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-   -   Multi Currency Credit Card ["Revolut"] (https://www.englishforum.ch/finance-banking-taxation/240252-multi-currency-credit-card-revolut.html)

ChrisNeedsToKnow 18.09.2015 17:38

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by The_Love_Doctor (Post 2451790)
I can see them setting up an option to say which order of priority the customer would like the money to be changed.

Where do you see that?

The_Love_Doctor 19.09.2015 11:19

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by ChrisNeedsToKnow (Post 2451802)
Where do you see that?

In the future I mean ;)

By the way, I checked my post this morning and the physical card has arrived! I shall be testing it today!

It comes in a snazzy little cadboard cover which when pulled from the right side pushes the credit card to the left... When the credit card is taken out you read the message... "Be Different. Be Free."

Nice touch Revolut!

fatmanfilms 19.09.2015 12:00

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by The_Love_Doctor (Post 2451790)
I can just see these kind of things cropping up more and more and people annoying them with questions about the behaviour of the algo they use to debit the amounts from the multiple currencies.

I can see them setting up an option to say which order of priority the customer would like the money to be changed.

To be fair if they do it at interbank rate then it doesn't really matter which currency is used up. But this begs a more important question as to how they are actually hedging their exposure to the currency movements, as it's not always possible to meet the demand from someone else trying to do the opposite transaction for every single customer. So they have to take some risk or/and feed the FX transaction to an external bank at some point.

It's an ambitious product and I would advise caution for anyone using it, the cost of using this card will certainly rise in 12 months time once they've figured out how much it's costing them to operate their business.

It your getting a live rate, that's what your getting, they are not hedging as would cost money. If the demand is not there, the price falls that's how a market works.

The_Love_Doctor 19.09.2015 12:40

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by fatmanfilms (Post 2452012)
It your getting a live rate, that's what your getting, they are not hedging as would cost money. If the demand is not there, the price falls that's how a market works.


Here we go fatman is back! ;)

Do you know they're not hedging or do you want to qualify that with something like "In my opinion"??

If they don't hedge their FX exposure at all then that's very dangerous and I'm pretty sure the VCs behind it wouldn't be able to sleep at night.

Getting a live rate doesn't mean you don't hedge, just means you don't mark it up for your customers. There is a cost associated with hedging and these guys are not passing on the cost to the customers during the 12 month promotional period. There is absolutely no need to take such exposure.

Phil_MCR 19.09.2015 13:17

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by The_Love_Doctor (Post 2452034)
Here we go fatman is back! ;)

Do you know they're not hedging or do you want to qualify that with something like "In my opinion"??

If they don't hedge their FX exposure at all then that's very dangerous and I'm pretty sure the VCs behind it wouldn't be able to sleep at night.

Getting a live rate doesn't mean you don't hedge, just means you don't mark it up for your customers. There is a cost associated with hedging and these guys are not passing on the cost to the customers during the 12 month promotional period. There is absolutely no need to take such exposure.

if they have no exposure, then they have no requirement to hedge and so won't incur any hedging costs. simples.

fatmanfilms 19.09.2015 14:18

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by The_Love_Doctor (Post 2452034)
Here we go fatman is back! ;)

Do you know they're not hedging or do you want to qualify that with something like "In my opinion"??

If they don't hedge their FX exposure at all then that's very dangerous and I'm pretty sure the VCs behind it wouldn't be able to sleep at night.

Getting a live rate doesn't mean you don't hedge, just means you don't mark it up for your customers. There is a cost associated with hedging and these guys are not passing on the cost to the customers during the 12 month promotional period. There is absolutely no need to take such exposure.

Do you actually understand a hedge? It's a position in the market.

So to have a position will cost money if the market works against you it costs money.

You can't hedge against exposure you don't know about.

Perhaps you mean they buy an option rather than a hedge, options are very expensive as someone else is taking the risk.

I know someone who bought a property in CH using pounds, they hedged & the hedge has cost 2,500,000 to date. The CHF asset has increased by 2,500,000 so it nets off as he owns both assets.

You can't hedge against exposure you don't know about.

The_Love_Doctor 19.09.2015 19:54

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by Phil_MCR (Post 2452043)
if they have no exposure, then they have no requirement to hedge and so won't incur any hedging costs. simples.

