A worldwide network of intermediaries necessitates access to multiple currencies in order to pay your suppliers. Unless an OTA has an in-house treasury function, this also means some degree of foreign exchange associated cost. As with surcharges high transaction FOREX fees can send this figure soaring.
Take action and get payment smart by reading our Top Tips to combat FOREX.
1) FOREX is a major cost of payments (so don’t ignore it!)
Recent research shows that FOREX forms nearly 23% of an OTA’s outgoing payment costs. Understanding FOREX and how it affects your business is the first step to reducing your cross-border payment costs. Mapping the geographies, currencies, schemes and timings of your global payments will help you design a more effective payments plan.
Watch our FOREX Optimisation Videos to discover how to assess your currency costs and how to bring them down.
2) Offer customers the option to pay in their preferred currency
Use a Dynamic Currency Conversion (DCC) service to make payment simpler for your customers. Present your customers with their preferred currencies and help them to know exactly how much they will be paying. The currency conversion will be handled by your payment service provider, and you could make additional revenue by getting a rebate.
3) Keep a track of exchange rates
Always check the exchange rates from trusted websites such as Visa, Mastercard or XE.com. Economies of scale mean that even small changes could have a big impact on your profits; especially when making aggregated payments. Armed with this knowledge, you’ll be able to compare who can offer you the best rates.
4) Avoid the banking trap
Banks are expensive. It may be better to consider working with a virtual card supplier for your currency conversion process. Why? Because virtual card providers deal in scale when it comes to FOREX and will typically be able to offer more competitive rates of exchange.
5) Eliminate fees altogether
The best way to pay your international suppliers is in their local currency. By working with a virtual card provider you can make payments by issuing cards in a range of currencies, eliminating FOREX costs altogether.
6) Get incentivized
It might not always be possible to avoid FOREX fees but some providers offer incentives. Discuss with your virtual card provider if these costs can be offset with a higher rebate or a discounted fee.