Key Takeaways
- Performing FX trades on a regular basis can be costly, but there are several ways to spend less on conversion fees.
- From multi-currency accounts and timed conversions to batched transactions and affordable fees, many strategies can save you money.
- Choosing an FX platform with tiered service rates is one key tactic.
- Payset offers all of these features and more in our built-in FX exchange.
We’ve previously established the high costs of FX conversion, with banks frequently imposing large currency spreads and charging other secondary fees.
Saving money on these forex costs can be challenging, but it’s possible to do so with the right strategy. In addition to seeking out FX services with affordable rates, it’s also important to optimize your forex activities across the board.
Below, we’ll take a look at the most effective cost-saving strategies that your company can use to save money on FX conversion.
Finding an Affordable FX Service
It doesn’t matter when you perform an FX exchange: whether it’s during a transaction or in a separate trade, you need to seek out affordable rates.
Generally, you can expect to pay up to 3% on every currency exchange you perform. But determining a service’s exact rate means investigating currency spreads, transaction fees, and other charges on every trade.
There may be separate transaction fees and account fees for you to consider, which count toward the bigger picture of what you need to pay.
See Payset’s current rates to find out how we stack up against the competition, with affordable trading and account fees all around.
Leveraging Service Tiers
If you have significant FX conversion volumes, choosing a platform with multiple FX tiers can be helpful because you’ll likely qualify for premium conversion rates.
Every provider handles tiers differently. Sometimes, you’ll explicitly choose a specific service tier, with greater upfront fees but better rates per trade.
In other cases, you’ll simply be placed in the premium fee tier based on your ongoing trading activity. That’s how we handle it at Payset: after maintaining trading volumes for a set period of time, we’ll secure a better rate tier for you (while also allowing you to move up further as you trade more).
Learn more about our tiered FX model here.
Multi-Currency Accounts
Sometimes, you need to do more than just trade foreign currencies — you need to manage and use those currencies for real-world payments.
That’s where multi-currency accounts come in, allowing you to store, send, receive, and withdraw currencies from a single platform.
This allows for a basic cost-saving strategy. By keeping assets you need on hand, you’ll reduce repeated exchange fees. And if you’re paid in a foreign currency, you can hold it and use it later, avoiding unnecessary trades.
Plus, multi-currency accounts can serve non-local users more flexibly than traditional banks, which often cater to local clients and may provide extremely limited foreign currency accounts despite growing demand.
Find out more about Payset’s multi-currency accounts here, featuring support for 34 currencies, including EUR, GBP, USD, and dozens of countries.
Timing Your FX Conversions
Timing your FX trades can counteract high service fees, allowing you to secure better exchange rates than conversions performed at transaction time.
If you know what currency you’ll need in advance, you can monitor exchange rates to purchase that currency at an advantageous rate. In other words, you can buy a foreign currency when your native currency is comparatively strong.
Alternatively, if you’ve received a foreign currency as payment, selling it when your native currency is weaker can get you more of your own currency.
It’s not possible to time the FX market perfectly, but monitoring daily trading sessions and economic news may help you anticipate short-term changes.
Combined Conversions
Grouping your currency conversions into a single trade request can help you avoid certain fees that your bank or FX platform charges.
This strategy has the most direct advantage if your FX provider charges flat fees on conversions — a single request means you’ll pay just once.
When FX fees are percentage-based or adjusted based on other factors, combining conversions provides you with less direct benefits. In this case, it’s most useful if it helps you enact other strategies or qualify for better rate tiers.
Combining transactions can also be a time-saving measure outside of FX. Payset’s bulk and scheduled payment feature can help you accomplish this.
Improving Overhead
If your company employs a team to manage its finances, the cost of FX administration extends beyond fees paid to a bank or trading platform.
The solution is internal: simplifying your FX workflow and other payment activities can reduce the time that your team spends, especially if you choose a highly streamlined platform with transparency and reporting tools.
Streamlining can provide direct benefits for you and your team, cutting back on staffing costs or just freeing up time for other important tasks.
Plus, a simplified process with fewer points of failure reduces the risk of errors, avoiding problems that could cost significant time and money to fix.
Local Payment Options
Foreign exchange can be avoided altogether whenever local transactions are possible — and this might be an option more often than you think.
That’s because multi-currency accounts frequently offer access to many countries’ domestic payment methods even when you’re not a resident.
Not only does this reduce the need for FX trading, it can also provide lower transaction costs. Of course, this is only truly an option if you share a currency with your transaction partner and can agree on a payment network.
At Payset, we offer a variety of local payment options, such as the UK’s Faster Payments Service, regional options like the EU’s SEPA network, and global options like SWIFT. See our full list of supported payment options here.
Risk Management and Hedging
Even if you’ve fully planned out an FX strategy, things might not go exactly as planned. Constantly changing exchange rates can quickly affect the funds that you plan to exchange or transfer, cutting into your profits and revenue.
That’s why you should manage FX risk with clear goals: start by estimating the potential impact and cost of currency fluctuations on your business.
With that knowledge, you can simply take potential losses into account in the rest of your business’s finances and prepare for unforeseen events.
If you’re more confident, you can attempt advanced hedging techniques, such as forward contracts or currency hedging, to protect yourself from FX risk.
How Payset Can Help
At Payset, we offer a complete payment platform that provides affordable FX conversions alongside a variety of other benefits.
By signing up, you’ll get access to:
- Transparent and tiered FX trading with real-time rates, allowing you to move up through the ranks as you meet trading volume requirements.
- Multi-currency IBAN accounts with support for 34 currencies, including the euro (EUR), British pound (GBP), U.S. dollar (USD), and more.
- 38 different trading pairs on our FX exchange.
- Local and international payment options — send and receive money in 180 countries via SEPA, SWIFT, CHAPS, FPS, and more.
- Bulk payment tools so you can make payments to multiple recipients.
- Team management tools that allow you to add and remove members on your account and set spending limits.
- Detailed account insights and reporting designed to help you make informed decisions and optimize your financial activities.
Take Advantage of Payset’s Tiered FX
At Payset, we’ve taken steps to streamline our tiered FX trading platform.
When you sign up, you don’t need to choose a tier — just tell us whether you’re using your account for personal or business use.
Once you start using the account, we’ll automatically put you in a pricing tier based on your transaction activity over a set period of time.
You’ll start at our baseline pricing tier and be moved to a higher tier once you meet volume requirements for a set period. You’re guaranteed pricing in the higher tier even if your activity falls below the requirements — and you can still enter higher tiers if you trade more volume in the allotted time.
This way, you’ll get transparent FX pricing with competitive rates that are suited to your needs, with no need to negotiate or change your plan.
Not sure how it works? The bottom line is this: the more you trade with Payset, the better FX rates you’ll receive.
Get started today or contact our sales team to see if we’re right for you.
References
https://www.forex.com/en-us/trading-guides/forex-market-hours
https://www.investopedia.com/articles/forex/08/forex-trading-schedule-trading-times.asp
https://fastercapital.com/articles/Currency-Exchange-Automation–Tools-to-Save-Time-and-Money.html
https://www.investopedia.com/articles/forex/10/forex-risk-management.asp