Quote:

Originally Posted by fatmanfilms (Post 2452065)
Do you actually understand a hedge? It's a position in the market.

So to have a position will cost money if the market works against you it costs money.

You can't hedge against exposure you don't know about.

Perhaps you mean they buy an option rather than a hedge, options are very expensive as someone else is taking the risk.

I know someone who bought a property in CH using pounds, they hedged & the hedge has cost 2,500,000 to date. The CHF asset has increased by 2,500,000 so it nets off as he owns both assets.

You can't hedge against exposure you don't know about.

I think you two have got the wrong end of the stick here. Please read the information about the card and how it works before you start commenting on things you don't know about.

I'm not talking about somebody buying something in Zimbabwe dollars and the credit card operator (MasterCard in this case) charging the card holder in one of the three currencies at interbank rate and having to pay the merchant in Zimbabwe dollars, where you guys think there is no exposure and I would agree with you to acertain extent. Because there is no exposure to Revolut as all of that background stuff is delegated to Mastercard and they just get their fee based on volume. (Mastercard of course have an FX exposure as they charge the customer in one currency and have to pay the merchant in another currency so at some point they have to buy the Zimbabwe dollars for a rate that might be different to that that they charged the customer, incidently I believe Mastercard get around this by charging the card holder at a rate that they can secure a hedge against once all of their positions have been consolidated for the day / given interval. Mastercard publishes these rates from day to another and card issuers can add a mark up to these rates which Revolut doesn't and call it interbank)

Anyway going back to the point I was making, Revolut operate this new concept where you hold three different currencies where you are able to convert money between the three different pairs at interbank rate throughout the day. Revolut is a tech company with no ability to do any financial transactions so the process of exchanging money is delegated to the card issuer Optimal Payments Ltd (which is behind Neteller and a similar Credit Card they operate). Optimal Payments Ltd is the one managing these positions / hedging processes. When I exchange 100 to EUR at a specific point in time, the counter party givng me the EUR is Optimal Payments. They take the opposite side of the trade and do this kind of thing with god knows how many customers, at some point though they have to hedge the exposure to the positions they will invariably build up in one of the currencies.

Think of it like this, Optimal Payments have three pots of GBP, USD and EUR, as the customers exchange money those pots will go up and down and at given interval Optimal Payments will want to go back to the orginal three pots of money that they started off with. How do they do that? Well they have to enter a trade in the opposite direction of the net long / short currency that they find themselves with. This "hedging process" is not free and the exposure is there. If you two can't see it then hopefully you do now ;)

fatmanfilms 19.09.2015 20:00

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by The_Love_Doctor (Post 2452164)

Think of it like this, Optimal Payments have three pots of GBP, USD and EUR, as the customers exchange money those pots will go up and down and at given interval Optimal Payments will want to go back to the orginal three pots of money that they started of with. How do they do that? Well they have to enter a trade in the opposite direction of the net long / short currency that they find themselves with. This "hedging process" is not free and the exposure is there. If you two can't see it then hopefully you do now ;)

Why would Optimal hold any pots for themselves & want to get back to what they had? They are just executing deals for their clients as far as I can see so no need to hedge anything as they have no skin in the game themselves. It's clients own funds that get transferred at interbank rates.

So client cash is held by Barclays, I doubt there is any depositors protection, well possibly 100k euro split between everyone.

FX transactions are not regulated, which is why punters get ripped off at airports.

The_Love_Doctor 19.09.2015 21:28

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by fatmanfilms (Post 2452169)
Why would Optimal hold any pots for themselves & want to get back to what they had? They are just executing deals for their clients as far as I can see so no need to hedge anything as they have no skin in the game themselves. It's clients own funds that get transferred at interbank rates.

So client cash is held by Barclays, I doubt there is any depositors protection, well possibly 100k euro split between everyone.

FX transactions are not regulated, which is why punters get ripped off at airports.

One entity or another will have an exposure to these customer FX transactions. The entity taking on the exposure will not take the exposure for no premium. That premium has to be passed on to the customer one way or another.

