Running a currency exchange has the potential to be a lucrative business. The traditional business model for currency exchange businesses is simple. Locate yourself where travelers can be found and provide the service of exchanging the currency of one country for the currency of another, charging the consumer a small fee for the transaction. Online currency exchanges work in a nearly identical manner, with the exception that you are trading one digital currency for another, or sometimes cashing out currencies for consumers.
Conduct research into the market you are entering. Identify who the major competitors in the market are, as well as what their strengths and weaknesses are. Make note of their fees in a comparison chart that will help you decide how to price your own services. Pay particular attention to any areas that the market underserves or does not serve at all, since these are areas where you can gain a competitive edge.
Write an online currency exchange business plan. Download a free business plan template and fill it in with details about the online currency exchange that you will be starting. Detail how you will enter the market, what your operational plan is and what staff you will need to carry the plan out. Having a written business plan that covers every foreseeable aspect of the company’s operations will help keep the currency exchange on track, even during hectic times.
Obtain the investment that is required to start your currency exchange. Use your business plan to meet with banks and potential investors. Business loans, personal loans and venture capital investment firms can serve as the primary source of funds for your business. Your bank may also be able to qualify you for an SBA guaranteed loan from the Small Business Administration.
Register a company to obtain a business license for your online currency exchange. Contact either your local City Clerk, County Clerk or Secretary of State to obtain the appropriate forms to register a Limited Liability Company (LLC). List someone to serve the roles of President, Secretary and Treasurer. The same person can serve all three roles. Also, list each of your investors as members, declaring what their contribution was and what percentage of ownership they have in the venture.
Decide which currencies your online currency exchange will deal with. Remember that most of your business will come from people who have money in one ecurrency and want to trade it for money in a different digital currency. Also, make a final decision on what fees you will charge for each currency. The fees should be high enough to profit on top of the transaction fee you will bill, but should also be low enough for your currency exchange to remain competitive in the market.
Choose a software program to manage your currency exchange. You can hire a team of PHP programmers to create a custom software program, or you can purchase a commercial package off the shelf. Some online currency exchanges prefer to operate with no software at all, and process each transaction manually. While this is more time consuming, it cuts down on the chances of a fraudulent transaction getting through.
Procure the hardware that is needed to run the software. Since online currency exchange software is designed to be implemented over the Internet, a standard web server meets the typical system requirements for the software, and can also be used to host the currency exchange website. Note that you will most likely require a dedicated server, particularly when your online currency exchange is fully operational and processing a large number of server queries.
Create a website for your online currency exchange. Keep in mind that the currency exchange website is more than a place for members to log in. The website also serves as your first impression to potential customers. The process of building a website involves purchasing a domain, obtain a web hosting account and writing the HTML or PHP code that tells the web browser how to display your site. Most people who are not web developers prefer to outsource this step to a company that designs websites professionally. Make sure the design is clean, easy to navigate and generally professional in appearance.
Implement any sales and marketing strategies that you have developed to announce your presence in the market. Consider who your target audience is and what methods are available to reach that audience. Internet advertising, such as banners and sponsored links, work great for advertising an online currency exchange. Magazine and radio ads are also good options. Narrow the focus to determine which of those are within your budget, and also consider what the CPM (cost per thousand customers) is for each option.
Keep on top of industry trends, especially with the latest tactics to battle credit card fraud and cyber phishing. Joining trade organizations, such as the Community Currency Exchange Association, will help you stay on top of the latest news.
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- Keep on top of industry trends, especially with the latest tactics to battle credit card fraud and cyber phishing. Joining trade organizations, such as the Community Currency Exchange Association, will help you stay on top of the latest news.
Jerry Garner has been writing semi-professionally for more than 15 years. The body of Garner's work includes informative articles, news and current events and historical essays. He is an avid sports fan and frequently writes about outdoor activities online.