18 October 2022

How to save money on foreign exchange: Everything SMEs need to know.

In our latest Money Talks guide, we’re exploring the exciting world of foreign exchange. We’ll discover what foreign exchange is, how it works and how businesses can save money when making international payments.
Foreign Exchange For SMEs: Complete Guide | 3S Money

Currency trading is a business practice as old as time. From the bustling alleyways of Ancient Egypt to the skyscrapers of Wall Street, currency exchange powers all global trade and economic growth.

Whether bartering spice prices on the silk road or importing chips from China – currency exchange continues to be a lucrative business. It’s estimated that by 2027, the value of cross-border payments will be an estimated $250T.

Today’s digitalised economy has made international trade easier than ever before. Yet despite the foreign exchange market being more competitive, SMEs continue to miss out on limitless growth opportunities.

Foreign exchange providers know that whatever the cost, businesses will pay it. This can leave SMEs feeling as though they are backed into a corner with no other option but to pay.

What is foreign exchange and why is it important?

Foreign exchange is the conversion from one currency to another. It is a vital economic process that makes all cross-border payments possible

The value of trading one currency for another, known as the exchange rate, directly impacts the cost of all goods and services for consumers & businesses alike.

For something so integral to the global economy, there’s no centralised body that controls exchange rates. The foreign exchange market is a global online network of regional brokers, banks, and financial service providers.


Why are some foreign currencies more valuable than others?


In general, a currency’s value is determined by supply and demand. The higher demand, the more value is attributed to it. A currency’s value is influenced by a country’s cost of exports, inflation, and its ability to be traded for physical commodities. 

Exchange rates permanently fluctuate, with the value changing multiple times a day. Monitoring the behaviour of global currencies is vital in maintaining global economic stability. 

What are fixed and floating exchange rates?


A fixed exchange rate occurs when a currency’s value is fixed to that of another country’s currency. This is the preferred economic position of emerging economies that require currency security.

A floating exchange rate is a policy in which a currency's value fluctuates in response to supply and demand. This is the default trading position of most of the world’s currencies.

What are the best currencies for businesses to exchange? 

US Dollars, British Pounds, Euros, and Japanese Yen are the world's most traded currencies and are accepted by businesses globally. 

Retail banks will only provide access to the safest tradable currencies. Their outdated attitude towards less ‘desirable’ currencies means that SMEs can be locked out of some of the world’s fastest-growing markets.

3S Money provides instant access to 65+ currencies, including Indian Rupee, Chinese Yuan, Hong Kong Dollar, Australian Dollar, and Canadian Dollar. This spread enables SMEs to expand their footprint and become financially present in more countries than ever before. 


What foreign exchange solutions are available for businesses?


Retail banks are the leading providers of exchange and transfer services. These services ordinarily come as part of an account package but may underpin a 3rd party offering. As with all retail bank services, transaction processing times are slow and access to currencies will be limited.

In recent years, challenger banks and fintech start-ups have accelerated their foreign exchange capabilities. This enables them to offer more accessible services at competitive prices.


What do businesses need to consider when choosing a foreign exchange provider?


Service providers are acutely aware of the difficulty SMEs have in acquiring competitive FX and offer little in the way of support. Partnering with a foreign exchange provider that guarantees transactional peace of mind, as well as seeking mutual opportunities for growth, is integral to progress.

How can businesses save money on foreign exchange?


There are two ways that businesses can save money on foreign exchange fees.

They can choose the most convenient provider and be left out of pocket, by sticking to the status quo. Alternatively, they can opt to take their international payments to the next level by opening an online multi-currency account with 3S Money. As well as including all the benefits of a business account, we issue local business IBANs in the UK, EU, and the US, enabling businesses to make local payments across borders with ease.


How long do international foreign exchange payments take to process?

Despite being slower than domestic payments, the processing time for international payments is the fastest it’s ever been. However, it’s still difficult to give an exact timeframe on how long it will take for an international payment to clear. 

International payments typically go through more checks and balances than a standard payment. Things such as fraud prevention, time zone conflicts, currency exchange, and local banking infrastructure will all cause delays.

Speed and convenience are of the utmost importance to every business, 3S Money included. By partnering with some of the most progressive global payment providers, we make limitless international business payments possible in seconds, not days.

A new standard for international business payments


If you make international business payments, our online multi-currency business accounts have got you covered. We work with shareholders and directors in 190+ countries, offer 65+ currencies, & have the widest global coverage of any payment provider. It’s time to discover the right 3S Money business account for you.

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