What exactly is the problem?

Normally international trade deals are agreed to in USD or EUR:

When payment is made the importer instructs their bank to make the payment.

The bank converts the amount and deposits the money into the bank account of the exporter in their country.

The effects of a bad exchange rate due to excess fees and banking charges is entirely suffered by the exporter who receives the local currency amount minus the banking and FX spread charges.

Additionally as the sending bank does not know the exporter, they have to perform a lot of time consuming checks.

In total the cost to the exporter is between 2 to 6%.

Here is a visual example:

A problem of control and incentive


A French importer agrees to pay 10,000 eur for the purchases of Smart phones from a Brazilian Manufacturer. The FX rate is 1 EUR = 10 BRL


Importer receives goods and provides their Bank, instructions to make payment

96,000 BRL

4% various fees = 4000 BRL

Banking Processes:
  • Payee detail checks
  • Compliance checks
  • Currency spread charges
  • SWIFT charges
  • Transaction fees
  • Transfers 10,000 EUR


Loss to exporter of 4,000 BRL

Recipients bank in Brazil: receives 96,000 BRL