Nine out of ten companies are overpaying for their foreign exchange (FX) transactions. That’s the key takeaway from Redbridge Debt & Treasury Advisory’s extensive experience working with businesses of all sizes on cash management, financing, and banking relationships.
According to Pauline Lion, Associate Director at Redbridge, “Optimizing FX fees and gaining full visibility into transaction costs is typically a privilege reserved for companies with high trading volumes and sophisticated FX management systems. “Large corporations that use platforms like FXall and 360T can create competition between banks to secure better rates. However, for smaller companies handling FX operations directly with their banks, fees can be ten times higher or even more.”
The costs spike even further for account-to-account transfers where banks apply automatic exchange rates. “In some cases, fees can reach several percentage points,” Lion explains. She recalls working with a large company that, despite having advanced treasury operations, only monitored its FX transactions periodically. “For certain automated transactions, the bank’s margin was as high as 220 basis points. That didn’t align with our client’s profile at all,” she says. “We renegotiated the terms and cut their FX costs by 75%
“All-in” Pricing
Many companies unknowingly overpay for foreign exchange services simply because they don’t have full visibility into what they’re being charged. “Banks typically provide an ‘all-in’ price that blends the actual exchange rate with their markup,” says Lion. While trading platforms generate detailed post-trade reports that clarify pricing, companies that receive only individual transaction confirmations from banks struggle to analyze cost, often because the process is time-consuming and complex.
Bringing Transparency to FX Pricing
That’s where Redbridge steps in. The firm helps businesses analyze their spot and forward FX transactions to uncover hidden fees. “We can reverse-engineer the bank’s margin using transaction confirmations, something banks are required to send to customers, combined with our deep market intelligence,” explains Lion.
The results speak for themselves. “Our clients have significantly reduced their FX costs after renegotiating their terms with our help,” Lion say. “More importantly, they’ve built stronger relationships with their banks by fostering more transparency and constructive conversations around FX pricing. Bridging the information gap between companies and banks is always a win.”