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The Complete Guide to Foreign Exchange (FX) Payments

Barbara Cook
By Barbara Cook
Barbara Cook

Barbara Cook

Barbara is a financial writer for Tipalti and other successful B2B businesses, including SaaS and financial companies. She is a former CFO for fast-growing tech companies with Deloitte audit experience. Barbara has an MBA from The University of Texas and an active CPA license. When she’s not writing, Barbara likes to research public companies and play Pickleball, Texas Hold ‘em poker, bridge, and Mah Jongg.

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Updated August 19, 2025
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Managing FX payments in accounts payable is incredibly important for businesses when paying overseas suppliers and vendors in their local currency or another specified currency. Managing currency and forex manually is a time-consuming and risky process that’s not sustainable as a fast-growing company scales. 

Understand the common challenges that businesses face when handling forex (FX) payments for international transactions, including tariff uncertainty, which applies to cross-border payments. Learn about top FX payment solutions.

What is an FX Payment?

A foreign exchange (FX) payment is an international, cross-border payment requiring currency conversion between two currencies to exchange money between a sender and recipient. A business pays its foreign suppliers with FX payments. The forex (FX) payment is converted using foreign currency exchange or payments platform or bank that usually charges a fee. 

How do FX Payments Work?

FX payments, which are cross-border payments requiring currency exchange, can be made through various payment methods. These cross-border payment methods include wire transfers, global ACH, PayPal, prepaid debit cards or credit cards, and checks.

As an example of how FX payments work, consider how to send a wire transfer. A wire transfer is an electronic funds transfer (EFT) between the sender’s and recipient’s bank accounts. A wire transfer represents a traditional, high-fee method for making foreign exchange payments to different countries and can be used domestically instead.

The wire transfer can either be made directly bank-to-bank or use a wire transfer service’s electronic network messaging system like SWIFT, with member financial institutions, to complete the money payment transaction.

The sending bank or wire transfer service may charge as much as $50 for an international wire transfer. Each bank and wire transfer service provider sets its unique pricing. International wire transfer fees may be charged by the sending bank, intermediary banks, and the receiving bank, adding to the wire transfer transaction fees. The costs may be determined by which receiving (and sending) country, the amount of the wire transfer, and other relevant factors.

Steps for making an FX (foreign exchange) payment by international wire transfer are:

  1. Your business initiates a wire transfer transaction through your bank either online or in a physical branch location with:
    • Sender’s business name, contact name, and contact information
    • Sender’s routing and bank account/transit information
    • Recipient’s business name and contact information
    • Recipient’s bank routing number, bank account number, and other transit number information
  2. The bank applies its daily foreign currency exchange rate fee with a markup in pricing to your forex transaction
  3. The recipient is contacted by the receiving bank or wire transfer service when the wire transfer is completed
  4. The recipient is also charged wire transfer fees

International wire transfers can’t be reversed once the wire transfer transaction is completed. Know your recipient before sending money and be sure that the banking details are correct for the wire transfer. 

Sending wire transfers is a relatively opaque process once the wire transfer is sent. Neither the sender nor the recipient receives detailed in-process status reports before the wire transfer is complete.

The Growing Importance of FX Payments

Cross-border payments continue to gain momentum worldwide, with their market projected to reach USD 320.7 billion by 2030, growing at a 7.1% CAGR from 2025 to 2030, according to a 2025 report by Grand View Research. This is a noticeable increase from 2024’s 212.5 billion market share.

The increasing volume of B2B payments between businesses and international suppliers is a major driver of this growth. Automation and currency management play a crucial role in making these payments possible. Companies that give suppliers the option to be paid in their own currency streamline the FX processes, strengthen vendor relationships, and create competitive advantages through efficiency and trust.

The findings come from Grand View’s Cross Border Payments Market Size, Share & Trends Analysis Report (2025–2030), which analyzes transaction types, payment channels, enterprise sizes, and end uses across global regions.

Feeling buried by FX fees and complex cross-border payments?

Discover how to eliminate hidden costs, simplify compliance, and gain full visibility into your international payables.

Today’s Biggest Challenges with Forex Payments

The biggest challenges with forex payments include:

  • Inefficient operations
  • Bank relationships
  • Immediacy
  • Conversion fees
  • Risk management
  • Lack of visibility

Inefficient Operations

The CFO or treasurer may be responsible for forex operations in a company. The time required to manually arrange forex payments distracts from their big-picture, strategic and decision-support responsibilities. As the company grows, cross-border payment volume increases and FX takes a larger bite out of their available time. 

Bank Relationships

Traditional global payments with currency exchange require businesses to establish accounts with multiple foreign banks in different regions. This complicates transactions, with the possibility of time lags and miscommunications. It may also result in an additional level of fees besides currency conversion fees for both the payer and payee. 

