most of us pay for the break itself before we get on the plane, large numbers of Britons continue to pay through the nose to exchange currency in airports and even withdraw cash at a premium from ATMs in the country we’re holidaying in.
Research by currency exchange firm WeSwap has found that 31 per cent of UK holidaymakers – just over 14 million Britons – withdraw cash for their holidays upon arrival at their destination, taking out an average of £169.78 each.
Across the nation, this tots up to a staggering £2.4billion in holiday spending money withdrawn once we land.
But there are simple ways to save on cash abroad – and not all of them are about finding the best exchange rate on the high street and ordering your currency before you go.
Large numbers of Britons continue to pay through the nose to exchange currency in airports
Challenger banks including both Monzo and Starling have launched current accounts in the past 12 months which allow you to spend abroad with no fees, but you’ll still be paying for currency at whatever the exchange rate is that day.
However, there is a way to make like the professionals and benefit from the most competitive exchange rates available, without having to become an FX currency trader.
There are now a number of peer-to-peer currency transfer sites in the UK, including WeSwap, CurrencyFair, Midpoint, MoneySwap and Transferwise, which offer travellers the option to swap currencies with each other directly.
Each operates slightly differently, and they’re not all registered in the UK, meaning you need to be comfortable that any money you exchange is safeguarded.
But all of these platforms promise to charge much lower rates of interest than high street providers and foreign ATMs by giving you access to money market currency rates – essentially cutting out the middleman.
WeSwap is one of the newer platforms to come to market. We spoke to its founder Jared Jesner and put his firm under the This is Money Startup Spotlight column.
WeSwap was founded in 2011 and fully launched in 2015. The firm operates on a peer-to-peer model, allowing travellers around the world to swap currency with each other directly.
Its aim is to bring the very best rates of exchange to the masses and at a very low cost.
WeSwap founder Jared Jesner
What is WeSwap?
Jared: WeSwap is a peer-to-peer travel money service. Instead of sourcing currency from banks, our technology automatically exchanges currency between users heading in opposite directions. Users spend with the WeSwap Mastercard abroad, or can order cash.
JARED JESNER, CV
After graduating in Theoretical Physics from UCL, Jared went into payments and finance, gaining a strong foundation in banking at JP Morgan and Dresdner Kleinwort where he traded currency derivatives.
Following this, he was selected for a fast track management program with Royal Dutch Shell.
In this role, Jared had responsibility for both developing technology strategy and its implementation across the globe, with a strong focus on payments.
Jared, 38, now lives with his wife and three children – a boy and two twin girls – in Borehamwood.
Ultimately we help travellers get much better rates when they spend abroad, because we cut out many of the middlemen involved in the typical travel money supply chain.
No one else in world operates a peer-to-peer travel money platform for holidaymakers.
Where did the idea come from?
Jared: The idea came from a combination of my experience as a currency trader – where I saw first-hand the rates banks exchanged at – and my time managing an international team at Shell.
At Shell we were constantly travelling, exchanging currency back and forth, and I started thinking, this is mad: why are we buying currency, when we could just be swapping?
I researched the idea, looked at the way money flowed globally, saw there was a business case and figured out a way to make it work. My exposure to the payments industry at Shell solidified how the WeSwap idea could all work in practice.
So I quit my job and WeSwap launched to market in 2015. It was started to address what I saw as a huge inefficiency and a profound lack of transparency in the foreign exchange space.
How does WeSwap work?
THE FINE PRINT
WeSwap offers a card that matches travellers up with others who need to change currency and uses an app.
It says that it always uses the real mid-market exchange rate and the amount you pay depends on how quickly you need the money.
Instantly costs 1.4 per cent, in three days costs 1.3 per cent and in one week costs 1 per cent.
Up to two withdrawals worth more than £200 are free per day.
You can swap for free when you invite friends.
Transactions are limited to ten per day, replacement cards cost £5 and an inactivity fee of £2 per month applies after a year of inactivity.
Jared: The technology is the complicated bit; using the product is actually very simple.
