Key Takeaways
- Several signs might prompt you to move to a new FX provider.
- One factor is trading volumes. If your FX rates don’t improve as your trading rises, you should consider a new service with pricing that matches your volume.
- You should also decide whether your FX provider meets your needs in general.
- Here are five signs that you should switch FX providers.
Sign 1: Your Rate Doesn’t Improve as Your Volume Grows
Some FX providers offer volume-based tiered pricing, which means that you’ll get discounted rates or lower pricing as you trade or convert more money.
These tiers usually have an upper limit. Once you reach the highest tier (i.e., the lowest rate), you might not be able to get larger discounts unless the service offers negotiated pricing. Reaching this upper tier can be a sign that it’s time to compare competing providers and find one with pricing that’s better suited to your trading volume.
But you shouldn’t just move to an FX provider based on its headline fees. Every provider has different rates and qualifying volume thresholds, and simply qualifying for one provider’s premium tier doesn’t mean you’ll get the best FX rates on the market.
Instead, consider your expenses in full. Calculate your current FX costs and determine whether an alternative provider can really offer you a better rate.
Sign 2: Your Provider Resets Your Discount Every Month
Once you secure a pricing tier that suits you, it’s usually a time-limited benefit: you won’t necessarily qualify for it month after month.
FX providers generally have different ways of timing their tiered pricing offers. Sometimes, this involves two timeframes: how long the provider measures your qualifying volume for, and how long you can use your reduced rate before it’s reset.
That means some setups might suit you better than others. For example, if your provider tracks your qualifying volume monthly, but your volumes are only consistent over longer periods, you might seek out a provider that measures quarterly volumes.
Shorter timeframes don’t necessarily require changing providers — you can also try to plan your trading around the schedule — but switching is always an option to consider.
Sign 3: You’re Tracking Fees but Not the Rate
Discovering your true FX costs is another reason to change services, especially if you currently monitor FX fees but not the costs embedded in each trade.
Many FX costs don’t show up as line items or explicit fees. Even if your FX provider offers 0% commission fees, you should still expect it to collect a margin on your trades. This means that you may receive less of the target currency on each conversion.
If you’re tracking fees but not the rate, you should instead measure the amount you receive on each trade. This involves calculating how much you receive at your given rate compared to how much you would receive at the mid-market rate.
Making sure you know the real cost, and not just the advertised price, will give you more information to compare when you start to seek out a new FX provider.
Sign 4: You’re Juggling Multiple Providers for One Need
Reliance on more than one FX provider to handle your FX activities can be a sign that it’s time to consolidate your services into one.
The problem is twofold. First, you’ll pay direct costs if each provider has recurring fees. Second, you’ll experience operational complexity as your finance team spends time and effort managing multiple platforms, and that extra work may generate indirect costs.
Sometimes, it’s a good idea to use multiple providers, especially if you have overlapping service periods during the change to a new service provider. And each provider might have unique benefits that might give you a reason to keep using it indefinitely.
However, reducing your list of FX providers to one provider that meets all of your needs is often the most straightforward option for businesses.
Sign 5: You Have Complex Currency Needs
Finally, you might want to seek out a different FX service if you need to perform certain conversions that aren’t supported by your current provider.
Businesses with highly specific trading and payment setups often need to consider this the most. For example, you might run a UK company that sends invoices in USD but later needs to convert funds to GBP. Or you might lead a manufacturing company that pays overseas suppliers who bill in a wide range of foreign currencies.
You should determine whether your FX provider supports trading the currency pairs you need at affordable rates. Additionally, you should make sure that it supports the countries and payment channels that you need to make any associated transfers.
And it’s not just uncommon payment setups where this applies: all companies can potentially reduce costs by finding an FX platform that caters to their currency needs.
What to Do Next as You Investigate Services
Comparing FX platforms means taking all of the above considerations into account. Here’s what you should think about as you look at alternatives:
- Review your current FX costs: Calculate the costs you pay on your current FX setup, taking both explicit fees and embedded markups into account.
- Compare other offers: Compare your current costs to competing offers, or use Payset’s FX calculator to estimate your costs against illustrative industry rates.
- Find out what tiers you qualify for: Don’t just look at headline pricing. Look at which tiers you can qualify for based on your current volumes, and determine whether the corresponding rates are really better for your business.
- Structure your volume: Think about planning your FX conversions so that your volume meets better pricing tiers, especially if your trading activity is irregular.
- Examine your currency needs: Make sure your new FX provider supports all of the currencies, payment methods, and countries that you work with.
- Decide how many services you need: Remember that you can use multiple providers in parallel during your service switch, or for as long as needed if you decide the cost of maintaining multiple subscriptions is worthwhile.
- Check the cost of switching: Find out if there are fees to open a new account, close your current account, or move funds between platforms.
- Ask the provider if you have any questions: Contact the FX provider you’re considering if you’re uncertain about its features or pricing.
How Payset Can Help
At Payset, we offer a complete FX and payment platform with global coverage. Send, receive, and exchange up to 35 currencies in 180+ countries.
You’ll enjoy tiered pricing based on your rolling 90-day volume, with your rate locked in for 30 days after you qualify. Plus, our transparent pricing system gives you full insight into our full margin before you trade. Compare rates with our payment calculator or get an estimate based on your current volume.
Switching to Payset is easy and without obligation: use alongside your current provider or trust us as an all-in-one provider for your FX needs.
FAQ
How do I know if my business has outgrown its FX provider?
You may have outgrown your FX provider if increasing your volume doesn’t provide better rates. You may want to seek out a provider with pricing tiers that suit you.
What are red flags that my business’ FX provider isn’t competitive on price?
You’ll only know if your FX provider offers competitive pricing by comparing it to others. However, non-transparent pricing, a lack of volume-based discounts, and frequent tier resets are red flags that mean better pricing options may be available elsewhere.
Should I switch services if my FX volume is rising?
Yes, sometimes. Higher volumes can help you qualify for better pricing tiers, which vary widely across different services. However, it’s important to make sure that you’ll be able to qualify for better rates at the new service before you commit to the switch.
When should a growing business review its FX provider?
On an ongoing basis. You’ll know when to change FX providers if you continually review your current FX setup, including the costs you pay and the features you need.
