Business sector specific Guidance: Money Service Businesses: How does a Currency Exchange office operate?
Currency Exchange Offices generate income from:
- commission - lower rates may apply for larger transactions
- exchange rate offered - may be less favourable if commission is not charged
- exchange rate differences between buying and selling
They may buy foreign currency from banks, currency wholesalers and other exchange offices. Their operations vary according to the type of business and customers and can include.
- Travel agents who may offer exchange as part of the overall holiday booking service and may not make a great profit. A large proportion of the smaller travel agents will only exchange currency for customers who have booked a holiday. The average transaction value is around £500.
- Stand alone offices only offering currency exchange facilities may be a branch of a larger organisation or simply a kiosk on the corner of a high street.
- Major department stores offer exchange facilities in many of their city outlets. The office will be a separate unit within the store. Transaction values can vary enormously.
- Cruise ships and ferries will provide on board currency exchange for passengers. The Operator will register if they operate within UK ports and if they operate within UK territorial waters. (Does not apply to ships simply passing through territorial waters). Transaction values will vary.
- Hotels usually only provide exchange facilities to residents. Hotel residents are offered exchange facilities for foreign currency to sterling and are mainly low value transactions
- Currency wholesalers dealing with other Currency Exchange Offices.
Records will vary (depending on the type of business and size of transactions) from till rolls to individual customer accounts.
The business should be able to provide information on who supplies it with foreign currency and give details of the type of currency it trades in, for example euros, dollars.