The Curious Case of Online Forex Startups

Being a start-ups enthusiast, I am never afraid to use services of start-ups who offer to make life simpler. Few days back I was helping my younger brother with an international trip. Air Tickets & hotels are never a problem but procuring foreign exchange was the biggest pain point of the trip. As there is no real benchmark for what the real transactable rate is!

Most of you would feel what’s there in forex that there is so much to be worried about. We live in Bangalore and we decided to check to figure out the foreign exchange a week before by going to commercial street. We asked one shop owner; he provided us with one rate and my brother asked around – he was getting it cheaper by 5 paisa.

Once we figured out that there is no limit of bargaining, we were just going around here & there and it was like haggling & hassling with the money changers for more & more. One of the shops undercut the others and said, “I will give you 1 rupee cheaper but no bill!” Quite alarming on such huge discrepancy we thought of doing some more research.  

A few of my colleagues suggested Banks but I thought of checking out the new breed of “Foreign Exchange Aggregators”.  Now this was interesting as there are three big players in this space – Fxkart.com, Bookmyforex.com & Nafex.com

I gave my forex requirement on all of them but finally got it done from one.

Fxkart.com

The newest kid on the block with $ 2 Million funding in 2015 and were very transparent in what rates are being offered + taxes + delivery charges if any. Interface was ok but service and last mile delivery was on time. They are incorporated in Dubai but operate in India out of their R&D office in Bangalore.

• Exchange Rates – 9/10
• Transparency – 9/10
• Home Delivery Options & costing – 8/10
• Overall Service & Experience – 8.5/10

Bookmyforex.com

Based out of Delhi and have been in the business for quite a while. They raised $2 Million recently and offer competitive rates. I requested for a call back and no one called back till date 

• Exchange Rates – 9/10
• Transparency – 7/10
• Home Delivery Options & costing – 8/10
• Overall Service & Experience – 8/10

Nafex.com

Based in Bangalore, they follow the classic connection business. You give your requirement on their site, they call you back and patch you with the dealer on the call. But the problem with them was that they showed one rate and the dealer was offering a higher rate. They clarified that the IBR moved up!

• Exchange Rates – 7/10
• Transparency – 7/10
• Home Delivery Options & costing – 7/10
• Overall Service & Experience – 7/10

How I got to the ratings –

• Exchange Rates – The rates seemed to move with market rate changes and weren’t static through the whole day. Which gave me an opportunity to capture a rate when the market seemed down.
• Transparency – Apart from Fxkart.com, where I could see the “The Nearest Rate”, “The Cheapest Rate” & the rate for “Home Delivery” none of the other aggregators gave this view. Example – I stay in Whitefield & incidentally I was in Commercial Street, so I could have got a better deal. But for a person who is in Whitefield giving him the best rate in the city doesn’t make any sense unless it is in his locality. Also, I felt other aggregators didn’t give me a sense of exactly how much I had to pay for tax + home delivery and that is the reason my ratings have varied & being money for money unless I knew what was coming, I was bound to be a bit cautious. 
• Home Delivery Options & costing – The good part about this industry is that money changers deliver on behalf of aggregators i.e the Food Panda model. But all these companies have to crack a better model to keep the customer interested as we have to interact with the money changer & the call center of the aggregator.
• Overall Service & Experience – I wish to have a seamless experience from checking the best rate to booking it to exchanging it. The more transparent it is the better it is as I don’t mind paying that 150/- extra for delivery but please tell that to me upfront.  

The good thing about these aggregators is that the foreign exchange requirement is going up with more & more Indians travelling abroad or remittances abroad. But all these start-ups are working with the same money changers and they have different ways they deal with each of them.

These start-ups also have to put up a huge effort in terms of educating the consumer first to use their services rather than blowing up all their cash in advertising & marketing! It just feels that while these start-ups are solving a problem but will the unit economics sit for them as I understand that the margins in the forex industry is wafer thin! Hope they don’t suffer the same fate as of the food delivery start-ups or will it be one winner in this market, will have to wait and watch. 

P.S – This was more of a personal experience and could be different for different people. Have rated them based on my interactions with these start-ups a week before. Also not associated with any of these startups!

You can tweet to me on @avinash4dvg