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What does a Money Changer do?

By Felicia Dye
Updated Mar 03, 2024
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A money changer is a person who exchanges one currency for another. The rates at which these trades occur are usually in flux and determined by international exchange rates. A person may act in this capacity independently or he may be employed. His income may result from service fees or fluctuating currency values.

There are a number of reasons that a person may need to exchange one type of currency for another. The primary reason tends to be international tourism. When a person travels to another country, the monetary system is often different. This prevents a person from being able to use her native currency while she is in the foreign country. A money changer is an individual whose services can remedy this situation.

A money changer accepts one type of currency from his client and exchanges it for an equivalent amount in another currency. In some instances, the money changer’s rates will be fixed. It is most common, however, for the trading rates to be determined by current international exchange rates. These are constantly in flux, and the most accurate currency changers usually operate using electronic systems that can respond to exchange rates from one minute to the next. Currency traders with less access to innovative tools are more likely to have a rate that remains fixed throughout the day.

There are two primary ways that a money changer can profit from the services that he provides. Some will charge service fees on each trade they make. Others reap their profits primarily by selling the currency they have obtained when its value increases. For example, if a currency trader got $100 US Dollars (USD) today, it may be possible for him to exchange it to get 7,000 South African rands. If, however, he holds that $100 USD until tomorrow, he may be able to get 8,000 rands for it.

In many countries, tourists are approached by money changers in locations where these individuals realize they are likely to encounter foreigners. They are usually prepared to conduct transactions on the spot and will accept several types of major currency. The exchange rates offered by these individuals is often more favorable to the tourist than those that they would receive if they went into an agency. This practice is often so widespread and open that many people are unaware this normally is considered black market trading and is usually illegal.

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Discussion Comments

By Laotionne — On Nov 02, 2014

@Drentel - To avoid getting taken advantage of when you exchange money in a foreign country you can get an app or a currency calculator so that you can simply plug in the numbers and figure out what equals what.

By Drentel — On Nov 01, 2014

Even though you can get better currency exchange rates on the black market in the back streets as the article says, I wouldn't want to go that route. You really need to know the current exchange rate to know whether you are getting a good deal or not, and I would be concerned that I would get taken advantage of and come out even further behind than if I gone to one of the agencies with the higher rates in the first place.

By Sporkasia — On Oct 31, 2014

One of the experiences that still stands out to me most from way too many years ago when I went to Europe as an adult for the first time is the changing of currency. I was using my own money and I was on a tight budget, so I had factored in all of my expenses and I knew how much money I would need to complete the trip.

I landed in Paris and I did a currency exchange from US dollars to French Francs. (I did say it was a long time ago.) I was pleasantly surprised at how far the US dollar went in France at that time. I began thinking that money was not going to be as tight as I thought.

Then I spent the last week of the vacation in England where all of the money I had saved on the first leg of the trip was quickly eaten up when I exchanged US dollars for English pounds. It is very disheartening when you give someone $100 and you get back half of that in pounds, which was about enough for two decent meals at the time.

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