Foreign dollar currency account: just like a local one!

Local foreign dollar currency account | amnis
  • Money transfer
  • International business

Companies that often transfer money to the US or receive US dollars usually open a foreign dollar currency account with their bank in order to avoid expensive foreign exchange fees. In this article we go one step further und show how you can avoid high transaction costs like SWIFT with a local business account.

What is a foreign currency account?

Companies open their foreign currency accounts usually at their house bank to be able to handle transactions in other currencies. It is usually not possible to hold multiple currencies in the standard business account at the local house bank. This means that in order to receive or send foreign currencies, they are first converted, which leads to high exchange fees.

When opening a foreign dollar currency account at the bank, you receive an own account number and therefore pay the bank’s account maintenance fees. At most banks, the international dollar account is held as a sub-account, meaning that separate debit and credit cards can’t be issued.

Foreign dollar currency account: Advantages and disadvantages

A foreign USD account offers many advantages for companies that frequently do business abroad: The money no longer has to be converted at expensive foreign exchange rates for incoming or outgoing transfers, which can become very costly, especially for companies that carry out many transactions.

A foreign currency account may solve the problem of conversion (fx) fees, but the transaction costs for foreign transfers remain. Normally, SWIFT is used for these transfers. The SWIFT-system facilitates the transfer of money between international banks. The problem is that the money is often sent via several intermediary banks if there is no direct business relationship between the sender and recipient bank. Thus, sometimes up to 5 banks are involved in a single transaction. This is also reflected in the costs: on average, SWIFT fees range between 3-5% of the transferred amount.

Unfortunately, a foreign dollar currency account with your own house bank cannot avoid these transaction costs. In the following sections we go into more detail on alternatives to avoid not only the conversion but also the SWIFT fees.

For whom is a USD foreign currency account suitable?

A business bank account in the USA is suitable for a wide range of entrepreneurs who do business abroad and namely people who do busines in the US:

  • Investors with international portfolios: Investors looking to diversify their portfolio often invest in foreign currencies to minimise currency risk. For example, precious metals and the US dollar often move in opposite directions. Accordingly, investors hold a foreign dollar currency account to minimise their risk.
  • International companies: They usually have local accounts in different currencies to accommodate customers and suppliers. In international trade, the USD is still the leading currency. Therefore, there is hardly an internationally active company that can do without a foreign dollar currency account.
  • Companies with customers in the US: The U.S. remains one of Europe’s most important trading partner. Therefore, many European companies are meeting their American customer’s needs and accept the US dollar. To avoid excessive exchange rate fees, most of these companies have an international dollar account.
  • Companies with suppliers in the US: Companies in the US usually want to be paid in US dollars. For this purpose, European companies set up a foreign dollar currency account to pay their suppliers in the local currency and, ideally, benefit from more favourable conditions.

The best choice: a local dollar currency account

While a foreign dollar currency account certainly has its merits when it comes to avoiding expensive exchange fees, the real problem remains: Companies still have to pay expensive SWIFT fees for foreign transfers, which range between 3-5% of the total amount. These are incurred by both the sender and the recipient, depending on the chosen expense allocation. Therefore, businesses that make foreign transfers several times a year should look for cost-effective alternatives: this is where local payment options become relevant.

If you want to transfer within the EU using SEPA, you need a European Euro account. If you seek to make use of ACH in the US, you also need a local US account accordingly. What is the advantage of these networks? The processing fees are extremely low, so you will be charged only a fraction of the SWIFT costs. In addition, the processing time is also much shorter. In the following section, we will go into more detail on how European companies can use the ACH network without having to open a USD account locally in the US.

Pay locally with amnis, everywhere

If you want to access local payment options like ACH from Europe, the digital payment platform amnis is the right choice. With amnis, businesses can benefit from low-cost, local networks and receive and send money at local rates.

With amnis, local payments can be made in over 20 countries in the local currency. If local payments are not possible, SWIFT is available to amnis customers in over 200 countries. Incoming payments are possible from over 180 countries and 20 currencies.

For local incoming payments in USD, companies receive a USD account number in the name of their company. In addition, they can execute USD transfers via the local ACH payment route and manage their foreign currencies as if they were in the US themselves – without an additional foreign dollar currency account at the house bank.

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Open a business account and save money right away: amnis enables companies to benefit from the most favourable payment options around the world. With the multi-currency account, you get all the tools to save money immediately and optimise your international money transfers. Open an amnis demo account now, completely non-binding:

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Sabrina Maly
As a marketing manager at amnis I provide SMEs with fx market, international business and news updates on our blog & FAQ page.
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