Currency Transfer Glossary

A named individual at a currency broker who manages your transfers, provides market updates, and advises on timing and hedging strategies. A key differentiator between specialist brokers and self-service platforms.

Laws and procedures designed to prevent criminals from disguising illegally obtained money as legitimate income. Under the Money Laundering Regulations 2017, all UK payment providers must verify customer identity (KYC), monitor transactions, and report suspicious activity to the National Crime Agency.

A type of FCA authorisation for companies providing payment services. APIs must meet capital requirements and safeguard client funds, though the specific requirements differ from EMIs. Smaller providers may be registered as Small Payment Institutions (SPIs) with lighter requirements.

An increase in the value of a currency relative to another. If GBP/EUR moves from 1.1700 to 1.1800, the pound has appreciated against the euro -- meaning you get more euros per pound.

The price at which a foreign exchange provider will sell a currency to you. A lower ask rate is better for you as the buyer, since it means you pay less for each unit of foreign currency.

A UK electronic payment system for direct credits and direct debits. BACS transfers take 3 working days to clear. Being replaced in many cases by Faster Payments for credit transfers, but still widely used for direct debits and payroll.

The first currency in a currency pair. Its value is always 1. In GBP/EUR = 1.1740, GBP is the base currency and 1 pound equals 1.1740 euros.

The person or company receiving the money transfer. When setting up a transfer, you will need the beneficiary’s full name (exactly as it appears on their bank account), their IBAN or account number, and their bank’s SWIFT code.

The price at which a foreign exchange provider will buy a currency from you. A higher bid rate is better for you as the seller, since it means you receive more of the other currency.

A national institution that manages a country’s currency, money supply, and interest rates. The Bank of England is the UK’s central bank. Central bank decisions on interest rates are one of the biggest drivers of exchange rate movements.

A UK same-day sterling payment system typically used for high-value transactions like property completions. Guaranteed same-day settlement if submitted before the cut-off time. Banks typically charge £20-35 per CHAPS payment.

An FCA requirement that authorised payment institutions hold client money in separate, protected accounts at approved banks. If the provider fails, your money is legally separated from the company’s own assets and cannot be claimed by creditors.

A written or electronic document verifying the details of a completed transaction, including the exchange rate, amount, fees, settlement date, and recipient details. Always save your confirmation as proof of the transfer.

A bank that processes payments on behalf of another bank in a country where the sending bank does not have a branch. International SWIFT payments often pass through one or more correspondent banks, each of which may deduct a fee.

An exchange rate between two currencies calculated via a third currency (usually USD). For example, the GBP/THB rate might be derived from GBP/USD and USD/THB. Cross rates can introduce additional conversion costs.

A specialist company that converts and transfers large sums of money internationally, offering better exchange rates and personal service than banks. Currency brokers typically assign you a dedicated account manager, charge zero transfer fees, and offer hedging tools like forward contracts.

An exchange-traded, standardised contract to buy or sell a specific amount of currency at a set price on a future date. Unlike forward contracts, futures trade on exchanges like the CME in fixed lot sizes (e.g. £62,500 per GBP contract) and require margin accounts with daily mark-to-market settlements.

Two currencies quoted together, such as GBP/EUR or GBP/USD. The first is the base currency, the second is the quote currency. The price shows how much of the quote currency one unit of the base currency will buy.

The risk that currency fluctuations will change the value of your transfer between the time you decide to send and when the money actually arrives. Particularly significant for large transfers like property purchases.

The completion of a foreign exchange transaction where both currencies have been exchanged and the recipient has received their funds. In practice, this means your provider has converted the currency and sent the payment to the beneficiary’s bank account.

A decrease in the value of a currency relative to another. If GBP/EUR moves from 1.1800 to 1.1700, the pound has depreciated against the euro -- meaning you get fewer euros per pound.

The ability to take portions of a forward contract at different times before the maturity date. Useful for property purchases where you need to make staged payments (deposit, completion, furnishing).