At this point in time it's not clear who is taking the exposure of the fx transactions between the three currencies. And when they say that they do it at interbank at no additional cost it seems a bit too good to be true hence my call for caution.

Now let's not get too worked up over this shall we ;)

fatmanfilms 19.09.2015 21:43

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by The_Love_Doctor (Post 2452216)
One entity or another will have an exposure to these customer FX transactions. The entity taking on the exposure will not take the exposure for no premium. That premium has to be passed on to the customer one way or another.

At this point in time it's not clear who is taking the exposure of the fx transactions between the three currencies. And when they say that they do it at interbank at no additional cost it seems a bit too good to be true hence my call for caution.

Now let's not get too worked up over this shall we ;)

The customer is taking the risk as far as I can see, with no compensation arrangements counterpart risk as well..

Goodwill increased by 175 million USD for the year now totalling 230 Million USD, profits for the year 57 million. Could easily be bankrupt with a write down on goodwill alone. Not sure I would want to hold significant funds with them.

poot 21.09.2015 12:31

Re: Multi Currency Credit Card
 
What a good concept- I have signed up and funded my account already with a trial 10. Not sure if there'll be a problem as I funded from a UK account but my Revolut account is held with my Swiss address details etc, but it got added to the account ok.

I shall be using this to spend and withdraw cash in the eurozone, shopping trips to Germany, long weekends in Italy etc.

Agree that I wouldn't want to have significant funds with them, but it certainly seems to fill a great gap in the market: I've been thinking for a while about a better solution for both shopping in eurozone and general worldwide travelling, and this seems to be it!

ChrisNeedsToKnow 21.09.2015 13:12

Re: Multi Currency Credit Card
 
Just found the same concept on www.weswap.com

They charge the customer a percentage for loading the card, and obvisouly also get a cut on the merchant's side.

Interesting: If you manage to refer "5 friends this summer" (whatever that means in detail), the percentage on the customer's side is dropped "for life".

Now, usually I wouldn't bother, but 2 details make this interesting:
  • they seem to have their fees at a final stage, so less prone to increases
  • they offer CHF as a holding-currency (however, it's not possible to charge in CHF)
Drawback: It's not possible to unload the card by default

Ill stick to Revolut for now - unless 5 people want an invitation for weswap ;)

The_Love_Doctor 21.09.2015 13:42

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by ChrisNeedsToKnow (Post 2452980)
Just found the same concept on www.weswap.com


Similar concept but not that same. The money exchange is peer-to-peer with Weswap whereas with Revolut they don't really say which leads me to think that they're somehow running the FX book or delegating it to the card issuer (Optimal Payments) or MasterCard or Barclays which holds customer funds.

For the sake of completeness / comparison purposes I also came across the following similar concepts:

- Number26 (Apparently only open to Germans and Austrians at the minute)
- And of course Neteller + Plastic which is operated by the same company Optimal Payments.

ChrisNeedsToKnow 21.09.2015 13:53

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by The_Love_Doctor (Post 2453003)
- Number26 (Apparently only open to Germans and Austrians at the minute)

I opened this using my sister's address in Germany.

They didn't want any proof of address, I just had to show my ID during an authorisation-videoconference.

It's effectively a free checking account with associated credit card. Everything is EUR based, fx transactions are converted at the time they're incurred.

Paying and withdrawing cash is free, worldwide, at mean fx-rates (at least that's what they say, I didn't try).

No interest is paid, so balances and mastercard-revenue is their only source of income. However they intend to become a "real" bank at some stage.

Their internetbanking has some interesting features, which I always wondered why they don't exist with established banks: For any transaction on the account there's a "note" box, allowing to write something into it and also change it later. Its a text box for customer's own use and not sent with the transfer in any way. Great idea.

I guess if you want to have a normal German current account, this could be a solution if DKB refuses you for unknown reasons.

As for me: I just opened it for curiosity's sake. Not sure what to do with this now. If the balance remains at zero, will I have to declare this account?

Phil_MCR 21.09.2015 13:59

Re: Multi Currency Credit Card
 
customer has a $ card. buys something costing 6 zorks. 6 zorks is $60 at the time of the transaction, so seller gets paid the 6 zorks and buyer owes $60 on his card. only outstanding transaction is for the buyer to pay off his card.

no other exposures and no need for hedging. easy-peasy. why try to imagine another scenario to complicate things when you can do it the easy way?

