A change bureau (plural bureaux de change , both ) (English English) or currency exchange (English America) is a business where one can exchange one currency with another.
Video Bureau de change
Nomenklatur
Although originally French, the term "bureau de alteration" is widely used throughout Europe and France Speaking of Canada, where it is common to find signs that say "exchange" or "change." Since the adoption of the euro, many exchange offices have incorporated their logotypes clearly on their signboards.
In English-speaking US and Canadian businesses this business is described as "currency exchange" and sometimes "money exchange", sometimes with various additions like "foreign", "desk", "office", "counter", "service" etc..; for example, "foreign exchange office".
Maps Bureau de change
Location
The change bureau is often located in banks, in travel agents, airports, major railway stations or major shops - that is, anywhere there is likely to be a market for people who need to convert currencies. They are very prominent in travel hubs, although currencies can be exchanged in many other ways both legally and illegally elsewhere. Some major players include HSBC, Travelex, JPMorgan Chase & amp; Co., Wells Fargo, and Bank of America.
Business model
A change bureau is a business that, in competition with other similar businesses, makes a profit by selling currencies at a higher rate than the rate at which it purchases the same currency, as well as any commissions or fees that may apply. In determining the exchange rate, it shall oversee the price quoted by the competitor, and may be subject to foreign exchange control of the government and other regulations.
The exchange rate charged to the bureau is generally related to the spot price available for large interbank transactions, and adjusted to ensure earnings. The rate at which the bureau will buy a currency different from what it will sell; for each currency traded both will be on display, generally in the shop window.
So the bureau sells at a lower price than the one bought. For example, the UK bureau can sell EUR1.40 for Ã, Â £ 1 but buy EUR1.60 for Ã, Â £ 1. Quite often the terms "buy" and "sell" are used in other ways by the de bureau of change, and the possible purchase rate it looks higher that the sales rate: in such cases it means "we buy/sell our local currency at the show value" (an example from Google Images).
So, if the spot price on a given day is EUR1.50 to Ã, Â £ 1, in theory Ã, Â £ 2 will buy EUR3, but in practice it will be difficult if it is impossible for the average consumer to get it. If the de bureau of change buys Ã, Â £ 1 from the consumer for EUR1.40 and then sells Ã, Â £ 1 for EUR1.60, this difference of 20 cents contributes to expenses and profits.
This business model can be disrupted by a currency that runs when there are far more buyers than sellers (or vice versa) because they feel certain currencies are overvalued or undervalued.
Businesses can also charge commissions on transactions. Commissions are generally charged as a percentage of the amounts to be redeemed, or fixed fees, or both. Some bureaus do not charge commissions but can adjust the exchange rate offered. Some bureaus offer special offers for customers who return the unused foreign currency after the holidays. The change bureau rarely buys or sells coins, but sometimes gets a higher profit margin, justifying this with higher storage and shipping costs than paper money.
In recent years along with the emergence of online banking, currency exchange services have emerged on the Internet. The new model allows for a more competitive exchange rate and threatens traditional bureaux-and-mortar changes. The online currency exchange has two main models: the more popular models are provided by deforestation bureaux set, while social currency exchange platforms like WeSwap allow participants to ask or bid for currencies at their own rates (usually with additional transaction costs).
Peer to Peer Foreign Exchanges
Consumer issues
Changing money in a bureau is often more expensive than pulling it from an automated teller machine at the destination or paying directly with a debit or credit card, but this varies depending on the card issuer and account type. The cost of withdrawing some ATMs should also be considered. Some people may feel uncomfortable carrying a lot of cash so prefer to use the card and bring in minimal cash for taxis, hotels, and restaurants. Hotels and car rentals many times also require a card for temporary suspension.
Some may also prefer to hold foreign currency rather than change it back if they expect to return to where it is used. Companies that often send employees overseas can basically act in exchange for themselves by replacing their employees in local currency and holding foreign currency. If the exchange rate is relatively stable, the costs charged by the bureau may outweigh the possibility of fluctuations and it also makes accounting easier.
As an alternative, some prefer to buy their currency before they travel, either just for a sense of security against credit card fraud normally achieved by corrupted card readers or hackers, or because they speculate better exchange rates at that time than it would be when they travel they. In addition, some places may only take cash or have a credit card terminal.
In 2002, many bureaus reported substantial profit reductions due to the replacement of many European currencies with the euro.
Illegal activity
Bureaux de change offers an opportunity for money laundering, and some countries need a de bureau of change to register as a money service business and are subject to their anti money laundering measures.
References
See also
- CLS Group
- Currency pairs
- Digital currency changer
- The exchange rate
- Financial instruments
- Foreign exchange company
- The foreign exchange market
- Gold standard
- List of international trade topics
- Money changer
- Money laundering
- Table of historical rates for USD
Source of the article : Wikipedia
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