What are FX costs?
FX stands for foreign exchange. When you convert money from EUR to USD or from GBP to EUR, a financial provider can earn through:
- an explicit fee
- a markup on the exchange rate
- its own exchange rate
- or a combination
Why this matters for e-commerce
Webshops often operate internationally, even when all customers come from the same region. Think of Google Ads, Meta Ads, software, Amazon, suppliers, logistics, freelancers and agencies.
A company can therefore have significant foreign-currency spend without seeing itself as an “international business”.
Small percentage, large amount
Example (illustrative)
- Say: $30,000 equivalent of foreign spend per month
- = roughly $360,000 per year
- A 1% difference = $3,600
- A 2% difference = $7,200
So FX has to be considered alongside cashback.
Cashback can disappear through FX
Example (illustrative)
- Card A: 1.5% cashback, but 2% FX
- Net on a foreign payment: −0.5%
- Card B: 0.5% cashback, barely any FX
On foreign spend, B can therefore be economically better, even before other costs. That is why “highest cashback” is never enough information.
What is a multi-currency account?
A multi-currency account or wallet lets you hold balances in several currencies, for example EUR, USD and GBP.
That can help when you receive income and make payments in the same currency. Instead of USD → EUR → USD you may be able to receive USD and later spend USD. That can reduce unnecessary conversions.
Multi-currency does not automatically mean free FX
This is important. A provider supporting twenty currencies does not necessarily charge 0% conversion costs. Check:
- exchange rate
- markup
- fixed fees
- weekend fees
- plan conditions
- fair-use limits
Where do you find your real FX costs?
Start with card terms, provider pricing, transaction details and monthly statements.
Where possible, compare the rate used against a neutral reference rate around the same moment. That gives an indication of the real spread.
Receiving foreign currency
FX is not only relevant for spending. Suppose American customers pay you in USD. If every payout converts to EUR automatically, an FX cost can arise each time.
Sometimes it is economically better to hold USD and pay USD costs with it. That depends on the provider and business profile.
When does FX optimisation become important?
Mainly when you structurally use foreign suppliers, pay a lot for USD software, advertise internationally, serve several markets or process large volumes.
At €500 of foreign spend per month the gain is probably limited. At €50,000 the story changes.
How to compare providers
Compare at least:
- FX markup
- card FX fee
- multi-currency capability
- supported currencies
- receiving options
- account costs
- cashback
Then look at the total. Those conditions per provider are in the provider directory.
Example
Example (illustrative) — €100,000 of foreign spend
- Provider A: 1.5% cashback, 2% FX
- + €1,500 reward − €2,000 FX = − €500 before other costs
- Provider B: 0.75% cashback, 0.25% FX
- + €750 reward − €250 FX = + €500
In this example provider B delivers €1,000 more economic value. That is why e-commerce finance should never be judged on one headline percentage — see also where your webshop leaves margin.
Conclusion
FX is a silent margin cost. There is no big monthly invoice labelled “currency costs”. The costs are spread across transactions, which is exactly why they are easily forgotten.
For internationally active webshops, FX belongs alongside cashback and bookkeeping in every provider comparison. How to combine those three is covered in the ideal financial setup.