7 May 2025 Article

A Quick Guide to FX Payments for Merchants

Money makes the world go round. But first, money must be able to go around the world – and that’s where FX payments come in.

FX payments enable merchants to send and receive international payments. However, they also come with certain challenges, making it important for merchants to optimise their FX payments.

In this article, we’ll cover what FX payments are, how they work, why they’re so important, how merchants can optimise their FX payment process, and how systems like Brite’s Merchant FX can help.

What is an FX payment?

A foreign exchange (FX) payment, also known as a forex payment, is an international, cross-border payment that involves converting one currency into another.

Types of FX payments include:

Bank transfers: Bank transfers are the traditional way of transferring funds between bank accounts. They’re secure, but can be slow and costly due to fees and exchange rates.
Instant Account-to-account (A2A) payments and open banking: A2A payments leverage open banking technologies to provide faster and more efficient FX payments. They have the security of a bank transfer but without the fees or lag time – for example, the instant A2A payments offered by Brite.
Credit cards and debit cards: Credit and debit cards are still widely used for FX transactions. They’re convenient, but they often incur higher fees.
Cryptocurrencies: Due to their speed and low transaction costs, cryptocurrencies are increasingly used for FX payments. However, they also come with a host of regulatory challenges and are highly volatile.
Digital wallets: Mobile payment solutions like PayPal, Alipay, and WeChat Pay provide a fast and seamless way to make FX payments. They’ve gained popularity due to their user-friendly interfaces and the ability to store multiple payment methods.

FX payments enable merchants to pay international suppliers in full, without lengthy delays that could affect their professional relationships.

They also enable merchants to process sales from international customers in their own country’s currency while allowing customers to pay in both their own currency and via their preferred payment method.

How do FX payments work?

Step by step, here’s a breakdown of how FX payments for merchants work, using an example of a UK merchant paying an international supplier:

Choosing a payment method/provider: The merchant chooses a payment method – e.g. bank transfer, an FX specialist or fintech platform, or a multicurrency account.
Checking exchange rates and fees: Before making the payment, the merchant checks the exchange rate, transaction fees, and settlement time.
Initiating the payment: The merchant provides the necessary information, including the recipient’s details, the currency and amount, and the purpose of the payment. Once confirmed, the payment is processed.
Conversion and transfer: The provider converts GBP to the recipient’s currency at the agreed rate and then transfers the funds through banking networks, such as SWIFT, SEPA, or local clearing systems.
Receipt of payment: The recipient’s bank receives the funds and credits the account. Some banks may charge the recipient a fee for incoming FX payments.
Record-keeping and reconciliation: Finally, the merchant records the transaction for accounting and tax compliance. If the merchant hedges FX risk, it monitors the impact of rate changes on future payments.

And that’s it – the merchant’s FX payment has gone through.

The bonus of using a system such as Brite Payments’ Merchant FX is that this is all taken care of within our own payments network, the Brite Instant Payments Network, Brite IPN. This makes all the processes much more streamlined and cost-effective as we have bank accounts already established in many countries for the various steps.

Why are FX payments important for merchants?

FX payments are essential for merchants because they enable international trade, investments and global business operations.

Here’s why they matter:

Facilitating international trade and commerce

Without FX transactions, global supply chains simply wouldn’t function efficiently, as businesses rely on FX payments to pay overseas suppliers, manufacturers, and partners. For example, a UK merchant importing electronics from China must pay in CNY.

Supporting global business expansion

Companies expanding internationally must pay employees, vendors, and taxes in local currencies. Through currency conversion, FX payments allow businesses to tap into global markets and customers.

Managing currency risk and hedging volatility

Exchange rates fluctuate, affecting costs and profits. Businesses can use FX strategies, like hedging or forward contracts, to reduce risk. For example, a UK company importing goods in USD might hedge against a weakening GBP to stabilise costs.

Enhancing cost efficiency and profitability

Smart FX management helps businesses save on fees and optimise cash flow, and competitive FX rates mean lower costs and better margins. A UK exporter receiving payments in EUR, for instance, may use a multicurrency account to avoid unnecessary conversions.

Enabling cross-border payments and payroll

Remote teams and international freelancers need FX payments for salaries – and companies use FX to pay these employees in their preferred currencies. For example, a UK startup with developers in India and the US may process FX payroll regularly.

Powering the instant economy and e-commerce

Online stores need FX-friendly payment options to sell to global customers. FX payments are also what allows businesses to accept multiple currencies via payment gateways.

In short, FX payments aren’t just a financial process – they’re a strategic tool for businesses to expand internationally, reduce currency risk, and optimise cash flow and costs.

FX payment optimisation

FX payments are an important asset. However, they’re also subject to certain challenges. To quote Ahmed Ismail, Co-Founder and CEO of Vivowire:

“The key challenges include high costs, a lack of interoperability between payment systems, and regulatory compliance.

We address this through cutting-edge APIs, partnerships like Brite Payments for transactions, and a robust compliance framework to ensure secure and efficient money transfers.”

This is also where FX payment optimisation comes in.

FX payment optimisation is about reducing costs, improving efficiency, and managing currency risk when making international payments.

Key strategies for FX payment optimisation include:

Getting the best exchange rates: Even a small difference in exchange rates can lead to significant savings, especially for frequent or high-value payments. Compare providers, use bulk transfers, and set up rate alerts to track when rates are favourable.
Reducing fees and hidden costs: High FX fees eat into profits, and hidden charges – like intermediary bank fees – can add unexpected costs. Use fintech or FX brokers instead of banks, opt for local payment routes where possible, and negotiate fees for high-value payments.
Using a multi-currency account: Holding different currencies prevents unnecessary conversations, helping you save money on FX fees.
Hedging against currency fluctuations: As mentioned above, hedging is important for risk reduction, as exchange rate volatility can unpredictably impact profits and increase costs. Use forward contracts to lock in favourable exchange rates, and regularly review FX exposure to assess how currency fluctuations affect cash flow and margins.
Automating and streamlining FX workflows: Manual FX payments take time and increase the risk of errors. Use APIs and integrations to automate FX payments, consolidate payments in batches to reduce costs, and automate FX conversations to avoid manual intervention. For example, this is a service Brite Payments offers its customers.
Choosing the right FX provider: The right provider can help you cut costs and improve speed dramatically, so don’t just settle for the first provider you come across.

FX payment optimisation isn’t just about cutting costs – it’s about strategic financial management. By leveraging the right tools, providers, and hedging strategies, businesses can reduce FX costs, improve cash flow efficiency, and minimise risks from currency fluctuations.

Get in touch with Brite

If you would like to learn more about Brite Payments FX payments and our Merchant FX service, please contact our payment experts by clicking on the form below.