FX commission on international payments: what your bank really charges
Three billing layers stack up on a foreign-currency payment, and only one appears on the statement. How to isolate them, quantify them, and reduce the total to a percentage comparable across providers.
A USD 200,000 supplier payment from a euro account gives rise to three separate charges. Only one is identified as such on the statement. The other two sit elsewhere — and usually account for most of the cost.
The three layers of cost
| Layer | Usual wording | Order of magnitude | Shown on the statement |
|---|---|---|---|
| Transfer fee | Payment commission / SWIFT fee | EUR 15 to 60 per transaction | Yes, a dedicated line |
| FX commission | FX commission / conversion commission | 0.05% to 0.15%, with a minimum | Often |
| Margin on the rate | — no wording at all — | Uncapped — can exceed 2% | No |
Most of what you pay on a foreign-currency payment appears on no billing line. It is a gap between the market rate at the moment of execution and the rate applied to you.
How to isolate the margin on the rate
- 1Record the timestamp of the transaction
The deal confirmation shows the date and, depending on the institution, the time of execution. That is the reference.
- 2Get the market rate at that moment
The mid rate of the pair concerned, as close as possible to the timestamp.
- 3Compute the gap
(rate applied − mid rate) / mid rate. Expressed as a percentage, that is the margin.
- 4Bring everything to one denominator
Margin + FX commission + fixed fees, divided by the notional converted. That is your all-in cost, the only figure comparable between providers.
The OUR, SHA and BEN codes, and what they change
- SHA: each party pays its own bank's fees. The beneficiary receives an amount net of the intermediary banks' fees. It is the default setting, and the leading cause of reconciliation differences.
- OUR: you pay all the fees, the beneficiary receives the exact amount. More expensive to send, but it removes supplier disputes and invoices settled EUR 40 short.
- BEN: the beneficiary bears all the fees. Reserved for particular contractual cases; to be avoided with a strategic supplier.
If your accounts-payable team spends time matching differences of a few tens of euros on international payments, the administrative cost of SHA probably exceeds the saving it delivers.
Paying in a currency from a euro account, or the other way round
Two configurations exist, and they do not cost the same.
| Configuration | FX transactions | When it makes sense |
|---|---|---|
| EUR account → USD payment | One conversion, at the bank's rate, at the time of payment | Occasional or small foreign-currency flows |
| Funded USD account → USD payment | No conversion at payment; one conversion chosen when funding the account | Regular flows, or receipts and payments in the same currency |
The second case changes the nature of the problem: you stop being subject to the rate on the day of payment and decide when and at what rate you convert. For a company that both receives and pays in the same currency, it simply removes a share of the conversions altogether.
Quantify the margin on your transactions
The pricer recomputes the reference rate of your FX transactions and shows the gap applied, transaction by transaction.
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Frequently asked questions
The questions finance departments ask most often on this topic
How do you find the market rate at the time of your payment?
The mid rate of a major pair is public and recorded to the minute. You simply look it up at the timestamp shown on the deal confirmation. For regular monitoring, the practice is to sample about ten transactions over a quarter and compute the average margin weighted by amounts.
Is an FX commission of 0.10 % a good rate?
The question is badly framed: the commission shown is not the cost. An institution can display a very low commission and apply a margin on the rate several times larger, for a total cost far above a competitor whose headline commission looks more expensive. Only the all-in cost is comparable.
Can the margin on the rate be negotiated?
Yes, and it is the most negotiable of the three lines, because it is discretionary. The precondition is being able to quantify it: a renegotiation request supported by a record of margins observed on twenty transactions gets results a general request never does.
Are payment fintechs cheaper than banks?
On the FX margin, generally yes, and the gap can be substantial. The points to examine before switching are the counterparty's soundness and regulatory status, client-fund segregation, margin-call terms on forward hedges, and actual coverage of the corridors you need.
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