Key Takeaways
- FX pricing for businesses can lead to astronomical costs if you rely on traditional trading platforms.
- That’s because of high price spreads, additional markup, and other obstacles.
- Choosing a platform like Payset, which offers a transparent and tiered pricing model, can help you save a lot of money on your trading activities.
If your company makes frequent or high-volume cross-border payments, you may face challenges that drive up foreign exchange costs on every transaction.
High FX markups and price spreads, hidden and embedded fees, and unclear pricing structures all raise costs. And traditional banks often have pricing models that aren’t the most beneficial to users with high or variable trading volumes.
Getting affordable business FX rates becomes even more important as your business scales up its operations — and forex trading and cross-currency payments tend to become a larger part of your activities as you expand into global markets.
But all’s not lost: at Payset, we offer transparent, tiered FX pricing for businesses, which can help you reduce FX costs and simplify your global business payments.
What Is Foreign Exchange (FX) Pricing?
Foreign exchange (FX) pricing includes all costs that you pay when you trade one currency for another, whether during an exchange or during a payment.
Main FX fees include the price spread and additional markup, which make up the difference between the mid-market (interbank) exchange rate and the rate you receive as a customer. For common currency pairs like EUR-USD, for example, the price spread offered is generally tighter than niche currency pairs.
Some providers may also charge non-percentage-based flat fees on every trade and transaction, which are separate from the price spread described above.
FX costs aren’t always visible. Providers may set fees to cover hidden and embedded costs, such as their own intermediary fees and liquidity and execution expenses.
Why Traditional FX Pricing Often Becomes Expensive as Businesses Scale
Whether your business is expanding internationally or simply growing in size, you’ll need scalable FX pricing that banks (many of which offer the same markup to businesses as to tourists) often can’t satisfy.
One issue is that some FX providers don’t automatically offer better rates to customers with high trading volumes without negotiation. Instead, they apply rates to all customers without distinction, often with high baseline fees.
This ties into a secondary issue: traditional FX providers may not make their pricing models fully transparent if there is no obligation to do so.
Ultimately, this means that many businesses don’t have insight into the prices they pay and have little leverage in negotiations until they choose a new FX provider.
Traditional FX Pricing vs. Transparent, Tiered FX Models
How do traditional pricing models compare to those with full FX transparency? Every provider is different, and some offer greater insight to customers than others.
But in an ideal scenario, this is what you can expect from a transparent FX provider:
| Traditional FX Pricing | Transparent FX models | |
| Pricing clarity | May contain hidden or embedded costs in rates | Costs are shown more clearly to customers |
| Price discovery | Comparing providers and trading opportunities can be difficult | Users can easily compare services to find the best rates |
| FX spread and markup | Exchange rate markups may not be fully disclosed | Markups are fully disclosed |
| Other service and transfer fees | Service may charge extra fees related to transactions | Extra fees are disclosed upfront |
| Tailored pricing | Varies – Pricing is often fixed or may be tailored only with negotiation | Varies – Pricing is often tier- or volume-based, providing better rates when you trade more |
What Are FX Tiers?
FX tiers are the different levels of pricing that some forex trading platforms offer, giving eligible customers access to better rates after meeting certain conditions.
When we talk about FX tiers at Payset, we mean premium pricing that’s based on the volume (the amount of money) that you trade over a period of time.
However, other tiered FX services may offer tiers based on other factors. They might set your tier based on the subscription plan that you pay for, the number of transactions or trades you make, or an agreement that you negotiate directly with the provider.
We believe that volume-based tiers are the best tier model because they reflect and scale with our customers’ trading activity — measured in real monetary value.
Payset offers a four-tier FX model allowing international and US businesses to lock in a discounted rate for 30 full days (not just until the end of the month) and based on a 90-day rolling volume window to account for normal FX volume fluctuations.
How Businesses Can Improve FX Efficiency
Here’s how you can improve your exchange costs in tandem with tiered pricing:
- Structure your trades: Plan your payments to qualify for preferred rate tiers and get the best rate available in your situation.
- Combine your transactions: If your FX provider charges flat fees, making fewer but larger trades and transactions may reduce fixed costs.
- Use fewer currencies: Restricting your payments to just a few currencies can cut down on the number of FX trades you need to make, saving money overall.
- Reduce unnecessary conversions: Hold, use, and spend local currencies whenever possible in order to avoid unneeded FX trades.
- Compare the terms: Transparent and varied pricing models mean there isn’t always one best option. Find a provider and service model that works for you.
Why Transparent FX Pricing Matters for International Businesses
eCommerce Brands
Online marketplaces and eCommerce companies often handle transactions with buyers and sellers across the world, and they rarely operate in just one country or currency.
These businesses face a large number of cross-border payment costs that need to be handled in a cost-effective way. Full insight into FX pricing, combined with strong planning and trade structure, can help your eCommerce company save money.
Import/Export Companies
Import/export businesses work with suppliers and customers globally while facing tight margins and hidden conversion costs. Gaining insight into FX trading costs before you perform a transaction can greatly reduce the foreign exchange prices you pay.
SaaS Businesses
Software-as-a-service (SaaS) companies frequently deliver their products to international clients, often involving large-scale subscriptions and contract payments. These companies often face significant cross-currency and international payment costs, which are usually more affordable under FX plans designed for high-volume users.
Paying Global Contractors
Global workforces are more common than ever. Businesses with overseas contractors, employees, and freelancers may need to make payments anywhere in the world in ever-changing ways. This makes transparent and tiered FX pricing a must-have feature.
How Payset’s Tiered FX Works
At Payset, we use a tiered FX pricing model that rewards users with high trading volumes while keeping access affordable for everyone else.
Here’s how it works. We use your rolling 90-day FX volume to place you into a tier, meaning you receive discounted pricing as your trading activity rises.
The 90-day rolling window ensures you aren’t penalized for seasonal fluctuations month to month.
You’re also locked into your qualifying tier for 30 days. Other providers cut you off at the end of the month, so if you qualify on the 15th, your discount ends on the 30th. At Payset, your discount will carry on to the 15th of the next month. You’ll keep your tier even if your volume drops below the tier threshold: you won’t instantly lose access to the better rate, and you can still climb to a better tier if your trade volume increases.
Why do we do it this way?
We recognize that many businesses experience fluctuating international payment volumes throughout the year. Our approach helps you take advantage of competitive, predictable pricing even as your situation changes.
Ready to start trading? Open a Payset multi-currency business account today.
Trade 38 currency pairs and transact 34+ currencies in 180 countries.
We’re currently waiving monthly account fees, and signup is free!
FAQ
What is foreign exchange (FX) pricing?
FX pricing includes fees, rates, and other costs that you pay when you trade currencies, including the spread, markup, flat fees, and embedded or hidden costs.
What is tiered FX pricing?
In tiered FX pricing, the provider adjusts rates based on your trading volume, such as the amount of money that you trade through the platform or other factors.
How do transparent FX pricing models work?
Transparent FX pricing simply gives you more insight into the fees involved in a trade before you complete it. Some platforms offer transparent pricing without tiers, but tier-based pricing usually offers greater price transparency and insight.
What are FX markup fees?
FX markups are the fees that your foreign exchange provider adds to the currency spread. Finding a provider with low markup fees may reduce the costs that you pay.
Do businesses get better FX pricing with higher volume?
You may be able to get better FX pricing as your volume increases. Choosing a platform with transparent and tiered pricing, such as Payset, can help you do this.
