Foreign exchange company

A non-bank foreign exchange company also known as foreign exchange broker or simply forex broker is a company that offers currency exchange and international payments to private individuals and companies. The term is typically used for currency exchange companies that offer physical delivery rather than speculative trading. i.e., there is a physical delivery of currency to a bank account.

Foreign exchange companies are normally distinct from money transfer companies or remittance companies and bureaux de change as they typically perform high-value transfers unlike their money transfer counterparts that focus on high-volume low-value transfers generally by economic migrants back to their home country or to provide cash for travelers. Transactions can be either spot transactions or forward transactions.

Foreign exchange markets in India has shown a steady increase as a consequence of increase in the volume of foreign trade of the country, improvement in the communications systems and greater access to the international exchange markets. The volume of transactions in these markets amounting to about USD 2 billion per day does not compete favorably with any well developed foreign exchange market of international repute but with the entry of online Foreign Exchange Companies like ExTravelMoney, FXKart, BookMyForex, BuyForex and others, the market is steadily growing . Around 25% of currency transfers/payments in India are made via non-bank Foreign Exchange Companies. Most of these companies use the USP of better exchange rates than the banks. They are regulated by FEDAI and any transaction in foreign Exchange is governed by Foreign Exchange Management Act (FEMA)1999.

It is estimated that in the UK, 14% of currency transfers/payments are made via non-bank Foreign Exchange Companies. These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. UK forex brokers are not covered under the Financial Services Compensation Scheme however FCA Authorised Payment Institutions are required to safeguard funds in accordance with Regulation 19 of the Payment Services Regulations 2009 .

...
Wikipedia