As the forex market continues to expand, more and more companies are seeking to enter the market. If you are also one of them and planning to opt for a white-label solution, then you are at the right place. In this article, we are going to review partial and full white-label solutions along with their strong and weak points so you can have an easy time making your decision.
Understanding the Concept of White Label Forex Solutions
To describe white label, it is a process where one company makes a product and sells it to another company which then brands it and resells it under its own name. In the context of forex brokerage, a primary broker or white label provider gives access to the existing trading platform, like Mt4 or Mt5 and liquidity to a new company. This allows the new brokerage company to build their brand easily.
Compared to starting a forex brokerage company from scratch, white-label forex solutions are inexpensive and can save a lot of time. By partnering with a white-label company, the new brokerage company can use its infrastructure and technology and offer its clients the same trading conditions as other established brokers operating under the white-label provider.
Pros and Cons of Partial White Label for New Forex Brokers
What distinguishes a partial white label from a full white label is the ability to handle clients’ deposits. In a Full white-label solution, you will get access to the custom-branded trading platform along with the ability to directly receive and deal with the client’s funds. On the other hand, in a Partial white-label solution, you only get a rebranded trading platform but the responsibility of handling the client’s funds will be on the white-label provider (primary broker).
In a partial white-label solution, you, as a sub-licenced broker, can’t process the client’s funds, but the primary broker will do so. Now this can be the biggest drawback as the primary broker can access the trader’s personal information, which undermines the principle of anonymity.
However, it has its benefits as well. The partial white-label solution provides an easy and quick route to start the brokerage firm. Considering that you have all the documents in place, it will take less than two weeks to get started.
Pros and Cons of Full White Label for New Forex Brokers
As discussed above, the full white-label forex solution gives sub-licensed brokers an opportunity to rebrand the trading platform as well as to handle the client’s deposits. This can be good or bad for your company, depending on who you partner with. If the white-label provider is highly reputable with a track record of trust and credibility, it will be easier for you to attract more clients. Remember that it’s hard for traders to trust a new private label company, but if it’s backed up by a primary broker with an established reputation, clients will feel more secure depositing their funds. Moreover, it will also save you from the trouble of dealing with payment processing. The only cons that can come with a full white-label solution are added costs. Full white-label platforms are more expensive than partial white-label solutions.
Factors to Consider When Choosing Between Partial and Full White Label Solutions
Funds Safety: The most crucial aspect when selecting a white-label company is the guarantee of funds safety. There are lots of misconceptions surrounding this. Some people believe that the larger the company is, the safer it is, but the size of a white-label firm is never a determinant of its reputation and reliability. In fact, many large firms take advantage of unsuspecting clients and carry out unscrupulous activities. To save yourself from falling into such a trap, it’s important that you do thorough research before partnering with a white-label company.
Infrastructure: The majority of retail traders don’t know about white labelling, and those who know don’t care about whether you’ve partnered with a white label company partially, fully or not at all. For traders like these, it doesn’t matter who is behind the platform. They will judge you based on the experience they get by signing up with your brokerage firm. So, even if you provide them with the best spreads in the market but the execution is sluggish or poor, it will overshadow everything else and discredit your company’s reputation. And believe me, negative things about any broker spreads like wildfire on the internet. This is why, while searching for a white-label forex solution, you should pay special attention to the infrastructure, how frequently the platform provider updates their technology, how efficient their platform is and everything else.
Flexibility: Each company has its own value, specific needs and requirements. For instance, if you plan to establish your brokerage firm, you may have some parameters in mind about what kind of experience you want to offer your customers. You don’t want to be one out of many brokers in the industry, you want to be one of your own kind. Don’t you? Therefore, you should work with a provider who offers you the flexibility to create a company of your vision. Don’t settle for a firm that’s not willing to understand your business model. Only commit to a provider if they are interested in supporting you; otherwise, your goal of establishing your dream brokerage company will turn into a complete nightmare.
Advantages and Disadvantages of Using a White Label Solution
- When you use a white label forex solution, you can get your company up and running much more quickly compared to going the long way of building the company from scratch. This is because you don’t have to spend months (or sometimes years) building a trading platform, creating forex tools like trading calculators, indicators, etc. Instead, you can leverage the technology offered by the white label provider, such as trading tools, educational materials and so on. Many traders appreciate the inclusion of trading calculators to get precise values, which help them trade better. For example, a profit calculator helps traders know the exact profit they have made in their trades. So, make sure to find a white-label provider that offers these features.
- Besides saving you time, white-label solutions can also be easier on pockets. Since you are using an existing trading platform, you don’t need to hire professional developers and don’t have to worry about the money spent on the maintenance costs of the platform. This also reduces the entry costs making white labels an attractive solution for beginners.
- With a good white-label solution, you will be sure to get technical support at every step of the way. These providers have dedicated customer service to resolve the issues new companies might face.
- Since you are free from all the hassle that comes with building a company from scratch, you can spend your time and energy building a strong brand identity and developing your relationship with your clients.
- It takes time for a new brokerage company to start making a company, but regardless of this, they are bound to pay set up or maintenance costs to their primary broker. Although white-label solutions can save money in the long run, the initial costs can be higher, which can be quite overwhelming for a starter.
- As a secondary broker depends upon white-label provider technology and infrastructure, it can, to some extent, limit flexibility. You may not be able to fully customise the existing platform, so even if there are some shortcomings or missing features, you have to compromise with it.
In the fast-paced forex industry, a white label is a convenient way to go around, but it’s important that you are aware of both the negative and positive sides of using a white label solution. Whether you should choose a partial or full white label solution depends upon what kind of control you want over your company, and also it relies on your financial budget. No matter which method you choose, make sure to select a reputable and reliable platform provider that provides transparency in its fee structure and the services it will offer. This will allow you to make better decisions for yourself and your company.