Users sign up via the WeSwap app or online and apply for a WeSwap Mastercard.
Through the app, users add funds to their account, exchange currency and keep an eye on all their travel spending and transactions on the card. There’s no effort required on the user side – WeSwap automatically exchanges their currency through our platform, so all they need to do is spend like they would with any other card, happy in the knowledge that they’re getting a great deal.
We also recently launched a cash option along with the card for travellers who like the comfort of a bit of cash in their pocket when they arrive, and a credit addition to help users spread the cost of travel too.
What are the benefits for customers?
Jared: A user exchanges currency with WeSwap at the interbank rate and we charge a low, transparent 1 to 2 per cent fee.
Bank cards typically charge upwards of 3 to 4 per cent when you use them abroad, and most high street bureaux will add a margin of 4 to 8 per cent onto the exchange rate. This rises to up to 15 per cent at airports. So the savings add up very quickly.
We also help users with budgeting – by helping users grab the best rates before they go – and security when spending abroad. If you lose your card you can block it in-app while you look, and if you don’t happen to find it, your money is safe anyway as it’s not linked to your bank.
And we’ve got much more planned to keep helping users when they spend abroad.
How has the business grown?
Jared: Since 2015 we’ve grown to 400,000 users across Europe and exchanged in excess of £140million through the platform.
The WeSwap MasterCard allows you to spend abroad just like any other card
We also just won Best Travel Money Provider 2018 at the British Bank Awards, which were voted for by UK consumers. This is fantastic recognition and means so much to us to have that support and to have won over more traditional, established companies like the Post Office.
We’ve had record volumes since then, seeing trading figures of around £10million a month through the platform.
What’s on the horizon for WeSwap?
Jared: Ultimately, we want WeSwap to be funding the whole world’s travel adventures, so expansion into new markets such as Asia is a big focus at the moment. We’ll also soon be launching a new product for business travellers.
In the nearer term, in the next few months we’ve got a suite of new features focused around helping travellers further manage their money abroad.
These include in-app advice on how much they should budget abroad, based on traveller data; a smart swap to help users exchange currency at the best time; and a way for holidaymakers to save up for their travel over time.
It’s all about using smart technologies and the power of our community to help people stress less and travel happy when they spend abroad.
We’re also currently in really interesting talks with the wider travel industry about leveraging the WeSwap platform to provide services, like supplier payments, for them.
So it’s a really exciting time for the business with lots of great stuff ahead.
THIS IS MONEY’S FIVE OF THE BEST HOLIDAY MONEY DEALS
OTHER OPTIONS FOR SPENDING ABROAD
This is Money has done a full round-up of the best ways to spend money abroad. For the full picture, take a look at our guide to holiday spending here.
Currency cards offer holidaymakers the chance to load up a card with money to spend while they are away and potentially benefit from lower rates.
Loading up a card in advance has the benefit of locking in the rate which means you know exactly what you have to spend.
Travellers should make sure these rates are better than their bank and check all the small print. Find out more about how they work here.
FairFX offers This is Money and MailOnline readers a free MasterCard prepaid card, which usually costs £9.95.
The main benefits include highly competitive exchange rates plus zero exchange rate fees.
Readers are offered three choices of cards: euros, US dollars or the Anywhere card that is loaded with Sterling and can be used anywhere that displays the MasterCard Acceptance mark.
There are no charges when paying in shops and restaurants and taking out cash costs £1 for Anywhere card, $2 for the Dollar card and €1.50 on the Euro card when used abroad – with a 0 per cent conversion fee.
To get the card for free, you’ll need to upload the following minimum amounts when you apply: Euro card – 60 euros, Dollar card – $75, Anywhere card – £50.
Another good option is the Prepaid Revolut Mastercard which uses an app and claims perfect interbank rates for most currencies. It carries no spending fees or cash machine withdrawal fees up to €650, $700 or £500 a month – a limit many holidaymakers may go over. A 2 per cent fee is applied above this.