Kantox, a peer to peer (P2P) foreign exchange transfer platform for businesses, announced that they have surpassed $1 billion in currency exchanges on their platform. The milestone occurs as transactions rose 250% over 2014, with $200 million in exchanges taking place over the last two months.
An alternative to banks, Kantox matches buyers and sellers of physical currencies on their platform. As a P2P marketplace, and without the need of banks acting as counterparties to currency exchanges, the appeal of Kantox and similar services, such as TransferWise and OZ Forex which target different geographies and customer type, are lower fees when compared to traditional currency exchange systems.
Launched in 2011, and having received over $10 million in funding since its launch, Kantox differs from its P2P currency transaction peers as it has always focused on businesses. According to Kantox, currently there are 1,000 businesses using the platform, double the same time last year. Over 2014, the platform’s largest transaction took place when a client transferred $21 million from euros to dollars.
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In conversations Forex Magnates has had with P2P currency transaction users, the feedback we received was that after getting over the initial friction of using a non-bank institution for transfers, customers are impressed by the lower fees which brings them back to the P2P platform. In regards to Kantox, in order to improve available liquidity, the firm has partnered with FX spot dealers to provide continuous pricing for transactions. However, as the marketplace grows, the natural customer order flow is expected to decrease the need of dedicated liquidity providers.
Speaking at the Forex Magnates London Summit Fintech Panel, Philippe Gelis, CEO and co-founder Kantox, explained that the idea for Kantox came to be when he and his co-founder had been working at Deloitte. At the time, they were analyzing available currency exchange rates for one of their Spanish clients and found limited transparency from banks for their prices. As a result, they decided that “through banks it would be very hard to find fair prices and transparency.” So they envisioned a different model that would be much simpler, “a platform with no banks and direct connections between businesses, which would be user friendly.”
Answering whether the problem of transparency is a banking or technology issue, Gelis explained further that he believed it was due to the way banks have an oligopoly on the deliverable FX exchange market as he said, “Banks are able to have transparency and give tight spreads, but they just don’t want to.” He added, “We are pushing transparency in the market, knowing that banks will never do that knowing that it is simply not profitable for them to do so.”