Immediacy

Handling forex payments immediately takes on a top priority, further distracting from strategic goal achievement.  

Conversion Fees

Spot-rate conversion fees are not competitive fees. The high costs can reduce profits when forex transaction volume is high. 

Risk Management

Foreign exchange risk management includes currency fluctuations and the volatility of exchange rates.

For example, your company’s functional currency may be U.S. dollars (USD). Your international suppliers may require or desire payments in other currencies, according to contract or invoice terms or customary practices helping to improve supplier relations. The currency pairs for a foreign currency transaction may be USD and EUR, or USD and another local currency in a foreign location.

Should your company hedge FX international payments with forward contracts to lock in foreign exchange rates? With FX hedging, you’ll make the accounts payable and your foreign currency payments amount to international suppliers fixed with locked-in FX rates instead of dependent on currencies still fluctuating until the payment date.

Manually hedging cross-currency payables transactions takes time and requires training.

Another risk is not complying with global regulations when making payments.

Lack of Visibility

FX transactions may not provide clear visibility into fees and other aspects of the transaction.

Optimizing FX Payment Processes with AP Automation

Your business will optimize its FX payment processes with Tipalti AP automation combined with optional Tipalti Multi-FX and Tipalti FX Hedging products. As your business grows from a small business to a midsize or enterprise company, it becomes more complex, requiring add-on automated FX and hedging functionality.

These Tipalti finance automation products handle the entire invoice-to-pay cycle of invoice processing and automate FX transactions. AP automation software reduces end-to-end payables time by 80% and reduces errors by 66%.

Tipalti eliminated the manual work that was consuming all of us—that’s a huge improvement. Now it’s click, fund, we’re done.

—Julia Yeo, Director of Accounting Operations at Matterport

AP automation begins with a self-service supplier portal. Accurate supplier contact and payment information are only entered once into the system. This information is used for all of your FX payments, with no need to re-enter the information each time an FX transaction (or domestic payment transaction) is initiated.

AP automation software provides automated real-time payment reconciliation. Large payment batches (of up to thousands of invoices) using multiple payment methods to various countries can be reconciled simultaneously. Automated reconciliation will help your business speed up its accounting close by 25%.

Instead of needing to set up and use regional banks, with AP automation and a unified global remittance system, you’ll have one virtual account for making global payments that works for all subsidiaries, and available payment methods, in a choice of 120 currencies in 200+ countries. Tipalti AP automation and global payments sends your supplier and partner remittances through a small number of major global banks or payment platforms like PayPal.

AP automation with advanced optional FX features reduces your business exposure to foreign currency fluctuations and gives you greater visibility into costs and transaction payment status. You can choose from less expensive payment methods than wire transfers. This becomes especially valuable when tariffs or geopolitical shifts create volatility in international trade and currency markets.

We no longer have to buy foreign currency on spot to execute our global payouts. Keeping everything in one system has been a great relief to eliminate the forex conversion burden.

—Jason Wechsler, VP of Revenue Accounting and Finance Automation at PubMatic

If you decide to use wire transfers, you’ll have more fraud screening protection to ascertain that the vendor is real with a valid tax ID number, actually provides goods or services through the invoice matching step, and is trustworthy. You’ll be able to shift your focus to more important projects, increasing your contribution to business results.

AP automation and global payments software with FX features provide real-time foreign exchange fees for your company’s FX payments instead of marked-up and locked-in daily exchange rates.

Tipalti AP automation software screens for OFAC sanctions and other blacklists and checks for applicable regulations in a recipient’s country when making international payments in different currencies and countries.

With AP automation software integrated with your ERP system, you’ll get better visibility into domestic and international accounts payable balances by each entity and with consolidated views.

In the case of Matterport, “The automation has eliminated duplicate accruals, added the ability to fund multiple currencies, deployed thousands of payments monthly, and improved reconciliation with ERP, NetSuite,” as detailed in their customer story.

Note: These customer insights reflect broader pain points in managing FX and cross-border payments. Challenges that are only compounded by rising tariffs, shifting trade policies, and growing compliance demands. Businesses and payees also need global payments automation, which Tipalti’s mass payments software provides. 

Is FX Payment Automation Right for Your Business?

Does your business pay its foreign suppliers regularly and have a substantial volume of cross-border transactions? Is your company switching international suppliers and facing foreign currency, regulatory compliance, and global payment complications in response to changing tariffs? If yes, then automated FX solutions to manage foreign exchange (forex) payments may be right for your business. You’ll easily and transparently make cost-effective types of electronic money transfers to international business suppliers and overseas independent contractors while reducing fraud risks.

Tipalti will guide you through this decision with a series of questions that your business can answer. To learn more about automating foreign exchange payments, download “How to Eliminate Currency & Forex Challenges in Payables.”