International FX payments: How to use them as a business

Foreign exchange (FX) payments allow businesses to buy, sell, and settle accounts across borders by converting money between currencies. Whether you're sourcing from overseas suppliers, selling to global customers, or managing payroll in multiple countries, FX payments are essential for international growth. Even small businesses expanding through e-commerce will encounter FX needs.

In this guide, we’ll break down what FX payments are, why they matter, and how to manage them without losing time—or money—in the process.

This article covers general information about FX transactions. For Ramp-specific FX capabilities, please go to Ramp Support.

What are FX international payments?

When you make an FX payment, your currency gets converted at the current exchange rate, or a rate you agreed to earlier, into the recipient's currency. Banks or specialized FX providers handle this conversion and move the funds through international banking networks.

FX payments are helpful in situations like paying overseas suppliers in their local currency, processing payroll for employees based in different countries, and converting payments from international clients into your operational currency to cover expenses.

Why do FX payments matter for businesses?

If you have international business goals, FX payments are essential. They open up global markets by removing currency barriers that would limit trade opportunities. They make operations smoother by standardizing how you pay across regions. They also help manage financial risk through tools that protect against currency fluctuations.

At a high level, FX payments matter because they:

• Directly impact your financial health. Exchange rate changes affect profit margins on international sales and purchases. Good FX management helps improve cash flow by speeding up settlements and reducing unnecessary conversions
• Enable global expansion. Being able to handle multiple currencies smoothly allows businesses to grow internationally without getting bogged down in financial complexity

Beyond the financial mechanics, FX payments show up in everyday business operations.

Trade relationships, for example, highlight their importance. A European manufacturer selling to Asian markets might set prices in euros but let customers pay in their local currencies to reduce friction and encourage conversions. International payroll is another common scenario. Businesses with employees in different countries need to pay them in local currencies while keeping costs centralized and manageable.

When used strategically, FX payments do more than support operations—they help protect against currency risks and unlock competitive advantages in global markets.

How do FX international payments work?

The FX payment process starts when you need to make a transaction that requires converting currency. Here's what typically happens:

1. Specify payment details: You specify the payment amount, recipient details, and when the payment should arrive
2. Receive exchange rate quote: Your bank or FX provider provides an exchange rate quote showing how much of the target currency your money will buy
3. Authorize and send funds: When you accept the rate, you authorize the transaction and send the funds to the provider

Who is involved in an FX transaction?

Several parties are involved in this process. You provide payment instructions and funds, while your bank or FX provider handles the currency conversion and routes the payment. Correspondent banks often act as intermediaries to move the money internationally before the recipient's bank credits the funds to their account.

Where do exchange rates come from and its costs?

Exchange rates come from the interbank market where major banks trade currencies. The rate you get includes a markup above this wholesale rate. This markup varies by provider and transaction size, and you'll usually get better rates for larger transactions.

You may also pay additional fees for the transfer itself, like cross-border fees, wire fees, or processing charges that can significantly affect your total cost.

The speed of FX payments depends on factors like bank cut-off times, the number of intermediary banks involved, and the liquidity of the currency pair. Major currencies such as USD/EUR (US dollar/euro) typically process faster than less common ones, and payments initiated before daily cut-off times are more likely to be processed the same day.

To make successful FX payments, pay attention to timing, choose a reputable provider, and be aware of all the costs beyond just the exchange rate. Then it's a matter of choosing the type of contract and FX transaction to use.

What are FX contracts?

Foreign exchange contracts are financial agreements that help businesses manage currency risk when making international payments or receiving foreign currency. These contracts allow you to control when and at what rate you exchange one currency for another, giving you more predictability in international transactions.

FX contracts serve as planning tools that let you decide whether to exchange currency immediately at current market rates or lock in rates for future transactions. They also provide ways to protect the business from currency fluctuations that could affect the bottom line. Different types of contracts offer varying levels of flexibility, protection, and timing to match specific business needs.

The key benefit of using FX contracts is that they provide options beyond simply exchanging currency. Instead of being at the mercy of whatever exchange rate happens to be available when you make a payment, you can choose from several contract types that align with cash flow timing, risk tolerance, and certainty requirements.

Types of FX contracts and transactions

FX contracts and payment structures give businesses multiple ways to exchange currencies, each designed for different timing needs, risk preferences, and levels of certainty about future transactions. Let's take a look at each type of FX contract and transaction.

Spot contracts

A spot contract is the simplest FX transaction. You buy currency at the current market rate for delivery right away. The money typically arrives within two business days.

Spot contracts are good for paying international vendors immediately, converting foreign currency you just received, or taking advantage of good exchange rates without waiting.

