Currensea: New FinTech Leverages Open Banking to Reduce FX Fees
We let you spend abroad directly from your existing bank account at fair rates and without charges.” – Currensea
Currensea: Launch & Offering
Currensea was founded only last year in June 2018 by Craig Goulding and James Lynn. These two have an impressive history with Foreign Exchange (FX) and open banking. Currensea was made for those who spend a lot of time abroad and are looking for the easiest way to save on FX fees. The launch is for their beta version, and there’s a waiting list.
This new FinTech leverages open banking to connect your existing UK bank account to their Currensea card. They claim that linking to their Currensea card can save up to 90% on FX fees. Furthermore, there aren’t any additional fees for ATM cash withdrawals. However, there is a £1,000 limit on ATM withdrawals per month. All you have to do is order a card and then link it to your existing bank account. Apparently these online forms take less than a minute to fill. The next step is to not forget taking your Currensea Card abroad, then use it like normal and enjoy the reduced FX fees.
Currensea Card Fees
Customers only get charged a small percentage for all transactions abroad or in other currencies. This is a singular flat fee 0.95% which is added onto the official Mastercard exchange rate. Alternatively, for £35 a year, you can reduce this fee to 0.35%. This would be beneficial for customers who are likely to spend £5,850+ per year abroad or in alternative currencies. It is common for legacy banks to hide fees into the exchange rate, in addition to a flat fee and a percentage of the total. Therefore, when broken down, this new FinTech offers a great deal.
Open Banking & PSD2
We define ‘open banking’ as a model in which banking data is shared between two or more unaffiliated parties to deliver enhanced capabilities to the marketplace.” – Mckinsey Insights
Open banking is a recent initiative which is in compliance with the PSD2 legislation (second Payment Services Directive). This was set by the EU to enhance the sharing of banking data with third parties. The aim is to enhance competition and allow for innovative new FinTechs to offer better services to customers, in collaboration with their banks. The UK government has been welcoming this change. However, other EU countries are late in implementing this regulation to their top banks, meaning they still hold a monopoly over customers’ data.
How Does Currensea use Open Banking?
Currensea does not hold your account balance, it is still held and protected by the existing bank. Due to the open banking initiative, banks are able to share your details (with your permission). In this case Currensea is allowed to act as an intermediary. With each transaction, the money is initially sent to the Currensea account, then instantly redirected to the recipient. This way Currensea acts as an intermediary and simply conducts the overseas transaction with their technology. Meaning the user can benefit from reduced FX fees. This is without needing to sign up to a new bank, prepaid card or exchange cash before a trip.