The_Love_Doctor 21.09.2015 14:07

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by Phil_MCR (Post 2453021)
customer has a $ card. buys something costing 6 zorks. 6 zorks is $60 at the time of the transaction, so seller gets paid the 6 zorks and buyer owes $60 on his card. only outstanding transaction is for the buyer to pay off his card.

no other exposures and no need for hedging. easy-peasy. why try to imagine another scenario to complicate things when you can do it the easy way?

I've made post #47 as idiot-proof as possible. If you don't get it that's not really my problem. :rolleyes:

ChrisNeedsToKnow 21.09.2015 14:26

Re: Multi Currency Credit Card
 
Don't want to interrupt your friendly exchanges, but I think yee are talking about 2 different issues / possible exposures:
  • #1 is all one currency:
  • Customer pays "x". As a result the creditcard company owes the merchant "x", while the client owes "x" to the creditcard company. (ignoring respective margins)
  • Possible exposure: The client doesn't pay up.
  • For Revolut this risk doesn't exist, as the card is strictly credit based.
  • #2 is the fact that the client can, in the case of Revolut, fx his balance between currencies, and even more so even intraday.
  • The customer might fx USD to GBP in the morning, GBP to EUR around noon, and completing the circle from EUR to USD in the evening.
  • Should he have done this with good timing, the customer might have more USD on his account than in the morning. Someone must bear this gain as a loss.
I guess the answer to #2 is that "optimalpayments" provide their services to quite a bunch of Fintechs, so really they will always have demand of most currencies in most directions, so they can offset one demand against another. Id imagine them as combining peer-to-peer exchange demands in such big amounts, that they can live purely off the interest made by holding those funds, and/or of a markup on the 4th digit after the dot (0.000x).

Should above be correct, it's also obvious who bears the imaginatory loss as per above: Whoever peer-to-peerd the other way.

The_Love_Doctor 21.09.2015 15:39

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by ChrisNeedsToKnow (Post 2453046)
  • #1 is all one currency:
  • Customer pays "x". As a result the creditcard company owes the merchant "x", while the client owes "x" to the creditcard company. (ignoring respective margins)
  • Possible exposure: The client doesn't pay up.
  • For Revolut this risk doesn't exist, as the card is strictly credit based.
  • #2 is the fact that the client can, in the case of Revolut, fx his balance between currencies, and even more so even intraday.
  • The customer might fx USD to GBP in the morning, GBP to EUR around noon, and completing the circle from EUR to USD in the evening.
  • Should he have done this with good timing, the customer might have more USD on his account than in the morning. Someone must bear this gain as a loss.
I guess the answer to #2 is that "optimalpayments" provide their services to quite a bunch of Fintechs, so really they will always have demand of most currencies in most directions, so they can offset one demand against another. Id imagine them as combining peer-to-peer exchange demands in such big amounts, that they can live purely off the interest made by holding those funds, and/or of a markup on the 4th digit after the dot (0.000x).

Should above be correct, it's also obvious who bears the imaginatory loss as per above: Whoever peer-to-peerd the other way.

Thank you for summarising it so succinctly and sticking to the known facts! ;)

Phil_MCR 21.09.2015 15:49

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by ChrisNeedsToKnow (Post 2453046)
Don't want to interrupt your friendly exchanges, but I think yee are talking about 2 different issues / possible exposures:
  • #1 is all one currency:
  • Customer pays "x". As a result the creditcard company owes the merchant "x", while the client owes "x" to the creditcard company. (ignoring respective margins)
  • Possible exposure: The client doesn't pay up.
  • For Revolut this risk doesn't exist, as the card is strictly credit based.
  • #2 is the fact that the client can, in the case of Revolut, fx his balance between currencies, and even more so even intraday.
  • The customer might fx USD to GBP in the morning, GBP to EUR around noon, and completing the circle from EUR to USD in the evening.
  • Should he have done this with good timing, the customer might have more USD on his account than in the morning. Someone must bear this gain as a loss.
I guess the answer to #2 is that "optimalpayments" provide their services to quite a bunch of Fintechs, so really they will always have demand of most currencies in most directions, so they can offset one demand against another. Id imagine them as combining peer-to-peer exchange demands in such big amounts, that they can live purely off the interest made by holding those funds, and/or of a markup on the 4th digit after the dot (0.000x).