Forward contracts

Forward contracts let you lock in today's exchange rate for a transaction that will happen on a specific future date, usually within 12 months. This offers certainty for budgeting and protects you from currency fluctuations.

Use forwards when you know you'll need to make a payment in foreign currency on a specific date, like for seasonal inventory purchases or planned international expansion costs.

You can also use variations of forward contracts depending on your timing needs:

• Flexible forwards: Allow partial drawdowns over the life of the contract, giving you more control over timing while still locking in a rate
• Window forwards: Offer a range of settlement dates instead of a single fixed date, providing more flexibility if your payment schedule is uncertain

FX options

FX options provide the right, but not the obligation, to exchange currencies at a set rate before an expiration date. This flexibility comes with a cost—you pay a fee up front.

Options work well when you're not sure whether you'll need the currency or when your need depends on other business events. For example, if your business is bidding on an international project, you might buy an option to protect against currency changes while waiting to see if the business wins the bid.

FX Transaction Types

Beyond the main contract types, there are a few different FX transaction structures:

• Same-day value transactions: Settle immediately but usually cost more
• Limit orders: Execute automatically when a favorable rate you specified is reached
• Regular payment plans: Make recurring international payments easier with consistent processing

The right mix of FX contracts and payment methods depends on your specific international exposure, risk tolerance, and cash flow needs. Using different tools together often gives you the most effective currency management strategy.

Strategies for managing FX international payments

There are many options to optimize FX payments, and planning ahead can cut costs and risks. The best approach depends on transaction volume, frequency, and risk tolerance, but having structured strategies works better than just reacting to needs as they come up.

Hedging techniques

These protect against unfavorable currency movements. Forward contracts lock in exchange rates for future dates, eliminating uncertainty for planned payments, while options contracts offer protection while preserving potential gains, though they cost more. Natural hedging, where you match incoming and outgoing cash flows in the same currency, reduces how much needs to be converted.

If you have predictable FX needs, you might implement a layered hedging approach, securing different percentages of your needs across multiple time periods.

Multi-currency accounts

These deliver big benefits if you regularly do business internationally. These accounts let you hold balances in various currencies, eliminating unnecessary conversions when you receive and make payments in the same currency.

This approach cuts transaction costs and provides flexibility to convert currencies when rates are good rather than when a payment needs to be made. Multi-currency accounts also make reconciliation easier by keeping all international transactions in one place.

Payment batching

If you make frequent international payments, combining several smaller transactions into one larger FX transfer can help reduce costs. This approach, known as payment batching, cuts down on per-transfer fees and can unlock better exchange rates due to the higher transaction volume. It also simplifies reconciliation and reduces administrative overhead.

Use batching when you’re paying multiple vendors in the same currency or making recurring transfers. Planning payment schedules in advance can make it easier to consolidate transactions and take advantage of these efficiencies.

Payment timing optimization

When you have flexibility around invoice due dates or transfer schedules, adjusting the timing of your FX conversions can lead to better outcomes. Rather than converting currency the moment a payment is due, you can monitor market movements and exchange when rates are more favorable—within the limits of your payment terms.

This tactic works well for businesses with longer payment windows or partners who accept early or slightly delayed payments. Pairing this approach with automated rate alerts or currency monitoring tools can help you act quickly when the market moves in your favor.

Effective FX international payment management requires a combination of the right partners, tools, and internal processes to minimize costs while maintaining payment efficiency and reliability.

What are the benefits of FX payments?

When you manage FX payments effectively, you can get more value from international transactions while reducing costs and risks.

Good FX payment management offers several key benefits:

• Reducing costs: Directly improves the bottom line. Getting better exchange rates, even by small percentages, adds up substantially if you have many transactions. You can save by consolidating FX providers to get volume discounts and negotiating lower fees based on how often you make payments.
• Optimizing cash flow and liquidity: Faster settlement times for international payments improve working capital efficiency. Holding strategic balances in frequently used currencies eliminates conversion delays when opportunities arise. Efficient currency management also reduces the need for safety buffers in multiple currencies.
• Accessing new global markets: Becomes easier when you can transact smoothly in local currencies. For example, if you run an e-commerce store, you can expand from domestic-only sales to serving customers in dozens of countries by implementing multi-currency payment capabilities.
• Improving forecasting accuracy: When you proactively manage FX exposure, you reduce the uncertainty that comes from unpredictable exchange rates. This makes it easier to forecast costs and revenues in your base currency.

Effective FX payment management delivers measurable improvements across business operations, from enhanced market access and reduced expenses to better cash flow control and revenue diversification across global markets.

