Midpoint & Transfer - Case Study 8
March 5, 2009 – 6:28 am | by ChristianWho are they?
The founders of Midpoint & Transfer come from financial services and software development backgrounds. CEO Todd Veri has run a retail foreign exchange in Canada.
What do they do?
Midpoint & Transfer is an Online International Money Transfer Business with proprietary software. It targets businesses around the globe that require the transfer or conversion of a foreign currency. It is currently looking for further investment before launching the site.
How does it work?
Users will be able to place currency orders of up to £250k. The order will then be matched against one or more users with the reciprocal currency requirement. All users will receive the same exchange rate, the Midpoint of the real-time interbank rate, at the time of the match. They will then receive notification of the details, and fund their order into a domestic bank account. Once both sides of the match have been funded the monies will be transferred to the appropriate Payees.
Typical transaction
A typical transaction will involve a user in Britain, for example, looking to convert his £10,000 Sterling into Euros. This request will then be matched with enough users looking to offload their Euros for the exchange to then take place.
Business model
Money transfer businesses traditionally earn a profit from charging a spread between the price they pay for a currency and the price they sell it for. Midpoint & Transfer will instead charge a single transaction fee of £30 on all exchanges, regardless of value.
Establishing trust
With a flat fee of £30, the service is cheaper than a retail bank for any sized foreign exchange order. To begin with, however, Midpoint & Transfer plans to offer the service for free in order to generate enough support to ensure long-term sustainability.
Problems or limitations
Midpoint’s most significant limitation concerns the number of transactions necessary for the company to break even. Having pledged to guarantee all incomplete exchanges at the end of each day (if, for example, a user looking to sell their currency backs out unexpectedly), it has been acknowledged that in the early stages at least, while it searches for support and drums up business, it will lose money. It remains to be seen whether or not Midpoint can deliver on its guarantee and still survive.
