Paying overseas suppliers
How to pick the right payment method and currency when paying foreign suppliers
When it's time to pay an overseas supplier, you don't just want to look at the transfer fee alone. There's the fee, the FX margin, and possibly intermediary bank deductions, and together these add up fast. You might reduce your overall cost more by picking the right method and right currency than by just chasing a lower stated fee.
Ask your supplier what currency they want. If you pay in their currency, this usually means fewer surprises for both sides, because their bank won't convert it again (which happens when you pay in your own currency and can result in additional costs for the supplier). Always compare options by what arrives in the supplier's account, not by what leaves yours.
Understanding the actual cost of paying a supplier
Let’s say your invoice shows you owe 10,000 euros. Your bank sets a 25-euro outward remittance fee, plus they offer you a rate that is 1.5% under the mid-market rate at that moment. That 'mid-market' is what banks use to trade with each other and is a clear benchmark for what the currency is actually worth. Here, that 1.5% margin translates to around 150 euros, so your real cost is closer to 175 euros more than what you'd expect from the fee on its own.
Your supplier might get even less, depending on deductions at their bank. To see what you're truly paying, check the rate you've been offered against the mid-market at the same instant, and then factor in any flat fees. If you want full detail, the exchange rate markup guide breaks this process down step by step.
How timing and batch payments affect your costs
Exchange rates aren't constant; they can shift quickly. If you know about an upcoming payment in a foreign currency, say, three months from now, you might want to lock in today’s rate. An FX forward contract lets you set a rate in advance for payment on a specific future date.
Paying many suppliers? Processing several transactions as a single batch payment can be practical; it means less admin, and reduces risks like manual errors. There's an overview of this approach in the batch and bulk international payments guide.
Frequently asked questions
Is it cheaper to pay a foreign supplier by card?
Most of the time, no. Some suppliers won't take cards at all. Card payments can come with their own processing fees and extra conversion charges, and it may be harder to get a clear view of the FX margin. Always add up every fee and check any rate markups before deciding if card is suitable.
How do I check the exchange rate my bank gives me?
Start by comparing your bank’s rate with the mid-market rate available from a trustworthy source at that moment. Calculate the gap as a percentage, then don’t forget to include any set transfer fees. What you get is the effective cost of the conversion. Seeing these numbers side by side for each provider helps you spot who delivers the largest net payment to your supplier.