Should above be correct, it's also obvious who bears the imaginatory loss as per above: Whoever peer-to-peerd the other way.

I agree with you. For the #2 risk, I expect they should be able to net off demand. where they have to get external funds, presumably the cost of getting it externally is the price the customer pays (perhaps with mark-up).

The_Love_Doctor 21.09.2015 16:10

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by Phil_MCR (Post 2453104)
I agree with you. For the #2 risk, I expect they should be able to net off demand. where they have to get external funds, presumably the cost of getting it externally is the price the customer pays (perhaps with mark-up).

But they do it for FREE! Which brings us full circle! How do they do it?

*** RANT ALERT ***
There you go, next time read the previous posts before you start disagreeing with people. Most of the times you are right on the money, this time it's disappointing to see you post without understanding what the product is and what others have said before and then post to say that you agree with another post that says exactly what I said a few posts earlier.

*** END RANT ***

Phil_MCR 21.09.2015 16:42

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by The_Love_Doctor (Post 2453129)
But they do it for FREE! Which brings us full circle! How do they do it?

because the customer pays for it?

fatmanfilms 21.09.2015 16:44

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by The_Love_Doctor (Post 2453129)
But they do it for FREE! Which brings us full circle! How do they do it?

*** RANT ALERT ***
There you go, next time read the previous posts before you start disagreeing with people. Most of the times you are right on the money, this time it's disappointing to see you post without understanding what the product is and what others have said before and then post to say that you agree with another post that says exactly what I said a few posts earlier.

*** END RANT ***

Nobody ever does anything for free, do you believe in Father Christmas too?

Phil_MCR 21.09.2015 16:48

Re: Multi Currency Credit Card
 
Not sure what is complicated. Whatever the customer pays, will be at least what the company pays. I'm not sure why you assume that the company gets currency at a certain rate and then charges the customer less than that. It doesn't make sense.

The_Love_Doctor 21.09.2015 17:17

Re: Multi Currency Credit Card
 
You guys are having me on right? :D


Quote:

Originally Posted by fatmanfilms (Post 2452012)
It your getting a live rate, that's what your getting, they are not hedging as would cost money. If the demand is not there, the price falls that's how a market works.

Quote:

Originally Posted by The_Love_Doctor (Post 2452034)
Here we go fatman is back! ;)
Do you know they're not hedging or do you want to qualify that with something like "In my opinion"??


Quote:

Originally Posted by The_Love_Doctor (Post 2452164)
I think you two have got the wrong end of the stick here. Please read the information about the card and how it works before you start commenting on things you don't know about.


Quote:

Originally Posted by The_Love_Doctor (Post 2452164)
Think of it like this, Optimal Payments have three pots of GBP, USD and EUR, as the customers exchange money those pots will go up and down and at given interval Optimal Payments will want to go back to the orginal three pots of money that they started off with. How do they do that? Well they have to enter a trade in the opposite direction of the net long / short currency that they find themselves with. This "hedging process" is not free and the exposure is there. If you two can't see it then hopefully you do now ;)

Quote:

Originally Posted by The_Love_Doctor (Post 2452216)
One entity or another will have an exposure to these customer FX transactions. The entity taking on the exposure will not take the exposure for no premium. That premium has to be passed on to the customer one way or another.

Quote:

Originally Posted by fatmanfilms (Post 2453163)
Nobody ever does anything for free, do you believe in Father Christmas too?

No 5h!t! Sherlock! :rolleyes:

Quote:

Originally Posted by Phil_MCR (Post 2453168)
Not sure what is complicated. Whatever the customer pays, will be at least what the company pays.
.

That's what I've been bloody saying all along!

Quote:

Originally Posted by Phil_MCR (Post 2453168)
I'm not sure why you assume that the company gets currency at a certain rate and then charges the customer less than that. It doesn't make sense.

