Paying an international invoice
Pay an invoice in the currency it is written in, and choose who converts the money on purpose. If your supplier invoices €20,000 and you wire dollars, their bank converts at its rate and the supplier may come up short, which comes back to you as a short-payment. If you send euros, your bank or provider converts at its rate and you see the cost.
Who converts, and at what price
Your bank will convert. Chase, Bank of America, Wells Fargo and U.S. Bank say in their business fee schedules that the rate includes a spread, markup or profit; Wells Fargo adds that different customers may get different rates. Providers that specialize in business payments compete on that rate. Airwallex publishes 0.5% above interbank for major currencies; Wise says it uses the mid-market rate and charges a fee from 0.23%. OFX, Xe and Convera show their rate only in a quote. Get two quotes for the same amount on the same morning and put them in the calculator next to the mid-market rate.
Who pays the bank charges
International wires carry a charge code. With OUR, you pay every bank’s charges and the supplier receives the full amount. With SHA, you pay your bank and the receiving side’s charges come out of the payment. Airwallex, for example, prices SWIFT transfers at $15 to $25 depending on which you choose. If your supplier complains about short payments, OUR usually fixes it.
Timing and locking a rate
An invoice due in 60 days is an exchange-rate bet if you wait. OFX offers forward contracts that lock a rate for up to 12 months, usually with a 5% deposit for business accounts; Xe offers up to 24 months, with anything past 12 needing credit approval. A forward gives up any gain if the dollar strengthens in exchange for knowing the cost now. Limit orders, offered by both, convert automatically if the market reaches a rate you set.
The protections are different
The CFPB’s remittance rule does not cover business transfers; its official interpretation says so for transfers from business accounts. Business wires are governed by Article 4A of the Uniform Commercial Code and your account agreement, and a wire sent to a fraudster on instructions you approved can be your loss if the bank followed the security procedure you agreed to. Confirm any change in a supplier’s bank details by phone, using a number you already had. Wire fraud red flags.
Sources: 12 CFR 1005.30 and comment 30(g)-3; UCC 4A-102; OFX forward contracts; Xe forwards; Airwallex pricing; Wise Business pricing; banks’ business fee schedules linked on the business wire fees page.
Questions people ask
Should I pay a foreign supplier in dollars or in their currency?
If the invoice is in their currency, pay in their currency so they receive the exact amount. If you can choose, a dollar invoice moves the exchange risk to the supplier, who may price it in. Either way, compare what the conversion costs you against the mid-market rate.
What do OUR and SHA mean on an international wire?
They say who pays the banks' charges. OUR means the sender pays them all; SHA means the sender pays its own bank and the recipient pays the rest, so the supplier may receive slightly less than the invoice.