Ecommerce (food) · Legal

ecommerce when exchange rate in black market is double bank rate

sam Ambitious developer interested in start ups

April 12th, 2018

HI,


I am thinking of opening an e-commerce site where local sellers can use te platform to sell their stuff. The problem is exchange rate in black market and bank/legal one is HUGE. Thus when a seller, say, puts price of a laptop 2000, the app translates to USD/EUR at legal rate automatically in order to comply with the gov which is much less than black market value. Sellers are really discouraged and i am caught between making them my clients and abiding te law.


How do i get around the dilemma?

Jenny Kwan Co-Founder and Technical Lead of Woodlamp Technologies

April 14th, 2018

@sam: There's all sorts of accounting games you could play. You could set up a holding company that "buys" all seller's inventory with local fiat currency. They get a balance on your platform that they can't withdraw until the corresponding item is sold to a third party. You then legally "own" the good, and can sell it in foreign fiat currency, because you're legally no longer a marketplace. It's money laundering of the most benign form, and obviously a dodge, but it may be technically legal. You are, after all, seeking to break the law (regardless of whether that law is either morally good or practically effective). So think like an organized criminal.

Jenny Kwan Co-Founder and Technical Lead of Woodlamp Technologies

Last updated on April 12th, 2018

Does the State require that transactions conducted in that jurisdiction be denominated in a single currency? Otherwise, let the seller assume exchange risk by letting them choose the currencies they're willing to accept and how much for each.

sam Ambitious developer interested in start ups

April 13th, 2018

Thansks @Alyssa.... the problem is indeed the state. All exchange rates must be according to the bank rates. In my application, I want to show prices based on location/preference such as Euro/USD to those in the area. The sellers will always add in local currency. But I like your idea of them adding it in in international currency and exchange that.

Jenny Kwan Co-Founder and Technical Lead of Woodlamp Technologies

April 13th, 2018

sam, I'm wondering what the regulations are on "credits" or "tokens", so that buyers and sellers can trade in those. You can sell "credits" on your platform for fiat or cryptocurrency. You effectively become a currency trading house. You assume exchange risk. And to a regulator, it's pretty transparent dodge of the law. But it may be allowed. Just a thought.

sam Ambitious developer interested in start ups

April 13th, 2018

I have yet to see what the the laws say about "tokens" and "credits". It is an area of possibility so yes, I will look into it. How popular is it with sellers is another question though and I like to start with something the majority of the clients are familiar with.