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The Currency Cloud, a company based in London, allows payment firms, banks and e-commerce companies to offer their customers access to foreign exchange through a simple API that links to Currency Cloud’s cloud service.
The company did $5 billion in transactions last, including 50,000 transactions in December alone. Transactions are up 8X year on year and value is up 3X said Mike Laven, the company’s CEO.
The Currency Cloud clients are often innovators who are reaching across borders and need inexpensive foreign exchange.
MANGOPAY, for instance, provides a platform for online marketplaces or crowdfunding sites to easily accept payments from customers and create e-wallets. During its first year in business, it signed over 200 customers including fashion marketplaces Vestiaire Collective and Vinted, Europe’s first reward-based crowdfunding site Ulule, and BankToTheFuture.com, the equity crowdfunding platform.
To expand beyond the Eurozone it needed a solution to handle foreign exchange, the company explained in a case study on the Currency Cloud site.
“We turned to Currency Cloud to help us accept and send international payments and quickly expand into new markets. Currency Cloud’s easy-to-embed payment engine allows us to offer our customers payments in 28 countries, transparently convert 40 currencies and send quick payments via SWIFT to 212 countries. And with the help of only a single developer, we were up and running in just a couple of weeks.”
The Currency Cloud has recently opened in the US and expects to announce a few of its users soon.
Laven said that Currency Cloud offers consumer to consumer payments, consumer to business and business to consumer.
Fidor Bank, a completely digital bank based in Munich, is the first bank in the world where users and their social interactions shape the interest rate they receive on their currency account, the FidorPay Account. The rule is simple: The more Facebook “Likes”, the lower the interest rate.
“Our vision is to be the European leader for online and mobile ‘community banking’, wrote Matthias Kroener, the CEO on the bank’s Web site. “We believe in banking with friends, and that banking need not be boring.”
The bank uses Currency Cloud, as it explained on the Web site.
“Fidor Bank was the first bank in the world to have a multi-currency banking-regulated eWallet that allows Fidor Bank clients to buy currency, make payments and view balances in GBP, USD, CHF, NOK TRY, PLN, AUD, and NZD. This facility was made possible by integrating Currency Cloud’s capabilities into our systems through their TCC Connect. Currency Cloud’s API enabled us to rapidly expand our business to include foreign exchange, payments and transfers without having to invest in costly infrastructure.
“By connecting to a variety of exchange rate providers and payments networks they ensure that our users are always receiving the best and lowest cost conversion and payment service possible.”
Currency Cloud is disrupting on two levels, Laven said. Some consumer services in peer to peer use it and it is active in the business cross-border payments business which is ten times as large as consumer FX.
“We think that the whole world gets turned upside down in the next 10 years through digitization — the provision of cross-border payments is part of a building block you can put together with other services.”
The service providers who use Currency Cloud are highly customer centric, he explained.
Traditional banks have presented a few products to customers and don’t offer to modify them to meet customer needs, he said. Now startup banks and other service providers are building on a customer relationship-first model and tailoring their products to customer demands.
“They maintain the front-end relationships with the consumer and we provide what they need for cross-border payments.”
Transactions are growing fast, Laven said, as global trade expands at a large percentage each year.
“Big department stores used to order a winter line just once. Now Zara ships every week , so you need a money transfer system on a global basis that can expand to that kind of volume.”
Currency Cloud’s focus is on cross-border industrial payments in major currencies, paying US and European bills through the world.
“India and China for manufacturing are huge for our business. It’s a massively liquid market, so there’s no reason people should spend a lot on foreign exchange. It’s all a question of getting the processing right.”
Banks will remain in the business, he added, since 90 percent of the world’s FX is done by 10 large banks, but they will have to take lower margins.
“It’s the usual internet story, Laven said, “I say to clients that this is all FX has to cost you because we specialize and don’t use this one type of transaction to subsidize our other costs.”
Companies that connect to Currency Cloud can be up and running within 30 days, he added.
“The API is simple and is available for free on the Web site. You can do everything you need to do and test it with live rates on the Web site, so in general by the time a customer wants to use our services they have worked through what it takes to get up and running. Everything in our world is digital, account to account. Our customers are pretty technically savvy.”
