Bureau De Change

A bureau de change is a business which, in competition with other similar businesses, makes its profit by selling currency at a higher exchange rate than a rate at which it buys the same currency, as well as any commission or fee it may charge. In setting its exchange rates, it must keep an eye on 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.

So the bureau sells at a lower rate from that at which it buys. For example, a UK bureau may sell €1.40 for £1 but buy €1.60 for £1.

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 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[citation needed], justifying this by the higher cost of storage and shipping compared with banknotes.


A bureau de change at an airport.
In recent years together with emergence of online banking, currency exchange services also gradually go online. This new model allows more competitive exchange rates and threatens traditional brick and mortar bureaux de change.[3] Online currency exchange goes in two main models - more popular model allows to exchange currencies at rate set by bureau de change, while the second model used by social currency exchange platforms like Walutomat allows to exchange currencies at rate set by platform participants (usually with an additional exchange fee).