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A bureau de change (plural bureaux de change, both ) (
British English British English (BrE, en-GB, or BE) is, according to Oxford Dictionaries, "English as used in Great Britain, as distinct from that used elsewhere". More narrowly, it can refer specifically to the English language in England, or, more broadl ...
) or currency exchange (
American English American English, sometimes called United States English or U.S. English, is the set of varieties of the English language native to the United States. English is the most widely spoken language in the United States and in most circumstances ...
) is a business where people can exchange one
currency A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general ...
for another.


Nomenclature

Although originally
French French (french: français(e), link=no) may refer to: * Something of, from, or related to France ** French language, which originated in France, and its various dialects and accents ** French people, a nation and ethnic group identified with Franc ...
, the term "bureau de change" is widely used throughout Europe and French-speaking
Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by to ...
, where it is common to find a sign saying "exchange" or "change". Since the adoption of the
euro The euro ( symbol: €; code: EUR) is the official currency of 19 out of the member states of the European Union (EU). This group of states is known as the eurozone or, officially, the euro area, and includes about 340 million citizens . ...
, many exchange offices have started incorporating its logotype prominently on their signage. In the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
and English-speaking
Canada Canada is a country in North America. Its ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world's second-largest country by to ...
the business is described as "currency exchange" and sometimes "money exchange", sometimes with various additions such as "foreign", "desk", "office", "counter", "service", etc.; for example, "foreign currency exchange office".


Location

A bureau de change is often located at a
bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...
, at a travel agent,
airport An airport is an aerodrome with extended facilities, mostly for commercial air transport. Airports usually consists of a landing area, which comprises an aerially accessible open space including at least one operationally active surfa ...
, main
railway station Rail transport (also known as train transport) is a means of transport that transfers passengers and goods on wheeled vehicles running on rails, which are incorporated in Track (rail transport), tracks. In contrast to road transport, where the ...
or large stores—namely, anywhere there is likely to be a market for people needing to convert currency. They are particularly prominent at travel hubs, although currency can be exchanged in many other ways both legally and illegally in other venues. Some of the major players include
HSBC HSBC Holdings plc is a British multinational universal bank and financial services holding company. It is the largest bank in Europe by total assets ahead of BNP Paribas, with US$2.953 trillion as of December 2021. In 2021, HSBC had $10.8 tr ...
, Travelex, JPMorgan Chase & Co.,
Wells Fargo Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and intern ...
, and
Bank of America The Bank of America Corporation (often abbreviated BofA or BoA) is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina. The bank ...
.


Business models

A bureau de change is a business which, in competition with other similar businesses, makes its profit by buying foreign currency and then selling the same currency at a higher
exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of t ...
. It may also charge commission or fee on the purchase or sale. In setting its exchange rates, the business would keep an eye on changing market conditions, as well as the rates quoted by competitors, and may be subject to government foreign exchange controls and other regulations. The exchange rates charged at bureaux are generally related to the spot prices available for large interbank transactions, and are adjusted to ensure a profit. The rate at which a bureau will buy currency differs from that at which it will sell it; for every currency it trades both will be on display, generally in the shop window. The bureau sells at a lower rate from that at which it buys. For example, a UK bureau may sell
The euro sign () is the currency sign used for the euro, the official currency of the eurozone and unilaterally adopted by Kosovo and Montenegro. The design was presented to the public by the European Commission on 12 December 1996. It consists o ...
1.40 for £1 but buy €1.60 for £1. Quite often the terms "buy" and "sell" are used the other way round by a bureau de change, and the buy rate may seem higher that the sell rate: in such cases, it means "we buy/sell our local currency at the rate showed
(examples from Google Images)
So if the spot price on a particular day is €1.50 to £1, in theory, £2 will buy €3, but in practice this would be hard if not impossible for average consumers to get. If the bureau de change buys £1 from a consumer for €1.40 and then sells £1 for €1.60, the 20 pence difference contributes to expenses and profit. This business model can be upset by a currency run when there are far more buyers than sellers (or vice versa) because they feel a particular currency is overvalued or undervalued. The business may also charge a commission on the transaction. Commission is generally charged as a
percentage In mathematics, a percentage (from la, per centum, "by a hundred") is a number or ratio expressed as a fraction of 100. It is often denoted using the percent sign, "%", although the abbreviations "pct.", "pct" and sometimes "pc" are also use ...
of the amount to be exchanged, or a fixed fee, or both. Some bureaux do not charge commission but may adjust their offered exchange rates. Some bureaux offer special deals for customers returning unspent foreign currency after a holiday. Bureaux de change rarely buy or sell coins, but sometimes will at a higher profit margin, justifying this by the higher cost of storage and shipping compared with
banknote A banknote—also called a bill (North American English), paper money, or simply a note—is a type of negotiable instrument, negotiable promissory note, made by a bank or other licensed authority, payable to the bearer on demand. Banknotes w ...
s. In recent years, together with emergence of online banking, currency exchange services have appeared on the Internet. This new model allows more competitive exchange rates and threatens traditional bricks-and-mortar bureaux de change. Online currency exchange has two main models: the more popular model is provided by an established bureau de change, while social currency exchange platforms such as WeSwap allows participants to ask or bid for currency at their own rates (usually with an additional transaction fee). The business model of traditional money changers is coming under threat by many new innovative fintech start-ups offering e-wallet foreign exchange alternatives that offer low or no currency exchange transaction fees. It is estimated that the total revenue of this industry is 362 billion $


