London-based start-up WeSwap is seeking online travel agent partners to help it pioneer its innovative peer-to-peer social foreign exchange service.
Just two months old and currently live in beta, WeSwap has attracted a substantial chunk of first-round funding from a group of influential angel investors.
It is offering travellers the chance to swap their currency for a fraction of the cost that banks charge via its network, and is targeting online agents as partners to roll out the concept.
Its model means it is able to charge customers the interbank lending rate for transactions plus 1% for anonymous swaps through its social network, or 1.5% if it has to buy the currency.
This compares to mainstream banks which charge 4% to 7% and this figure can rise to as much as 10% to 12% in airport currency exchange bureaus and in hotels.
Any non-anonymous currency swaps made by users with fellow WeSwap friends, or ‘SwapMates’, which have been invited to join the network are free of charge.
For potential agency partners WeSwap is offering a revenue share, a discounted rate for swaps between customers, and access to potentially valuable customer insight into spending habits.
It believes this will help retailers reinforce their branding, offer retargeting and additional revenue opportunities as well as providing customers with a valuable money-saving service.
WeSwap users set up an account and are sent a pre-paid Mastercard which can be branded with the agency’s logo and which the user will load up with their currency and then use as a debit card.
When abroad any ATM withdrawals over £200 are free of charge (under £200 there is a charge of £1.50), so travellers can also reduce their costs when in destination.
Jared Jesner, WeSwap founder and chief executive and a former currency trader, predicted this form of social currency could be a game changer in foreign exchange.
“WeSwap was born out of a frustration that as a trader I could see what the real currency rates were but as a consumer although it’s my money the banks or bureaus step in and take a chunk.
“I should be able to exchange my money with people at the absolutely cheapest rate in the market. The reason we are able to do this is we are not having to buy the currency.
“If you take the bank supply chain out of the picture you can offer amazing rates like 1%.”
Jesner said the firm was looking for a small number of large-scale industry partner to integrate with WeSwap to introduce the concept quickly to the market.
“The business strategy is distribution through online travel businesses. Direct customer acquisition is always challenging for an unknown brand and online business.
“The best way is through distribution partners. We are built as a platform with APIs, so we can integrate wherever they want us to be.
“We can do as much integration or as little as they would like, maybe as part of the booking stream or just after the point of sale.”
Jesner said WeSwap has been established according to the strictest financial regulations and all users who sign up undergo a vetting process before being able to offer currency swaps.
Swaps can only happen once the money is pre-loaded. Currently swaps are taking as little as 15 minutes to complete but WeSwap expects that will be instant once the network grows.
However, users who are prepared to allow more time are likely to get a better deal because it will enable the system more time to find a swap partner.
Travellers who return from their trips with unused foreign currency in their account are able to swap it back to their native currency on their return and spend it using the WeSwap debit card.
Currently WeSwap operates in six currencies including Sterling, US Dollars and Euros and northern European currencies but expects to add other currencies in long-haul destinations quickly.
WeSwap is integrated with Facebook via which users can organise a swap and has a mobile app through which users can currently manage their account but will have more functionality added.
Jesner said: “I have no doubt that swapping money will just be the way things are done in the future.
“If you look at the user experience and the mobile experience, you will be able instantly swap on your app while you are away.
“Peer to peer is fantastic when it offers genuine value, it must never be generic. We are the first doing this in travel money.
“Operationally it’s complex and we are 100% compliant with industry standards and that’s hard. This is probably something that’s easy to do badly but very hard to do well.
“We genuinely want to be the future of travel money. We have a model that’s really scalable and we have investors with deep pockets that will take us there.”