Sargon Elias (left) GM Velocity Trade Limited with Laura Dolphin, marketing executive, in their Auckland CBD online facility.
If you are one of those people who ‘just know’ that the bank will always give you the best foreign exchange rate when you import machinery or are sending off an exhibition stand to an international tradeshow, prepare to be disappointed.That’s the claim of Sargon Elias, GM of Velocity Trade, and someone who has done his time in the foreign exchange market internationally and in New Zealand.
And if you think he is shaving a margin and making a lot of noise, how about this for a statement to make you think again: ‘If your company has hired someone from the UK and they are selling a GBP400, 000 home (an average price), you can tell them the difference between going via their bank or using our services will be that they can buy a fairly decent second-hand car when they get here with the savings they’ve made.’
That got your attention?
Velocity Trade Limited is a New Zealand-based foreign exchange company, FMA approved, part of Velocity Trade International – originally founded in Canada in 2007 – with offices in Toronto, London, New York, Auckland, Sydney and Cape Town.
Their ‘secret’ or the basis of their ability to trump your local bank is they have ‘global access to wholesale interbank rates and advanced trading platforms’ with relatively miniscule overhead, according to Elias.
Clients using their services get the rate at the exact moment they strike the deal, rather than a bank rate, which is fixed for some 24-hours or more.
‘Obviously, the larger the sums involved are, and the frequency thereof will dictate an even better deal for you,” says Elias, “and unlike the banks we are flexible when it comes to deadlines – within reason. But if you are, say, a day late with assembling your money, we won’t make you start all over again at a new rate. The one you secured with us at the outset will stand.”
So, let’s get down to the nitty-gritty: given they are not a charity, how do they make their money?
“Our online platform is designed to give our customers control over the transfer of their money (you need to be computer-savvy enough to use Trade Me, to establish a reference point on that front) and empowers them to choose the exchange rate they want, when that rate is ‘best’, rather than just having to accept the one the bank gives them – ‘take it or leave it’ style.
“Banks get their rates from the interbank market, to which they first add a margin of up to 2.5 percent (ours is 0.3 percent, on average) and then they charge a fee for each transfer made, usually from $15-$25. We don’t charge any fees. It is the ‘last opaque frontier in banking.”
What about security then?
“Two large and reputable financial institutions, one Canadian and the other Australian, have a significant stake in Velocity, but more importantly, since we don’t earn interest on client funds, we never hold these funds in our account, but simply facilitate the deal between yourself and whoever it is that you are transacting with,” explains Elias.
“By all means go to the banks for ‘convenience items’ such as cash and cash cards, but stop getting ripped off on the big transactions, which all Kiwi manufacturers get involved in, whether it’s machinery, licence payments or imported materials and components. When you are next planning to do that, go online to our website, compare our rates and then call up your bank and have a chuckle as you work out what you’ve saved.
“The more frequent the transactions you make, the more money you save which you can invest back in your business. It’s our way of supporting New Zealand manufacturers.”