New Service Idea

Re: [spiers] New Service Idea

This service idea sounds good to me, as I recall spending $20 on a
soda in the Copenhagen airport and did not want to then deal with the
currency exchange, I just wanted to have a drink. So I showed up in
Los Angeles, tired and with Danish kronor in my pocket. It's been in
my dresser for years.

But let me challenge the idea a bit. How often would diners/shoppers
remember to dig out their old kronor before they leave the house?
Seems like it would be a more or less random event. I suppose the
frequent travellers would always carry 2 or 3 currencies in their
wallet, but they would be silly to spend it on my premium service
when they can simply use dollars until they return to Tokyo or
wherever. Heck, I'm still holding out for my next trip to Denmark.

The opportunity seems to be for people who actually remember they
have currency, aren't going to the airport anytime soon, and don't
mind paying the "worse than Thomas Cook" premium I would charge. Or
am I missing the point, and is the real opportunity with people who
get big "face" from spending foreign dough at fancy restaurants? I'm
guessing that is it.

So here's what I envision: I sign up the retailers, send them a
Fedex envelope and a rate sheet (with my cool logo, for branding
purposes) that fits in a bill caddy (rates good for 1 month). They
use a rate sheet both to show to the customer and to get paid by me -
it's got a tally grid on the back for the bills they send me. After
Fedex returns it to me, I send them back a new Fedex envelope, a new
rate sheet, and a check containing the exchange money plus a royalty
for them. The more the business, the bigger the royalty rate, thus
incentivizing them to promote my service.

Business can scale to other regions and can still be operated from
the same place (magic of Fedex). I then hire someone to lift the
enormous pile of bills to carry to the bank. Later, as you say,
Thomas Cook buys the business in order to get wider brand
recognition. One additional risk to those you mentioned would be the
exchange rate variations over a month. As the U.S. declines,
however, that may add to the profit margins. Insurance can be
bought, in any event, through currency futures as revenue flow
warrants. The other risk is inventory theft, as folks figure out
that I have $100K per day flowing to my house. Of course, that's
$100K in dong and peso, so maybe it's not so appealing to the average
thief.

Hmmm....interesting idea. What's the best way to see if demand
exists for it?


On May 9, 2006, at 10:10 AM, John Spiers wrote:

> Folks,
>
> It is not uncommon for airport vendors (outside of USA anyway) to
> accept payment in a foreign
> currency and give the change in a local currency.
>
> What happens is the vendor takes say JPY1000 (which is about US$10)
> and converts it to about HK
> $70, charges the HK$34 for the mocha grande and gives the patron
> (70 - 34 = 36) HK$36 in
> change.
>
> Now, what if someone were to develop a program that that converted
> foreign currency at a
> handsome profit (that part is simple) for retailers to use so they
> could accept foreign currency
> from retailer customers in USA.
>
> Some traveller has a 500 euro note left over from a trip, is buying
> dinner at a fancy restaurant, the
> restaurant accepts the EU500 , converts it to US$650, takes out the
> US$400 tab, and gives change
> of US250.
>
> Retailers in USA who sign up for this service agree to use your
> exchange rate and sell the foreign
> currency to you. You in turn sell it to the banks, at a nice profit.
>
> Of course, you'd have to build in a premium for counterfeit bills,
> and you'd have to have some sort
> of loss limits, but by introduciing this at the super premium
> level, the quantities would be small
> and generally the "customer" would be known to the retailer.
>
> The vendor gets an enhanced image of sophistication, may make news
> and certainly any time one
> can accept more forms of payment, ones business grows. The fact
> that you are makiing say 15%
> overnight on your money, with ever growing velocity is something no
> one will notice or care about
> at this level.
>
> Later this biz could be sold to the people who turn pocket change
> into dollars at the grocery
> stores (I heard copper in pennies is now worth 1.25 cents.)
>
> The job would be to vacuum up all those residual stashes of foreign
> currency people have in their
> dressers, and make money of course.
>
> Who will take this?
>
> John

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