Exchange office
A currency exchange is a company of the financial services sector , whose business premises client money can change. Foreign currency brought with them will be exchanged by the employees there for banknotes and / or coins of another - usually domestic - at the exchange rate offered . Legal tender changes hands.
Exchange offices can also be recognized by the widespread names Bureau de change (from the French "échanger" = "to swap"), Exchange or Forex Bureau (from English), Cambio (from Italian) etc. There are companies that, in addition to their main activity of changing money, also buy or sell gold in the form of coins or bars and operate the financial transfer business.
Buying rate, selling rate, commission
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The exchange rate is the price of a currency. The different exchange rates are often noted at exchange offices on tabular display boards that are flexibly updated using a digital display or simply with chalk. There are always two courses, the name of which always arises from the point of view of the exchange office on site :
- Purchase price or the purchase price (about overwritten with "We buy" or "buying") means that the currency exchange which the foreign currency ( "foreign" based on their location) buys . This is the decisive rate for travelers if they want to exchange their native currency for the corresponding national currency. The exchange office buys them from them for a lower rate. Explained using the example of an exchange office in Gambia (see photo), for one euro given to the exchange office, you get 32.50 dalasi .
- Selling rate (overwritten, for example, with "We sell" or "Selling") means that the exchange office sells the relevant foreign currency . This is the rate for which you can exchange the remaining national currency back into your home currency after your trip. To stay with the example in Gambia (see photo), you would have to give 34.50 Dalasi to the exchange office to get one euro back.
If the exchange office is in the home country , the opposite is true: the selling rate is decisive for the exchange before the trip (the exchange office sells the foreign currency). After the trip , the exchange office in your home country buys back the foreign currency you brought with you at the lower purchase rate . But no matter where the exchange office is located, the buying rate is always lower than the selling rate. The exchange offices generate their profit from this price difference: they sell sorts for a higher price than they bought them.
In addition to the exchange rate difference, a so-called commission may be due - a fee that the exchange office can charge either as a percentage of the exchange value or as a lump sum for each exchange made.
Exchange office service
Trade in varieties
The main focus of the business activities are currency transactions , i.e. buying and selling a foreign currency (almost always) against the local currency. This also includes the sale or redemption of travelers' checks . Common convertible foreign currencies are kept in stock . The exchange office can procure banknotes required by customers for more exotic travel destinations for the customer. In the colloquial language, the currency business has mostly become commonplace as the purchase or sale of " foreign currency ", which is not true, because from a banking point of view only the cashless domestic balances on foreign currency accounts or on accounts abroad are referred to.
In special currency constellations it can happen that the exchange office does without certain transactions. In 2008, for example, small Amsterdam exchange offices temporarily refused to exchange US dollars because of its exchange rate losses.
Trading in precious metals
A second area is buying and selling gold, be it gold coins or gold bars. Trading in other precious metals, such as silver , silver coins or platinum , can also be part of the business in individual cases.
Financial transfers
If the exchange office operates the financial transfer business, it usually acts as an agency for international providers such as Western Union . A customer here in Germany can, for example, pay a service fee in cash, which is also paid out in cash to the recipient abroad.
Expertise
The employees develop over time a flair for possible forgeries both bills as coins. Recognition is supported by holding relevant literature and information as well as technical aids such as lamps with ultraviolet radiation .
They will also be able to provide customers with expert information on import and export regulations for the currencies of frequently visited travel destinations.
Business aspects
Spatial location
Exchange offices mainly serve travelers . They are therefore almost always present in places with an airport, a seaport, a larger train station or a border crossing . Exchange offices are also established in cities with international exhibitions or trade fairs . In addition to exchange offices , money exchange is carried out by credit institutions , some travel agencies , larger hotels or shops frequently visited by foreign tourists. On cruise ships or ferries at sea, the purser is often also responsible for running the exchange office.
Sources of income
An exchange office earns money from the pricing of the buying or selling rate of convertible currencies or the price differences in gold sales. In addition, fees may be incurred for the performance of your financial services. Details can be found in the price notice .
The exchange rates of the varieties are based on the officially fixed exchange rates plus or minus a trading margin . They can change daily. Usually only banknotes are bought or sold. Coins are traded as an exception because they are less favorable in terms of prices for both customers and dealers. This differentiation is due to the higher expenditure for storage and, if necessary, transport or shipping of the metal travel means of payment to the country of origin.
A simple example of the trading range:
- Suppose someone wants to exchange 1000 euros for a planned trip to the USA. For example, if the exchange rate is 1.27 USD for 1 euro , the exchange office will give him 1,270 US dollars (USD) . If the customer changes his mind a week later and stays in the country, he will get back only 940.74 euros (1,270: 1.35) at a purchase price of 1.35 USD for 1 euro. The exchange rate difference ensures that the company covers its personnel costs and other expenses as well as disadvantages caused by exchange rate fluctuations.
Effects of modern payment transactions
In the last third of the 20th century, various developments affected the business situation of exchange offices. The spread of ATMs has meant that it can be cheaper for customers to use their debit card or credit card to obtain the cash they need in a foreign currency in the other country directly from an ATM that has been approved for this purpose. The amount will then be debited from his home bank account converted at the exchange rate and minus a bank fee for the withdrawal. This reduces the risk of loss if you carry a large amount of money with you on trips, for example through theft.
