How to choose an FX and payments provider for your business: a practical checklist

Start with your own requirements

Before you speak to any provider, write down what you actually need. It sounds obvious, but many businesses compare providers on a headline rate for a single pair and only later discover that the provider cannot pay into one of their key countries, or cannot handle the way their group is structured.

A one-page brief should cover:

• The currencies you buy and sell, with rough monthly volumes for each.
• The countries you pay into and receive from.
• The typical size and number of payments, and whether you need batch payouts.
• Whether you need to collect funds from customers or partners.
• How many legal entities will use the service and where they are incorporated.
• Your industry and anything about it that banks tend to find unusual.
• Who will use the service internally and how approvals work.

Give the same brief to every provider you speak to. It makes their answers comparable and shows them you know what you want.

Registration and regulation

Any firm that exchanges currency or transmits funds for clients should be registered or licensed with the relevant authority in each country where it operates. In Canada, money services businesses must register with FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada, and FINTRAC maintains a public register you can search. Other countries have their own regimes and registers.

Check the register yourself. Do not rely on a logo on a website. Confirm that the legal entity you will contract with is the one that holds the registration, and that the registration covers the activities you need.

Understand what kind of firm you are dealing with. A bank holds deposits and may offer deposit insurance within national limits. A money services business or payment institution is not a bank. Funds passing through it for conversion and payment are generally not covered by deposit insurance. Ask how client funds are held, at which banks, and what happens to them in the period between your funding and the onward payment. A good provider will answer plainly.

Pricing transparency

You should be able to see the full price of a trade before you commit to it. That means the exchange rate, any payment fee and the charge code used on the outgoing wire, so you know whether your beneficiary will receive the full amount.

Questions to ask:

• How is the rate built, and what factors change it from trade to trade.
• Which fees apply, and when they are shown.
• Whether rates differ outside main market hours or at weekends.
• Whether fees are deducted from the amount sent or charged separately.
• How the provider handles intermediary bank charges.

Treat "no fees" claims with care, since the cost may simply sit in the rate. Compare providers on total cost against the mid-market rate at the same moment, for the same amount and value date. Our guide to how FX pricing works sets out a fair method.

Quotes, booking and confirmations

Find out exactly how a trade happens. How you request a quote, how long it is held, how you accept it and what record is created. Ask to see a sample confirmation and check that it carries the details you would need for audit: legal entity, trade reference, trade date and time, value date, amounts, rate and settlement instructions.

Ask how errors are handled. A provider that reads back terms at booking and confirms every trade in writing promptly is protecting you as much as itself. If trades are booked by phone, ask whether calls are recorded. If they are booked on a platform, ask what the platform logs.

Ask about value dates and cut-offs for the currencies you use, and how the provider tells clients about holidays and closures. Our guide to reading a trade confirmation covers what a good confirmation should contain.

Payments coverage

Currency conversion is usually only half of what a business needs. The other half is getting the converted funds to the right place, and providers differ widely in how far their payment network reaches.

Check each country and currency on your brief against the provider's list. For each one, ask how payments are sent: by international wire through correspondent banks, or through a local clearing route. Ask which details each destination requires, such as purpose codes, local bank identifiers or beneficiary addresses, and whether the platform prompts for them before a payment is submitted.

If you pay many people at once, such as contractors, affiliates or staff abroad, ask about batch payouts: the file format, the maximum number of lines, how failed lines are reported and how returned payments are credited back. If you need to receive money from customers or partners, ask about collections, including which currencies can be received, how incoming funds are identified and how quickly they appear on your account statement.

Finally, ask what happens when a payment is rejected or returned by the beneficiary bank. Returns are a normal part of international payments. A provider with a clear process for tracing, explaining and reprocessing them will save your team a good deal of time.

Onboarding

A regulated provider must know who its clients are, who owns and controls them, what they do and where their money comes from. Expect to provide corporate documents, details of directors and beneficial owners, identification, proof of address, a description of your business and expected activity, and in some cases evidence of source of funds or source of wealth.

Thorough onboarding is a good sign. A provider that asks almost nothing is either not meeting its obligations or will ask later, often at an inconvenient moment such as when a large payment is pending. Ask for a full document list at the start, and ask whether the provider accepts certified copies and from whom.

Ask how long onboarding usually takes for a business like yours, what tends to slow it down, and who will be your contact during the process. Ask too about periodic reviews: how often the provider will refresh your file and what it will need from you.

Sector fit

Some industries find it harder than others to keep banking and payment relationships. Online gaming, adult content, defence and security, contracts for difference brokerage, digital assets and businesses using offshore structures are frequent examples. Many providers decline these sectors outright or accept them and then exit the relationship after a review.

If your business sits in one of these sectors, ask directly whether the provider serves it, on what basis, and what licences or documents it expects to see. A provider that understands your sector will know which licences matter, how your flows normally look and which counterparties are likely to raise questions. That knowledge reduces the number of payments that stall in review.

Be open about your business at the start. Discovering a mismatch after six months of trading is far more disruptive than a frank conversation before onboarding.

People and service

Currency and payments are a service business. When a payment is stuck, a beneficiary bank rejects a wire or a trade needs to be booked before a cut-off, you need a person who knows your account and can act.

• Ask whether you will have a named contact or a general support queue.
• Ask which hours the dealing and operations teams cover, and from which offices.
• Ask how urgent issues are escalated, and to whom.
• Meet or speak to the people who will handle your account, not only the sales team.

Time zones matter. A group with entities in Canada and Hong Kong benefits from a provider that has people awake during both working days. Ask where the provider's staff are based.

Platform and controls

For most businesses, the platform is where day-to-day work happens. Ask for a demonstration with your own use case, and look closely at controls as well as features.

• User management. Your administrators should be able to add and remove users and set roles for each.
• Dual authorisation. Every trade and payment should require a creator and a separate approver.
• Multi-entity access. If you have several companies, each should be kept separate with its own permissions.
• Beneficiary management. New payees and changes to bank details should need separate approval.
• Audit trail. Every action should be logged with user and time, and be exportable.
• Batch payments. If you pay many beneficiaries, check the file format and limits.
• Reporting. Statements and trade histories should export cleanly into your accounting system.

The checklist in one place

The last row deserves attention. A provider that is clear about what it does not offer, whether derivatives, deposits or advice, is easier to work with than one that implies it can do everything.

General information

This article is general information to help businesses assess FX and payments providers. It is not investment, legal or financial advice. CCYFX works only with businesses, and does not offer derivatives, deposits or investment advice. See our compliance page or start the onboarding process.