Keeping the economic wheels turning during wartime
In 1914, the First World War plunged the world into war on an unprecedented scale.
The war was a defining time when millions of people and business across the world entered uncharted territory.
The bank draft – unsung hero
As tensions escalated between Europe's great economic powers, most local banks stopped honouring foreign letters of credit.
Since pioneering the improved security of foreign payments in the 1800s, American Express was one of the few businesses to continue facilitating crucial international payments via bank drafts.
This service provided relief to nearly 150,000 travellers and troops stranded on the continent without access to funds.
As war raged on, the company was appointed an official agent of the British government, tasked with delivering relief parcels, letters and money to British prisoners in Bulgaria, Germany, Holland, Norway, Switzerland and Turkey. American Express employees were authorised to access prisoner of war camps and arrange for British and French prisoners to access bank drafts.
The bank draft - used extensively during this period - is still a common payment method today, used to settle foreign exchange spot contracts. That is, contracts between you and a foreign exchange provider, for almost immediate settlement.
Simple to understand and execute, spot contracts provide a quick exchange of funds - suitable if you're exposed to short term transaction risk.
Longer term foreign exchange risk can be mitigated with the use of forward contracts – agreements to buy or sell a certain amount of a foreign currency at a fixed rate of exchange at a future date.
American Express continues to improve the security and efficiency of international payments and foreign exchange transactions for Australian businesses looking to grow in the global marketplace.