An brief analysis of currency cloud — their services, their shortcomings and how it can be improved upon

Currency Cloud Synopsis“Powering global payments”

What they do? 

They move money. You send the consolidated funds to a currency cloud bank account and you give them the instruction to distribute those funds to accounts with an identifier like iban etc.   

They give you an option to “block” FX rates for a certain period of time so that if the funds arrive within that time the “blocked” rate will be used for currency exchange. This adds a layer of predictability when the funds are being moved between accounts of different currencies. 

How they do it? 

  • All operations are api based. You “book” distributions by making certain http calls from your application. 
  • They have a muticurrency checking account for international payments with Barclays bank that can be used to internally exchange money on mid market rates. 

Who are their customers? 

Financial institutions like fidor and mediterranean bank. Telcos like Lebara.  Travel companies like evaneos. Innovative payment solutions like mangopay, revolut etc. 

Where they lack? 

The biggest problem with currency cloud is that the money must be manually moved to their bank account. Which means that you must instruct your bank to send money to currency cloud account just so that they can distribute it to your clients. And this must be done over and over again. Every time you need to move money. 

This is good when your clients are banks themselves but when it’s businesses who have no control/ contact with their institution, this concept falls flat. How do you go about instructing your bank to send funds to currency cloud’s account? How do you make sure that the payments arrive on time to make effective use of “blocked rates”? What happens when the receiver’s details are invalid?  Tighter control over wealth management and distribution is needed. 

Further, there’s an over reliance on protocols.  Currency cloud is now focussing its efforts in making its services more in tune with different protocols. They want it to be compliant with CHAPS with ACH and with thousands of others. This is a recipe for disaster. I believe that it is the transferwise effect. 

There’s a bit of history here. Transferwise was once a currency cloud client. They have since moved on from them and become bigger than currency cloud themselves. A lot of funding is being poured into them by the investors. Their strategy is to partner with banks from around the globe and create a pseudo RTGS central bank so that money can be moved around quickly. That’s what currency cloud is going after as well now. 

All you need for an international money mover is to be SWIFT compliant. Keeping things simple is way better that trying to do everything. 

Our solution

However there is an alternative. Big banks already have a global network. The movement of money within this banking network is fast, cheap and efficient. We can build a more focussed product by concentrating our efforts on onboarding businesses directly to the existing banking networks instead of creating new networks for money movement altogether. 

Multicurrency accounts for accepting payments in multiple currencies. Client monies for managing payments of customers. SWIFT for disbursements. 

All exposed through a currency cloud like api. Without the hassles of dealing with regulations , protocols and the pain of partnering with banks. 

We are working on a level lower than currency cloud and hence we can build a much better solution with much less resources. Protocols change. What we are proposing won’t. 

Category

Posted

  • On January 26, 2020