Key Takeaways
- If your FX trading platform offers volume-based pricing but counts from zero each month, you might lose your rate during fluctuating monthly volumes.
- Platforms that track your rolling volume can help you keep your rate for longer.
- At Payset, we determine your pricing tier based on your 90-day rolling volume.
- When you qualify for an improved tier, you’re locked in for 30 days, guaranteed.
How Volume-Based FX Pricing Usually Works
Volume-based FX pricing adjusts your FX rate to your level of usage. Typically, this means that you get reduced or discounted rates as you trade larger amounts.
Naturally, you should seek out a provider that combines affordable rates with volume thresholds within your reach. However, there’s another important consideration: the way in which your FX trading volume is measured on an ongoing basis.
So how does it usually work? The exact method for tracking your usage varies between trading platforms, but one common method involves measuring your trading volume over a monthly cycle and counting your volume from zero each month.
This sounds simple, but it’s not always the most efficient model, and there are bigger optimisation opportunities available. Here’s how Payset handles volume-based FX pricing, and why we think our approach is superior.
The Problem With Monthly FX Volume Resets
There’s more than one way that monthly FX volume resets can limit your access to reduced rates. Let’s take a look at a few different challenges that come with this model.
Your Volume May Be Counted From Zero Each Month
Some FX providers count your trading volumes from zero every month, either at the start of each calendar month or on a custom monthly cycle.
This model offers straightforward timing, but it can make it difficult for you to trade enough to qualify for better rates. You might not qualify until late in the monthly cycle unless you’re carefully timing your trades to happen earlier in the month.
In other words: qualifying for improved rates just before your rate expires at month-end leaves little time to take advantage of the discount.
Your Volume May Be Based on the Previous Month
Some FX providers instead base your FX rate on the previous monthly volume. For example, your February rate may be based on your January volume.
In this case, you don’t need to worry about reaching the qualification threshold at the start of the month. However, the broader issue still applies: if you have months with low volumes, you could soon stop qualifying for the better rate tier.
One Month Is a Short Timeframe
There’s one other problem: examining just one month of volume doesn’t take into account your long-term FX activity. You might have high trading volumes that are spread across multiple months, causing you to miss out on reduced rates.
Together, these all add up to a set of related challenges: temporarily low volumes can lead you to lose your pricing tier, and your long-term usage isn’t accounted for.
How Payset’s Rolling 90-Day Window Works
At Payset, we offer a different approach. Here’s how our model works:
1. It’s based on a 90-day rolling volume.
We don’t reset your FX trading volume count each month like some competitors. Your volume is measured in a rolling window over the last 90 days, so won’t end up losing your pricing tier just because of a single low-volume month.
2. You’re locked in for 30 days.
Many services will reset your tier at month’s end, (you qualify on the 15th and your discount dies in 15 days). At Payset, you’re guaranteed your rate for 30 days no matter when the start date lands on the calendar.
Your rate tier applies for 30 days from the moment you qualify.
Our starter tier includes rates at less than half the average bank rate of 2%, which means businesses with lower volumes can still take advantage of our starting price tier. You’ll then start moving up the tiers for even lower rates once you achieve €300,000 in volume over 90 days.
Read more on our website and calculate how much you could save under our model.
Understanding How Your Provider Sets Your Rate
Not sure whether your provider offers volume-based FX pricing? Follow these tips:
- Check the website: Providers with transparent pricing should make clear all pricing tiers, volume measurement cycles, and rate durations.
- Look at your existing trades or transactions: Looking at past FX trades may help you understand how your rate has been calculated so far.
- Know when changes take effect: Your FX provider may apply rates at the start of the month, on a custom cycle, or as soon as you qualify for a new rate.
- Be aware of the rate duration: The period that determines your rate is not always the same as how long your rate lasts. At Payset, for example, your volume is measured over a 90-day rolling period, but your rate lasts for 30 days.
- Check for extra requirements: FX providers often determine your rate based on whether the value of your trades hits a threshold, but they may also consider your transaction history, your account history and balance, or other details.
- Ask your provider: If you’re not sure how something works, ask your provider how they apply their rates. It’s the best way to be sure.
Who Should Use a Rolling Model?
All businesses can potentially benefit from a rolling model. However, there are a few areas where we believe this model is especially useful.
Businesses With Seasonal Volumes
Some types of business need foreign exchange rates that fit fluctuating monthly volumes or seasonal trading patterns. In this case, a rolling model can help smooth out slow months by taking into account your usage over a longer timespan.
We see this as ideal for industries like e-commerce and imports/exports, where demand from suppliers and customers isn’t always stable.
Businesses With High But Infrequent Volumes
Businesses with high-volume FX trades and transfers can benefit from rolling volumes. Even if your transfers and trades are infrequent, a few large trades can boost your rolling volume, qualifying you for reduced rates and plenty of time to use them.
We see this as especially useful if you’re involved with holding companies or special purpose vehicles (SPVs), where a handful of large trades may account for all volume.
Businesses Looking for Stable FX Costs
Even if you only qualify for the most basic pricing tier, a rolling model can still help your business by providing predictable FX rates. Using a trading platform with this approach can make it easier to budget and plan expenses over the near term.
We believe this is useful to companies that operate on fixed budgets and tight margins and therefore need both affordability and predictability.
FAQ
Why did my FX rate get worse after a slow month?
Your FX provider may have downgraded your FX rate if you did not meet its required trading volume threshold or other usage thresholds. Payset’s 90-day rolling window and 30-day tier lock are designed to reduce this very issue.
What’s the difference between monthly and rolling FX volume tiers?
Monthly tiers generally determine whether you qualify for a rate tier based on your volume in the current or previous month. Rolling tiers determine your tier based on an ongoing measurement (in Payset’s case, based on your volume over the last 90 days).
Can I get consistent FX pricing even with seasonal trading volumes?
Pricing models that consider your trading volume over longer periods can help you get more consistent pricing. However, your rates may still vary in the long term.
Do all FX providers determine pricing based on volumes?
No. Some providers determine FX rates based on the subscription you choose, directly negotiate rates with you, or simply offer set FX rates.
How does Payset determine FX fees?
Payset measures your rolling 90-day volume, then uses that amount to set your FX rate for the next 30 days. See details of our FX pricing model and other fees on our website, or find out how you can switch to Payset without experiencing disruptions.