What on earth makes you think I assumed that??? I am just saying that they do this for free for now, at least for the first 12 months! Because that's what they say they do! And that is why I was advising caution because if something sounds too good to be true then it probably is.

These guys are either taking a loss on purpose for promotional purposes and will eventually raise their fees after the promotional period ends or simply doing this for no additional mark up to the customer hence making this a very attractive product!

What the hell is happening on this forum! :eek:

Phil_MCR 21.09.2015 17:29

Re: Multi Currency Credit Card
 
:D

Quote:

Originally Posted by Phil_MCR (Post 2453168)
Whatever the customer pays, will be at least what the company pays.

Quote:

Originally Posted by The_Love_Doctor (Post 2453190)
That's what I've been bloody saying all along!

Quote:

Originally Posted by Phil_MCR (Post 2453168)
I'm not sure why you assume that the company gets currency at a certain rate and then charges the customer less than that. It doesn't make sense.

Quote:

Originally Posted by The_Love_Doctor (Post 2453190)
What on earth makes you think I assumed that?

Because you then say this:

Quote:

Originally Posted by The_Love_Doctor (Post 2453190)
These guys are either taking a loss on purpose

I'm saying the company doesn't incur a loss.

The_Love_Doctor 21.09.2015 17:38

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by Phil_MCR (Post 2453200)
I'm saying the company doesn't incur a loss.

I'm pretty sure the company doesn't set out to make a loss but... they will incur a loss if their costs of doing business are more than their net revenues.

The fact that they themselves hint at increasing fees in the future indicates that they might be doing things at a loss (at least for the time being) to gain market share.

ChrisNeedsToKnow 21.09.2015 17:42

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by Phil_MCR (Post 2453160)
because the customer pays for it?

Quote:

Originally Posted by Phil_MCR (Post 2453200)
I'm saying the company doesn't incur a loss.

If the company does NOT incur a loss, then why does the customer pay for it (which he doesn't because it's free?)

-->
I think we all agree that
  • the company does something (fx-ing client's funds),
  • for which the company might incur costs(?)
  • but does NOT (obviously) charge its customers at present.
So we are looking to answer:
  1. does the company actually NOT incur a loss OR
  2. do they actually charge customers in some sort of hidden way OR
  3. do they not charge customers now (for whatever reason), but will try to change their fees at a later stage
I think we're all talking about the same thing, just from different perspectives.

Phil_MCR 21.09.2015 18:24

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by ChrisNeedsToKnow (Post 2453205)
If the company does NOT incur a loss, then why does the customer pay for it (which he doesn't because it's free?)

-->
I think we all agree that
  • the company does something (fx-ing client's funds),
  • for which the company might incur costs(?)
  • but does NOT (obviously) charge its customers at present.
So we are looking to answer:
  1. does the company actually NOT incur a loss OR
  2. do they actually charge customers in some sort of hidden way OR
  3. do they not charge customers now (for whatever reason), but will try to change their fees at a later stage
I think we're all talking about the same thing, just from different perspectives.

1. It doesn't incur a loss on FX
2. Yes
3. Who knows in the future, but they shouldn't need to.

The company probably does make a loss now due to overheads and not yet having scale.

Phil_MCR 21.09.2015 18:27

Re: Multi Currency Credit Card
 
p.s. The Post Office also has zero commission FX. That's also FREE. :D

The_Love_Doctor 21.09.2015 20:05

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by Phil_MCR (Post 2453227)
1. It doesn't incur a loss on FX
...............

The company probably does make a loss now due to overheads and not yet having scale.


The mind ****ing boggles!

So you basically have no idea but you state your opinions as if they were fact just to winde people up. Ok got it! My bad for taking you seriously!

Phil_MCR 21.09.2015 20:37

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by The_Love_Doctor (Post 2453276)
The mind ****ing boggles!

So you basically have no idea but you state your opinions as if they were fact just to winde people up. Ok got it! My bad for taking you seriously!

you can have no loss on the fx deal, but the company being in a loss position overall. not unusual when starting up. as i said. overheads and scale.

EDIT: to spell it out since this basic point is apparently not so easy to grasp. a 0.001% FX margin means profit on the FX deal, but with 100k office rent, you need sufficient scale for the fixed costs to be absorbed.

