The easiest and fastest way to find out if you’re getting a good deal on your foreign payments is to compare your bank rates with other providers in the market.

Lets start by understanding who the payment providers are.

1 Major Banks, the Minister of Finance has appointed certain banks to act as Authorised Dealers in foreign exchange. This gives such banks the right to buy and sell foreign exchange. Until fairly recently, if you wanted to move money out of South Africa to pay foreign suppliers, you had no choice but to use one of the four major banks. (STD Bank, ABSA, Nedbank or FNB)

Banks are more expensive! They have large overheads & heavy cost structures which means wider margins and higher fees. So, for now, if your business makes import or export payments, then you won’t get away from using a bank altogether. That being said, it doesn’t have to be one of banks mentioned above, there are other options and it’s time to shop around. Welcome to the world of effortless payments…

2 Intermediaries, the Financial Advisory and Intermediary Services Act regulates the activities of all financial services providers (FSP) who give advice or provide intermediary services to Consumers. In respect to foreign exchange payments, intermediaries exist in SA and are usually supported by smaller banks (who are authorised and regulated) but don’t have the resources, infrastructure or desire to service the market directly themselves. This is where intermediaries play an invaluable role in keeping the market fair, competitive and efficient.

These authorised financial service providers are client facing which means they take care of everything (the admin, the dealing, the payments & most importantly… the problems). Most SME’s don’t have the payment volumes needed to negotiate better rates, they’re just not big enough. That doesn’t apply to intermediaries like fx paymaster, they do this for hundreds of companies which gives them the buying power to negotiate preferential rates & reduced transfer fees, which they pass on to their clients.    

According to research conducted by Boston Consulting, South African bank fees are up to 4X higher than countries like Germany, Australia and even India. On top of this Banks require too much paperwork and their response times are incredibly slow. If you are using a traditional bank to make international payments, then chances are, you’re probably used to the time it takes, the costs involved and even the occasional frustration of having to chase a held or rejected payment.

4 tips to help you save money on foreign exchange payments:

Find out what margin you are on with your bank.

The best way to do this is to do a live rate comparison with your bank or current provider. You can view live market rates on fxpaymaster.com (this is the interbank rate or the rate banks trade at between each other), the difference between this rate and your bank rate is your margin.

Establish what fees you currently pay with your bank.

Most banks charge between R 500 – R 1,000 to make an international payment. Some banks have lower fees but charge additional commission (usually calculated as a % of the transaction volume). fx paymaster charge a flat fee of R 250 per payment, there are no hidden fees or commissions.

 Speak to an Authorised Intermediary like fx paymaster.

On average our clients save between 10 – 15 cents on the rate versus the bank. In addition to the reduced transfer fees, the difference in exchange rates could easily equate to annual saving of tens of thousands of Rands. We’ll open a free account for you with one of our designated partner banks and handle all of the admin around your payments. You don’t have to switch banks in order to use us and there’s no obligation to continue using us, if you’re not entirely satisfied with our rates and service (it hasn’t happened yet #justsaying)

Keep your finger on the pulse.

Exchange rates move all the time so its important to be aware of what the market is doing and understand how these fluctuations impact the value/cost of your future payments. If you haven’t got the time to monitor the exchange rates, then let us do it for you.