A type of FCA authorisation that allows a company to issue electronic money and provide payment services. Most specialist currency brokers (Currencies Direct, TorFX, OFX) are authorised as EMIs. EMIs must safeguard client funds in ring-fenced accounts.

The price of one currency expressed in terms of another. For example, if GBP/EUR = 1.1740, one British pound buys 1.1740 euros. Exchange rates fluctuate constantly during market hours based on supply and demand.

A UK payment system enabling near-instant sterling transfers between UK bank accounts, typically arriving within seconds. Free with most UK bank accounts. Maximum single payment is £1,000,000 (varies by bank).

The UK’s financial regulatory body responsible for authorising and supervising firms that provide financial services, including currency brokers and money transfer providers. FCA authorisation requires meeting capital adequacy, conduct, and safeguarding standards.

The global market for trading currencies. With daily turnover exceeding $7 trillion, it is the largest financial market in the world. The term 'forex' is often associated with speculative trading, while 'FX' is used more broadly to include currency conversion for transfers.

An agreement to exchange a specific amount of currency at a fixed rate on a future date. You lock in today’s rate (minus a small adjustment for interest rate differentials) for settlement up to 24 months ahead. Requires a 5-10% deposit.

The adjustment added to or subtracted from the spot rate to calculate a forward rate. Forward points reflect the interest rate differential between the two currencies over the contract period. They are not a fee -- they are a mathematical adjustment.

The UK’s statutory deposit insurance scheme that protects up to £85,000 per person per institution for eligible deposits. Importantly, funds held with currency brokers and money transfer providers are NOT covered by the FSCS -- they are protected by safeguarding rules instead.

Any company offering currency exchange services, including banks, currency brokers, and online money transfer services. The term is deliberately broad and covers everything from HSBC to Wise to a specialist broker like TorFX.

A strategy to protect against adverse exchange rate movements. In currency transfers, the most common hedging tools are forward contracts, limit orders, and stop-loss orders. The goal is certainty, not profit.

A standardised account number format used in 80+ countries to identify individual bank accounts for international transfers. It contains a country code, check digits, and the domestic account number. UK IBANs are 22 characters long (e.g. GB29 NWBK 6016 1331 9268 19).

The wholesale foreign exchange market where large banks trade currencies with each other. Interbank rates are the basis for the mid-market rate and represent the 'true' price of a currency before any retail markup is applied.

The process of sending money from one country to another, involving currency conversion and international payment networks. Can be done via banks, specialist currency brokers, or online money transfer services.

The process of verifying a customer’s identity before providing financial services. Typically requires government-issued photo ID (passport, driving licence) and proof of address (utility bill, bank statement dated within 3 months).

An instruction to your currency broker to execute a transfer automatically when the exchange rate reaches a target you specify. The order remains open until your target rate is hit or the order expires.

The percentage difference between the mid-market rate and the rate a provider actually offers you. For example, if the mid-market GBP/EUR rate is 1.1740 and your provider offers 1.1564, their margin is approximately 1.5%.

A demand from your currency broker for additional funds if the exchange rate has moved significantly against your forward contract position. This protects the broker’s exposure. Margin calls are uncommon for personal transfers but can occur during extreme volatility.

A deposit (typically 5-10% of the transfer value) required when you open a forward contract. It acts as collateral against adverse exchange rate movements. The balance is paid on or before the settlement date.

The ability to send payments to many recipients simultaneously from a single instruction. Used by businesses for payroll, supplier payments, or international disbursements. Providers like OFX and Currencies Direct offer this for business accounts.

The date on which a forward contract is due to be settled. On or before this date, you must pay the remaining balance and the currency conversion is executed at the locked-in rate.

The midpoint between the buy (bid) and sell (ask) prices on the global currency market. This is the rate you see on Google or XE and represents the fairest possible exchange rate before any provider adds their margin.