The_Love_Doctor 21.09.2015 22:42

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by Phil_MCR (Post 2453288)
you can have no loss on the fx deal, but the company being in a loss position overall. not unusual when starting up. as i said. overheads and scale.

EDIT: to spell it out since this basic point is apparently not so easy to grasp. a 0.001% FX margin means profit on the FX deal, but with 100k office rent, you need sufficient scale for the fixed costs to be absorbed.

All that matters on the FX side is FX-RISK and PREMIUM. The rest is just common business sense.

What you don't seem to grasp is the RISK associated with allowing customers to change money at interbank rates for no appatent PREMIUM.

But let's not go around in circles. You just seem to think that this company have fully mitigated the FX-RISK somehow. Fair enough, I am just curious how they do that without affecting their bottom line. If you know how please enlighten us if you don't then please keep your business studies lectures to yourself.

poot 21.09.2015 23:44

Re: Multi Currency Credit Card
 
Update:

-Just made a purchase via paypal with the Revolut credit card; worked a dream.

-The card is registered in Switzerland. Have loaded the card twice from my UK-based VISA debit card, both without problems.

-A direct purchase on a UK-based site (delivery to UK, billing to my Swiss address where the card is registered) didnt work. But then again, I tried the purchase with my UK-based VISA debit, incl delivery to the same UK address where it's registered, and that also didnt work, so could have been something at the retailer side.

newtoswitz 22.09.2015 08:23

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by The_Love_Doctor (Post 2453352)
All that matters on the FX side is FX-RISK and PREMIUM. The rest is just common business sense.

What you don't seem to grasp is the RISK associated with allowing customers to change money at interbank rates for no appatent PREMIUM.

But let's not go around in circles. You just seem to think that this company have fully mitigated the FX-RISK somehow. Fair enough, I am just curious how they do that without affecting their bottom line. If you know how please enlighten us if you don't then please keep your business studies lectures to yourself.

You're making plenty of snarky comments to others without actually explaining - why exactly is there FX-RISK?

They are not investing the funds, they don't care whether they go up or down relative to any other currency while they are in the holding account.

They seem to have enough backing to obtain the interbank rate, so there's no significant spread.

They are fully in control of the timing - they don't promise to match the rate precisely at the point of sale, only at the point of conversion in the account.

Phil_MCR 22.09.2015 08:32

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by newtoswitz (Post 2453415)
You're making plenty of snarky comments to others without actually explaining - why exactly is there FX-RISK?

They are not investing the funds, they don't care whether they go up or down relative to any other currency while they are in the holding account.

They seem to have enough backing to obtain the interbank rate, so there's no significant spread.

They are fully in control of the timing - they don't promise to match the rate precisely at the point of sale, only at the point of conversion in the account.

Indeed.

Which takes us all the way back to my first comment:

Quote:

Originally Posted by Phil_MCR (Post 2452043)
if they have no exposure, then they have no requirement to hedge and so won't incur any hedging costs. simples.


The_Love_Doctor 22.09.2015 09:42

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by newtoswitz (Post 2453415)
You're making plenty of snarky comments to others without actually explaining - why exactly is there FX-RISK?

I have explained it at length in post #47

And Chris has summarized it nicely 10 posts later see: post #57

Quote:

Originally Posted by newtoswitz (Post 2453415)
They are not investing the funds, they don't care whether they go up or down relative to any other currency while they are in the holding account.

I never said anything otherwise regarding this. In fact as pointed out they probably earn a nice little bit of interest even though that's hardly worth talking about right now.

Quote:

Originally Posted by newtoswitz (Post 2453415)
They seem to have enough backing to obtain the interbank rate, so there's no significant spread.

They are fully in control of the timing - they don't promise to match the rate precisely at the point of sale, only at the point of conversion in the account.

They might have access to interbank FX rates. But bear in mind that there are minimum sizes (you can't just trade 100 @ interbank rate)

I'm talking about trading against the major Banks that provide liquidity in the major currency pairs / crossers.

So what does Revolut or whoever they feed the trades to do given that, I believe, they can not trade against the major bank for small sizes, they of course have to have an internal matching book, matching customer flow one against another @ interbank rates without feeding them externally.