Peer-to-peer foreign exchanges

The rise of
peer-to-peer Peer-to-peer (P2P) computing or networking is a distributed application architecture that partitions tasks or workloads between peers. Peers are equally privileged, equipotent participants in the network. They are said to form a peer-to-peer ...
foreign currency exchange platforms and FinTech has led to disruptive P2P forex platforms that significantly undercuts traditional banks and financial institutions. Providers that use the P2P model to satisfy offsetting currency demands without an intermediary (such as a broker) has result in significant margin and spread compression in the foreign exchange business model.


Consumer issues

Changing money at a bureau is often more expensive than withdrawing it from an
automatic teller machine An automated teller machine (ATM) or cash machine (in British English) is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, f ...
at one's destination or paying directly by
debit Debits and credits in double-entry bookkeeping are entries made in account ledgers to record changes in value resulting from business transactions. A debit entry in an account represents a transfer of value ''to'' that account, and a credit e ...
or
credit card A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the card issuer to pay them for the amounts plus the ...
, but this varies depending on the card issuer and the type of account. Fees from multiple ATM withdrawals should also be considered. Some people may feel uncomfortable carrying a lot of cash and so prefer to use a card and carry minimal cash for tipping cabs, hotels, and restaurants. Hotels and rental cars many times also need cards for temporary holds. Some may also prefer to hold foreign currency rather than change it back if they are expecting to return to where it is used. Companies that frequently send employees abroad may essentially act as their own exchange by reimbursing their employees in the local currency and holding the foreign currency. If exchange rates are relatively stable, the fees charged by a bureau may exceed any likely fluctuation and it also makes the company's
accountancy Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "langua ...
easier. In the alternate, some prefer to buy their currency before they travel, either just for a sense of security against
credit card fraud Credit card fraud is an inclusive term for fraud committed using a payment card, such as a credit card or debit card. The purpose may be to obtain goods or services or to make payment to another account, which is controlled by a criminal. The ...
typically achieved by tampered card readers or hackers, or because they speculate the exchange rate is better at that time than it will be when they make their trip. As well, some places may only take cash or have credit card terminals down. In 2002, many bureaux reported substantial reductions in profit due to the replacement of many European currencies with the euro.


Illegal activity

Bureaux de change offer an opportunity for
money laundering Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdicti ...
, and a number of countries require bureaux de change to register as
money service business A money services business (MSB) is a legal term used by financial regulators to describe businesses that transmit or convert money. The definition was created to encompass more than just banks which normally provide these services to include non-b ...
es and are subject to their
anti-money laundering Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdictio ...
measures. The Financial Action Task Force offers a set of recommendations for money services businesses to identify risky customers and transactions, however it is up to the various regulatory authorities to set out the specific regulations that govern the money services businesses in different countries.


See also

*
CLS Group CLS Group (for Continuous Linked Settlement), or simply CLS, is a specialized financial infrastructure group whose main entity is the New York-based CLS Bank. It started operations in 2002 and operates a unique global multicurrency cash settlemen ...
* Currency pair * Digital currency exchanger *
Exchange rate In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of t ...
*
Financial instrument Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership interest in an entity or a contractual right to receive or deliver in the form ...
s * Foreign exchange company *
Foreign exchange market The foreign exchange market (Forex, FX, or currency market) is a global decentralized or over-the-counter (OTC) market for the trading of currencies. This market determines foreign exchange rates for every currency. It includes all as ...
*
Gold standard A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from th ...
* List of international trade topics * Money changer *
Money laundering Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdicti ...
*
Tables of historical exchange rates to the USD Listed below is a table of historical exchange rates relative to the U.S. dollar, at present the most widely traded currency in the world.Financial GuidFX FundamentalsRetrieved on July 6, 2007 An exchange rate represents the value of one currency ...


References

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