A company that specialises in sending money between countries, typically focused on speed, convenience, and competitive rates for smaller amounts. Includes digital-first providers (Wise, Revolut) and traditional remittance companies (Western Union, MoneyGram).

A bank or e-money account that lets you hold, receive, and convert between multiple currencies. Providers like Wise and Revolut offer these with local account details in 10+ currencies, avoiding conversion until you choose.

A bank account held by a UK bank at a foreign bank, denominated in the foreign currency. For example, Barclays holds a euro-denominated account at Deutsche Bank. These accounts enable banks to process foreign currency payments without converting through a third party.

The smallest standard unit of movement in an exchange rate. For most currency pairs, a pip is the fourth decimal place (0.0001). So if GBP/EUR moves from 1.1740 to 1.1741, that is a one-pip movement.

UK legislation (derived from EU PSD2) governing how payment service providers operate. Sets requirements for authorisation, conduct of business, safeguarding of funds, transparency, and complaints handling. The legal framework under which currency brokers and money transfer providers operate.

The second currency in a currency pair. It shows how much of that currency you get for one unit of the base currency. In GBP/EUR = 1.1740, EUR is the quote currency.

Money sent home by someone working abroad, typically to support family. The global remittance market exceeds $700 billion annually. Providers like Wise, Remitly, and WorldRemit specialise in fast, low-cost remittance corridors.

A 9-digit number used to identify a US bank or financial institution for domestic transfers. Required when sending money to the United States alongside the recipient’s account number.

A payment network that enables euro-denominated transfers between 36 European countries under the same rules as domestic payments. SEPA Credit Transfers typically arrive within 1 business day and cost far less than SWIFT transfers.

A real-time variant of SEPA Credit Transfers that settles in under 10 seconds, 24/7/365 -- including weekends and bank holidays. Maximum transfer amount is €100,000 (as of 2025, rising to no limit under new EU regulations).

The date on which the exchange of currencies is completed and funds are delivered to the recipient. For spot contracts this is 1-2 business days; for forward contracts it is the agreed future date.

A 6-digit number (formatted as 3 pairs, e.g. 20-00-00) that identifies a specific UK bank branch. Used alongside the account number for domestic sterling transfers. The international equivalent is the SWIFT/BIC code.

Documentation proving where the money you are transferring originated. Required for large transfers as part of AML compliance. Examples include property sale completion statements, payslips, savings account statements, inheritance documentation, or business accounts.

A foreign exchange deal at the current market rate with settlement typically within 1-2 business days. This is the standard transfer type when you send money without any forward contract or special order.

The current market exchange rate for immediate delivery (settlement within 1-2 business days). When you make a standard transfer without a forward contract, you are dealing at or near the spot rate.

The difference between the bid rate and the ask rate. This is one of the primary ways banks and currency providers make money. A tighter spread means lower costs for you.

An instruction to execute your transfer if the rate falls to a specified worst-case level. Protects you from further depreciation while leaving you free to benefit if rates improve. Often used alongside limit orders.

A global messaging network used by banks to send payment instructions securely. SWIFT does not transfer money itself -- it sends the messages that tell banks to move funds. Most international bank transfers use the SWIFT network.

An 8-to-11-character code that identifies a specific bank branch for international transfers. It contains a bank code (4 characters), country code (2 letters), location code (2 characters), and optional branch code (3 characters).

A flat or percentage-based charge for processing a money transfer. Many specialist providers advertise 'zero fees' but make their money on the exchange rate margin instead. Always check the total cost (fee + margin), not just the fee.

A consumer review rating on the Trustpilot platform, widely used in the UK to compare currency brokers and money transfer providers. Scores range from 1.0 to 5.0 stars. Look for providers with 4.5+ stars and thousands of reviews -- small sample sizes can be misleading.

An electronic transfer of funds between banks, typically using the SWIFT network for international payments. The term dates from when transfer instructions were sent by telegraph wire. Now used broadly to mean any bank-to-bank electronic transfer.