Challenges of FX international payments

Managing FX payments involves several operational challenges that can affect business efficiency and profitability if left unaddressed. Let's take a look at a few of those challenges and how to address them.

• Exchange rate volatility: Currency values can change dramatically due to economic data releases, political events, or market sentiment shifts, directly affecting payment costs and received values. Reduce this risk by using forward contracts to lock in rates for future payments.
• Lack of visibility into FX exposure: Many businesses don’t have a centralized view of their currency exposure across departments, regions, or systems. Without this visibility, it’s hard to assess risks or act before currency fluctuations impact the bottom line. Tools that consolidate FX activity and provide real-time reporting can help you make informed decisions and reduce reactive management.
• Hidden FX fees and pricing: Lack of transparency in FX fees and pricing can lead to unnecessary costs that affect the bottom line. It's important to ask for detailed breakdowns of all fees, use comparison tools to gather quotes from multiple providers, and regularly benchmark FX costs against market rates to ensure you're getting fair pricing.
• Fragmented workflows and systems: Managing FX payments often involves juggling multiple platforms—banks, accounting tools, ERPs, and payment processors—that don’t always connect seamlessly. This fragmentation slows down approvals, increases the chance of errors, and creates extra work for finance teams.

Balancing these challenges requires regular review of FX processes and partnerships to ensure they continue meeting the business needs as you grow internationally.

Best practices for managing FX payments in your business

Effective foreign exchange management requires deliberate planning and consistent execution. These proven practices help businesses minimize currency risks, reduce transaction costs, and maintain better control over international payment processes.

Forecast FX payment needs and timing

Accurate forecasting forms the foundation of effective currency management. Review historical payment patterns to identify recurring needs in specific currencies and coordinate with your procurement, sales, and finance teams to gather information about upcoming international transactions.

Factor in seasonal variations in currency requirements based on business cycles. Create a rolling 3–6 month forecast of major currency needs, updating it regularly as new information becomes available. This visibility allows you to time conversions strategically rather than making last-minute exchanges.

Monitor market trends and exchange rates

Successful FX management starts with staying informed about currency markets. Set up daily rate alerts through your banking platform or specialized apps to notify you when currencies reach target levels, and use market analysis tools from reputable financial information providers to understand what's driving currency movements.

Also, develop relationships with FX specialists who can provide insights on market direction and timing considerations. Consider subscribing to currency forecasting services if your FX exposure is substantial, as they provide deeper analysis than free resources.

Automate FX payment workflows

Manual processes introduce delays, errors, and inconsistencies. Automating FX payments through your finance platform or with a dedicated FX provider reduces human error and ensures timely execution. Automation also helps enforce approval rules, trigger rate-based conversions, and streamline reporting across currencies.

Integrate FX tools with financial systems

Connecting FX platforms with your accounting software or ERP enables real-time data sharing across systems. This integration supports faster reconciliation, better visibility into currency balances, and smoother internal controls. As your international payment volume grows, this connectivity becomes essential for managing complexity and maintaining accuracy.

Following these best practices creates a structured approach to FX payments that protects your business from unnecessary costs and risks while supporting international growth. Regular evaluation and adjustment of your approach ensures continued effectiveness as the business and market conditions evolve.

Streamline your payments with Ramp

Ramp provides comprehensive payment solutions that handle both domestic and international transactions through a single platform. Whether you're managing supplier payments or employee reimbursements, Ramp's integrated approach simplifies your financial operations while maintaining the controls and visibility your finance team needs.

Ramp Bill Pay supports multiple currencies and payment methods, allowing you to execute transactions efficiently while tracking expenses and managing approvals seamlessly across your business:

• ACH (Direct deposit): Ideal for payroll, recurring vendor payments, and predictable disbursements. Ramp supports both regular and same-day ACH for faster delivery on eligible bills.
• Domestic wire transfers: Great for large, time-sensitive payments. Ramp enables same-day domestic wires for eligible transactions, with secure processing through the FedWire network.
• International wire transfers: Ramp supports payments to vendors abroad in U.S. dollars or payments to international vendors in their local currency
• Ramp cards: Pay vendors by card—either with your existing cards or one-time-use Ramp cards—to earn cashback for vendors that accept Visa
• Check payments: For US-based vendors who still prefer checks, Ramp can issue and mail checks on your behalf.

By combining control, speed, and ease of use, Ramp helps you streamline every payment, whether it’s recurring or last-minute, small or large, domestic or international.

Whatever the need, Ramp Bill Pay makes it easy to pay your international vendors.