Global Payments

How Foreign Exchange Rates Affect International Businesses

July 02, 2018 | Mohit Kansal

Exchange rate fluctuations can have a sizeable effect on the profitability of companies. Two main factors affect foreign exchange rates and currency conversion for businesses.

1. The open-market exchange rate

The mid-market, interbank, or real exchange rate is the price of one currency expressed in terms of another currency. It is the exchange rate found through Google, Yahoo, Reuters, or xe.com. If a currency depreciates, it is beneficial for exporters, and negatively impacts importers. Alternatively, if a currency appreciates, exporters are negatively impacted and importers benefit.

For example, imagine a Vietnamese company is exporting coffee to the United States. If the Vietnamese dong depreciates, or becomes weaker, the coffee becomes more attractive.

Flywire is able to negotiate favorable foreign exchange rates with global banks, costing customers less than if they were to use a traditional bank or wire transfer service. We are able to provide competitive exchange rates by grouping payments together. This larger volume of payments then enables us to leverage our scale to get improved wholesale rates for our payors.

2. Foreign currency conversion fees

When conducting international payments, businesses incur charges for converting currency, whether they are the payer or receiver. Banks charge a premium on foreign money, and sometimes utilize an intermediary bank in the middle of the transaction that charges its own additional wiring fee.

Flywire provides a core solution that eliminates hidden fees for both the payer and receiver of international payments. As a result, short payments are eliminated. We remove international payment obstacles to ensure businesses receive their full amount quickly and easily every time.

Mohit Kansal, Director of Global Payments

To learn more about how Flywire can streamline your international business payments, sign up to see a demo.

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