In low periods of liquidity they just have to take the other side of the trade which leads to building a position in one currency or another.

When a significant position is built up they have to cross it externally.

This mechanism has inherent FX-RISK it's not bad, they just need to manage it well, managing it well means overheads which translates to costs that we all agree has to be passed on to the customer.

I think we have to leave it at this. This thread has been derailed too much already.

This is a good product offering convenience for people who otherwise would have to open a USD account, GBP account and EUR account which do not charge any commission and which do not mark up FX rates.

How do they do it? Let's just think of it as a magic box shall we. It just works, there are no risks and everyone should just get it and put all their money into it. :msnsarcastic:

ChrisNeedsToKnow 22.09.2015 11:16

Re: Multi Currency Credit Card
 
So I wanted to test the physical card by paying something random.

I entered my PIN, which I changed into one that I can surely remember.

1st try: Wrong PIN
2nd try: Wrong PIN

Contacted support before messing everything. I was advised to log out of the app, and then log in again, as this triggers a full update of everything, including PIN.

Done that. Next & last try: Wrong PIN!

Literally 5 seconds later support chats to me: Your PIN is blocked. Give me
  • DOB
  • address and
  • the info when and how and in what amount the last top-up happened
This supposedly unblocked the PIN again - will check later today if it finally works now.


One detail, however, is totally illogical. I mentioned it to the support guy, I hope it's relayed to someone who can deal with this:
  • As a security measure, they asked for information of which 100% can be seen in the app: DOB & address can be seen under "profile", the info when the last top-up happened can be found in the account history.
  • The immediate answer of the support agent to my objection was: "We have to verify if it's really you, what if someone steals your passcode"
  • Well - if someone steals my passcode the same person can see all information directly in the app, as per above, so this is not security, it's more like an idiocy-test.

The_Love_Doctor 22.09.2015 12:04

Re: Multi Currency Credit Card
 
I did the same and bought my lunch with it. I didn't change my pin in case I have the same problem.

The money was taken out from the GBP balance as expected since it's the biggest balance and I have no USD.

The transaction happened at 11:47 and the interbank trades were happening around 1.5057 for the GBPCHF crosser. The app recorded 1.5046 so around 10pips mark up which is peanuts for such a small transaction.

All in all very satisfied! A few wrinkles to iron out but this will be sorted out with time and a bit of patience from customers.

fatmanfilms 22.09.2015 13:48

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by The_Love_Doctor (Post 2453551)
I did the same and bought my lunch with it. I didn't change my pin in case I have the same problem.

The money was taken out from the GBP balance as expected since it's the biggest balance and I have no USD.

The transaction happened at 11:47 and the interbank trades were happening around 1.5057 for the GBPCHF crosser. The app recorded 1.5046 so around 10pips mark up which is peanuts for such a small transaction.

All in all very satisfied! A few wrinkles to iron out but this will be sorted out with time and a bit of patience from customers.

Possibly they just made a trade at 'best', prices change by the second a minute is a long time & many trades will take place at different prices during that minute, so they may or may not be doing what they say you will never know.

If they are taking positions they will likely go bankrupt.

The_Love_Doctor 22.09.2015 14:10

Re: Multi Currency Credit Card
 
Quote:

Originally Posted by fatmanfilms (Post 2453636)
Possibly they just made a trade at 'best', prices change by the second a minute is a long time & many trades will take place at different prices during that minute, so they may or may not be doing what they say you will never know.

I checked all quotes between 11:46:00 and 11:47:59 on Bloomberg and the consolidated offer was never below 1.5053 with a high of 1.5059. It doesn't take a genius to figure out that they're taking the other side of the trade.

Any market order or "at best" as you put it in the interbank market wouldn't have been filled for below 1.5053. and in any case they're not gonna put a market order for a sandwich from Migros in the live FX market.

Anyway it looks like I made a tidy profit as the quote is now 1.5035 ;)

Quote:

Originally Posted by fatmanfilms (Post 2453636)
If they are taking positions they will likely go bankrupt.

As I said before taking the other side of customer trades is not a bad thing. They just need to manage their risk well.


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