The introduction of the common currency euro in various states of the European Union has led to the elimination of their national currencies and reduced turnover in money exchange transactions. In the start year 2002 , the exchange transactions in German marks , Spanish pesetas , Italian lire , Belgian francs and Dutch guilders disappeared .
There are now a few exchange offices that offer services over the Internet. Ordered foreign currencies are sent to the customer's home, for example, and the equivalent value is debited from the customer's account via credit card or direct debit .
Company (selection)
ReiseBank is a large provider in Germany that specializes in the exchange office business. According to its own statements, Travelex stands out from its competitors worldwide .
Legal Regulations
permission
An exchange office is operated by both merchants and legal entities , possibly as a state institution. Business is often carried out in banks and savings banks and their branches. Business operations generally require commercial bookkeeping . Depending on the national regulations, a state permit may be required before starting business activity .
- Germany
In Germany, a sole trader does not receive a permit to operate an exchange office. In accordance with Section 1 (1a) sentence 2 no. 7 KWG ), the currency business is a banking business . Anyone who operates it is therefore either a credit institution or a financial services institution , unless - as is the case with department stores, hotels or travel agencies - these sales are secondary activities that do not require a permit ( section 2 (6) sentence 1 no. 12 KWG).
Anti-Money Laundering Precautions
Because of their cash turnover, exchange offices are a potential target for criminals who want to turn illegally obtained money into legal tender. In the meantime, every operator of an exchange office in the countries belonging to the FATF is obliged to take precautions against money laundering .
- Germany
In Germany, this happened in 1998. In the case of branded stores of 5,000 euros or more, more detailed records of the customer transaction, including identification, are always necessary. The legislature saw itself prompted to do this by police investigations and findings from international cooperation between the authorities on money laundering. Among other things, the police had investigated money laundering on a large scale with the help of owners of two exchange offices in Munich, who got involved with criminals in the drug environment. A total of around 60 million D-Marks are said to have been smuggled into the regular money cycle between June 1993 and 1994.
Other state regulations
Business processing in exchange offices was or is also affected by other government regulations. Examples are:
- Countries with non-convertible currencies often prohibit the export of the domestic currency and require or limit the exchange of foreign currency. In customs regulations may be instructed that the traveler the possession of foreign currency must declare and conversion into local currency basis to document evidence of the exchange offices. For example, the former GDR forced western visitors to exchange a minimum amount in GDR marks , which was processed in exchange offices at the border crossings in the GDR.
- After the currency reform , the four-part city of Berlin had a dual currency phase until the Western Allies finally put an end to the mixed situation by allowing exchange offices and opting for the German mark as the sole legal tender in the western sectors. In this exchange agents were East German marks in West-Mark or be exchanged reversed into an oriented to supply and demand course. There were judicial differences of opinion between the price office and the exchange office owners.
The business activities of exchange offices are monitored by supervisory authorities in many countries. For example, in Germany, the Federal Financial Supervisory Authority which, in France Banque de France responsible.
history
Exchange offices are the modern counterpart to money changers that have been familiar to the population for centuries . The need to change foreign currencies into local or national means of payment has existed since the time of Hellenism . It is known from the history of Bremen , for example, that Archbishop Adaldag set up an exchange office in 966.
The exchange offices created by King George of Podebrady in the cities of Bohemia that belonged to him were conceived with a different task : They were to implement a coin reform that he had laid down on June 5, 1469, and to exchange old money for new money. The banks emerged from the money changers in modern times .
Online offers
Jojmoney offers an online exchange for foreign currency that can be used by everyone.
Individual evidence
- ↑ Deutsche Bundesbank: Glossary ( Memento of March 25, 2009 in the Internet Archive ) Definition: "Payment orders in foreign currencies payable at foreign locations as well as bills of exchange and checks payable abroad in foreign currencies.
- ↑ Spiegel-Online from March 19, 2008: Amsterdam exchange offices do not accept dollars , queried on May 8, 2009
- ^ Na press portal of March 1, 2005 , accessed on May 8, 2009
- ↑ Kai Bongard: Economic Factor Money Laundering: Analysis and Combat (= DUV: Economics ). Deutscher Universitäts-Verlag, 2001, ISBN 3-8244-0622-5 , pp. 114 ( limited preview in Google Book search).
- ↑ Michael W. Wolff: The currency reform in Berlin: 1948/49 (= Historical Commission in Berlin [Hrsg.]: Publications of the Historical Commission in Berlin . Volume 77 ). Walter de Gruyter, 1991, ISBN 3-11-012305-3 , ISSN 0067-6071 , p. 122 ff . ( limited preview in Google Book search).
- ^ Johann Hermann Duntze: History of the Free City of Bremen, Volume 4 . Heyse, 1851, OCLC 219875317 , pp. 335 (881 p., Limited preview in Google Book search).
- ^ František Palacký: History of Bohemia: mostly based on documents and manuscripts, Volume 4, Issue 2 . Tempsky, Prague 1860, OCLC 162827133 , p. 594 ( limited preview in Google Book search).
- ↑ https://derstandard.at/2000074283499/Vom-Gurkenglas-an-die-Restgeldboerse
