We all love vacations, but there’s one part of your holiday that’s always horrible – exchanging currency.
This post ’Waze for currency exchange’ will stop travelers getting ripped off appeared first on Tech in Asia.
Common sense tells us to avoid exchange outlets at obvious places such as airports or hotels. In fact, the dingier the currency exchange booth, the better its rate. There’s nothing more annoying than exchanging a large amount of cash for the local currency just to discover an outlet with significantly better rates just around the corner. We like our vacations and we like them cheap. And it’s best if it stays that way.
That’s the problem Currenseek aims to solve. The startup helps travelers locate the best exchange rates close to them and avoid getting ripped off by crafty moneylenders. Through Currenseek’s mobile app, tourists can see updated, real-time information on current exchange rates as well as locate outlets closest to them.
Amir Haghbin, co-founder of Kuala Lumpur-based Currenseek, says the idea behind the app came during his student days when he was looking to exchange a large amount of US dollars to Malaysian Ringgit. He noticed a huge disparity from one exchange outlet to another and asked his local friends to recommend a place where he could find the best rate.
Acting on their advice, he drove to a shopping mall and spent about an hour researching the rates offered by different kiosks. Satisfied by his thorough research, Amir proceeded to an outlet that had the best rate. There was a large queue of travelers waiting patiently for their turn – which further validated his decision to trust this money changer.
Amir spent about 20 minutes in line. But he didn’t mind the wait as he thought he was saving a significant amount of cash. After the transaction was over, he went back to his car. It was then when Amir spotted a small currency exchange outlet located inconspicuously inside a small convenience store. Out of curiosity he took a peek at the rates, and, to his horror, saw that the rates were much better than the ones he had got. And there was no queue either.
"My excitement turned sour," recalls Amir. "I realized I wasted almost two hours of my time for nothing and I got ripped off for more than 100 ringgit." That’s more than US$20. "It was even more depressing when I found out the money changer was prepared to offer me a better rate because I was carrying a large amount of USD."
But, as they say, behind every failure lies opportunity. Amir knew he wasn’t the only one looking for good exchange rates. "I wondered if there was an app which helped point people in the right direction. After all, there are apps for restaurants, events, and tourist spots. Why not for currency exchange?" he asks.
Amir claims he searched on both the iOS and Google Play stores, as well as on the web, but couldn’t find what he was looking for. The closest products were free currency exchange apps that would display the existing interbank conversion rate, but nothing more. "These rates are useless for travelers as they’re reserved for banks, institutions, and professionals dealing in millions of dollars at a time. They’re not applicable for currency exchange outlets operating on the ground," explains Amir.
Slowly, it dawned upon him that there was opportunity and a real problem waiting to be solved. He discussed the idea with co-founder Hakim Karim and both of them decided to do more research to validate the model.
More bang for the buck
What the entrepreneurs discovered was fascinating. Currency exchange outlets operate in a very unsophisticated way, much like most brick-and-mortar retailers. To make money, they simply buy low and sell high. The rates offered depend on factors like salaries, overheads, rent, and the location of the outlet. Money changers in prominent locations inevitably attract more customers and have higher volumes – but generally don’t offer the best rates. The difference between currency exchange stores is stark.
"In an analysis of 25 money changers located in a tourist-friendly spot of Kuala Lumpur, there was widespread volatility in exchange rates. For tier-1 currencies such as the US Dollar, Singapore Dollar, and Euro, the disparity can be as much as 5 to 10 percent within a very small area. For tier-2 currencies such as the Indonesian Rupiah, Korean Won, and Taiwanese Dollar, the disparity can be up to 25 percent," says Amir.
Hakim says this problem isn’t restricted to Malaysia. During a recent trip to Krabi, Thailand, he noticed a price disparity of 200 percent in the case of the Korean Won. "It’s possible for travelers to get only a third of what they’re entitled to. And the worst part is that they’re usually not even aware of it," he explains.
Crowdsourcing to success
It took the entrepreneurs nine months to through the idea, research, market validation, and product launch stages. Currenseek is funded by Cradle Funds, a Malaysian government agency which helps pre-seed startups come up with an MVP. But how exactly does it monitor exchange rates, particularly when they’re so volatile?
"We have a number of different methods, and crowdsourcing is one of them," explains Hakim. "It’s much like Waze in this respect. Everyday people are providing rates to us, and we encourage them to do so. Money changers also provide information, and we do our own quality control checks. The whole process of how we collect and scrub the data is part of our secret sauce."
Information about exchange rates is only available in Kuala Lumpur right now, but Amir says they’re eager to expand into other cities. Funding is a problem inhibiting growth, so the entrepreneurs are in talks with angel and institutional investors to take the startup to the next level.
Hakim says Currenseek will remain free-to-use but there are plans to bring in revenue from it. "The online travel space is mainly referral-based. We’re trying to appeal to price conscious, savvy travelers who want to find a good deal. As traction builds we’ll find more things to sell them."
Hakim also offers a word of advice for tourists coming to Asia. "People don’t know this, but you can actually negotiate the rate with exchange outlets. We’ve had Currenseek users who’ve seen a better rate in a different part of the city, and used that information to bring the rate down," he adds.
Cover image by epSos.de