Hi all!
Strap in, this post is going to be very long! I’d like to address this issue as it not only concerns Worlddom, but may also concern a few others (if not now, then possibly in the future). I will not reveal private details, though.
Before April of this year, payment in GBP for UK clients was not possible. Enough people requested payment for domain sales in GBP, so we began offering it to increase transparency in domain sales.
Clients in the UK, selling domains in GBP receive exactly the amount they agreed upon (minus the commission). Continental European clients, selling in Euros also receive the agreed amount (again, minus commission).
This gets tricky when a UK client (GBP) has an account in Europe (Euros), but wants to be paid in GBP. Sedo makes all payments to Euro-country banks in Euros. Sedo is located in Germany, our bank here is German, so transactions in Euros to other Euro-currency countries make sense.
The only way for the exact amount we send to be the exact amount the bank receives is to send the payment in Euros. If we send in Euros and you are expecting GBP, even though your bank is located in Spain, you will either profit or lose from arbitrage. In the previous case, this did not work out in the client’s favour.
Let's take the following example (all hypothetical). I am an American living in the US with an US bank account. However, I want to sell in GBP, for whatever reason. I list the domain for 500 GBP. An American buyer agrees, bids in dollars and pays $850. At that exact moment of agreement, $850=500 GBP. The payment gets sent in dollars, as my bank and I are in the US. In the 2 days it takes for payment to reach me, the dollar has drastically fallen against the GBP. Now, $850=300 GBP.
I agreed on the price. The price at the time of agreement was correct. However, when I receive payment, I don't receive the amount I agreed on, because I was expecting the US Dollar to gain on the GBP, which it did not.
In retrospect, it would have been better for me to have sold in USD. Had I sold the domain for $850, I would have received $850.
The issue that our clients should be aware of here is that Sedo does not hedge funds. If a currency conversion is necessary, it is done at the point of agreement (the rate of conversion is always listed in the bill of sale). What happens with conversion rates after that point cannot be controlled by Sedo.
The best way to avoid problems in this area, is this: If you are in the UK (regardless of currency of your bank), sell your domains in GBP. If you are in continental Europe (again, regardless of the currency of your bank), sell in Euros.
Kind regards,
Brad
Brad.tilley@sedo.com