Small business guide to online foreign exchange

• 15 July 2008

1. What FX rate do you get?

Never be afraid to question your provider about quotes for FX rates. Booking exchange rates online is a low cost business and this should be reflected in the exchange rates you receive. All providers keep a ‘margin’. This is the difference between what they buy the currency for and where they sell it onto you. Ask what margin you are receiving.

2. Fees

Most FX providers will charge a fee to transfer money. Free transfers are becoming more commonplace, but a free transfer does not offset a bad exchange rate. Take the time to compare fees AND exchange rates.

3. Easy to use

Foreign exchange doesn’t have to be complicated. Buying or selling foreign currency online should be a simple, fast process. A lot of websites have unnecessary bells and whistles. When researching an online provider, look for a site that allows you to complete your transaction quickly and easily with a minimum of fuss. A good site will make you feel as if you’re being guided through the payment process.

4. Security

How safe are your funds? Always check who is backing your transaction. It's great to get a good rate and no fees, but you need to know that your provider can offer online security and full traceability on your money. Passwords and security tokens can seem tedious, but they offer security and peace of mind where money is concerned.

5. Customer support

Make sure you have a point of contact. If you have any problems with booking a rate or organising a transfer, you need to feel secure that you can contact a customer care representative via phone, email or fax.

6. Risk Management

Choose a provider that can help you protect your business against adverse foreign exchange movements. Actively managing your FX requirements could save your business money.