Credit: Shutterstock photoInternational travelers like Sam Schubert know that exchanging one currency for another is not free. At least, it wasn’t.
Then uChange came along. The one-year-old startup’s app, available in both iOS (App Store) and Android (Google Play), offers a “fee free” P2P currency exchange. Schubert, uChange’s CMO, discussed the currency exchange environment in an interview with Benzinga.
What is uChange? How does it work?
Sam Schubert: It’s an app that connects two people in the same geographic area who want to exchange currencies. It provides a platform for them to meet up.
The way it works, you go into the app and, for instance, say, “I have $1,000. I’m in Israel and I’m looking for $1,000 worth of shekels. You put that search into the app which already has your physical location.
A list comes down with everyone in the area that has that amount. The app provides the current exchange rate which might be 1 to 4, or $1 for 4 shekels.
You pick someone who is a match and open up a chat with them. The two of you meet up, say at a coffee shop, exchange currencies and you’re done, completely for free.
How often is the exchange rate updated and where does it come from?
Currently every 10 minutes. Soon it will be every 10 seconds. The rate is based on averages from all over the world. We call it the real market rate average.
You can check the rate on Google (GOOG, GOOGL) or on xe.com. It will be the same as the rate that pops up on uChange. This is the real rate without altering. That’s what banks do to build in their fee.
How did the idea for uChange come about?
The CEO, Avi Kugel, built the platform before he and I met. The platform came about because here in Israel everyone understands how much the banks charge to exchange currencies.
A chance encounter in an airport that ended with Avi and another person exchanging currencies led to the development of the uChange app.
How did you come on board?
I was in Israel getting paid in shekels but wanted dollars. I was frustrated with constantly getting ripped off 5% to 10% by banks and currency exchanges. That amounts to $50 to $100 lost for every $1,000.
It turns out Avi and I talked to some of the same people and, as a result, we met. Avi raised startup funds and I came on board to help with the user base, marketing, advertising and user experience.
You’ve raised about $800,000 in seed money so far. What’s next?
We are on track to raise $1.5 million in our next round. We’re in Jerusalem and Tel Aviv now. With the next round we will expand to New York, London and Dubai and from there one city at a time.
We haven’t spent any money on marketing or advertising yet and we already have over 1,000 users. Within a couple of weeks to a month an entire city could be signed up in exchanges.
What about security? How does that work?
We use a verification process where folks have to put in their personal details and list their Facebook or any social media platform with their profile. The person who is exchanging can see that person, see if he has mutual friends and basically take a look at them.
Second there is a verification process where we ask for an ID card, phone number and we in the back office verify all details and make sure this person is legit.
Finally, we have a ratings system where the community of users take it on themselves to rate and comment on their exchanges.
You’ve mentioned a match-making algorithm. What’s that?
We are building an algorithm so that people who match your demographic - whether its nationality, behaviors, interests, socio-economic profile, whatever it may be – those would be the first people who pop up in a search.
It can go as deep as we want it to. Right now we’re just building it so it will match very basic stuff.
What types of currency will the app handle?
That’s the beauty of uChange. It handles every available currency. Since we’re not touching the money and instead are simply making matches based on what people are looking for, there are no limits.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
