How Travel Agencies Save on Multi-Currency Transactions: A Guide for Tour Operators

Key takeaways

• Travel agencies pay 150+ suppliers in 20+ currencies annually, losing 4–6% to credit card FX markups and bank fees on every international payment.

• A mid-size agency with $2M in annual supplier payments wastes $80K–$120K on unnecessary FX costs compared to using a specialized provider.

• Multi-currency wallets, forward contracts, and batch payments let you pre-fund currencies at favorable rates, lock package costs, and pay suppliers instantly—transforming FX from a profit drain into a competitive advantage.

Why FX costs eat into travel agency profits

Currency exchange costs are the silent profit killer for travel agencies and tour operators. You sell packages in USD but pay hotels in EUR, ground transportation in JPY, and activities in THB. Credit card companies and traditional banks charge 3–5% FX markups plus transaction fees, eating 30–50% of your already-thin margins.¹ For an agency booking $2M in international supplier payments annually, switching to a specialized FX provider saves $40K–$80K per year. Below is a practical guide to cutting costs and simplifying workflows.

1. Calculate your true multi-currency transaction costs

Most travel agencies underestimate FX costs because charges are hidden inside credit card statements or wire transfer fees rather than shown as line items.

Identify all FX-related costs:

Credit card processing (most expensive):

• Base credit card fee: 2–3%

• Foreign transaction fee: 1–3%

• Dynamic currency conversion (DCC) markup: 3–5%

Total: 4–6% on every international payment

Example: $5,000 hotel payment in Paris using business credit card:

• Credit card shows: $5,000 × 1.04 FX rate = $5,200 charged

• Hidden cost: $200 (4%) in FX markup

• You paid €4,630 equivalent instead of €4,807 you thought you paid

Wire transfers (high fees, poor rates):

• Sending bank fee: $25–$50

• Intermediary bank fee: $15–$35 (often hidden)

• Receiving bank fee: $10–$25 - FX markup: 2–4%

Total cost: $50–$110 plus 2–4% markup

Example: $10,000 wire to Thai hotel:

• Wire fees: $75 total

• FX markup at 2.5%: $250

Total cost: $325 (3.25%)

Third-party booking platforms: Many OTAs (Online Travel Agencies) and supplier platforms add 2–4% FX markup to "simplified" payments - Convenient but expensive

Calculate annual impact:
Total annual international supplier payments: $________
Average FX cost (4–5%): $________ × 0.045 = $________

For $2M in annual payments at 4.5% average cost = $90,000 in annual FX costs.

Why this matters: FX costs often exceed rent, software, or marketing expenses but get overlooked because they are embedded in individual transactions rather than billed monthly.

2. Identify all foreign supplier payments

Travel agencies make hundreds of micro-payments to diverse suppliers. Map them to understand total exposure.

European tours (EUR, GBP, CHF):

• Hotels: Boutique properties, chains, B&Bs

• Ground transportation: Private drivers, coach companies

• Activities: Museum tickets, food tours, wine tastings

• Guides: Local experts, city tour guides

• Restaurants: Group dinners, welcome receptions

Asia tours (JPY, THB, VND, KRW, CNY):

• Hotels: Urban hotels, ryokans, resorts

• Rail passes: JR passes in Japan, high-speed rail in China

• Guides: English-speaking local guides

• Activities: Temple visits, cultural experiences

• Transportation: Private vehicles, intercity transfers

Latin America tours (MXN, COP, PEN, ARS):

• Hotels: Colonial hotels, boutique properties

• Activities: Archaeological sites, adventure tourism

• Ground services: 4x4 rentals, boat operators

• Guides: Specialized Andes/Amazon guides

Other destinations:

• Australia/New Zealand (AUD, NZD): Lodges, adventure operators

• Africa (ZAR, USD): Safari lodges, guides, park fees

• Middle East (AED, ILS): Hotels, guides, transport

Payment frequency by supplier type:
Hotels: Deposit (30–90 days pre-arrival) + balance (pre-arrival or checkout)
Ground transport: Usually 50% deposit, 50% on service completion
Activities/guides: Often pre-payment or day-of payment
Restaurants: Pre-payment for groups or payment on-site

Example tour cost breakdown (10-day Italy tour):

• Hotels (EUR): 8 properties × $150/night × 12 rooms = $14,400

• Ground transport (EUR): Private coach = $3,200

• Activities (EUR): Wine tours, cooking classes, museums = $4,800

• Meals (EUR): 3 group dinners = $2,400

• Guide (EUR): English-speaking guide for 10 days = $2,200

Total EUR exposure: €24,500 (~$27,000)

If you book 20 similar tours annually, you have €490,000 (~$540,000) in EUR exposure alone.

3. Set up multi-currency wallets for major destinations

Pre-funding currencies at favorable rates and paying suppliers directly eliminates repeated conversion costs and timing delays.

How multi-currency wallets work:

Step 1: Fund the wallet
Transfer USD from your business bank account to Xe. Xe converts to EUR, GBP, JPY, or other currencies at transparent rates (0.5–1% markup vs. 3–5% at banks).

Step 2: Hold balances
Maintain EUR, GBP, JPY, THB, or other balances based on upcoming tour volume. When rates are favorable (e.g., EUR weakens to 1.12), convert $50,000 to €44,640 and hold.

Step 3: Pay suppliers instantly
When hotel invoices or activity deposits are due, pay directly from your EUR wallet. No conversion, no waiting, no fees.

Which currencies to hold:
Prioritize by annual payment volume:
Tier 1 (hold constantly): EUR, GBP, JPY
Tier 2 (fund seasonally): AUD, MXN, THB
Tier 3 (on-demand): NZD, CHF, CAD, KRW

Funding strategy:
Weekly top-ups: Small agencies ($500K–$1M annual volume)
Monthly bulk funding: Medium agencies ($1M–$5M annual volume)
Rate-triggered funding: Set target rates (e.g., "fund €50K when EUR/USD hits 1.12") and convert automatically

Benefits:

• Pay suppliers immediately when invoices arrive (no 3–5 day wire delays)

• Avoid spot rate risk (you already converted at a favorable rate)

• Eliminate repeated conversion fees

• Improve supplier relationships (faster payments = preferred agency status)

4. Lock rates when selling tour packages

You sell packages 3–12 months before departure but pay suppliers 30–90 days before travel. Currency can move significantly during this window, eliminating margins.

The pricing problem:
You quote a 10-day Italy tour at $4,500 per person in January for September departure. Your cost breakdown assumes EUR/USD at 1.10:

• Supplier costs: €3,500 per person = $3,850 - Your margin: $650 per person

By August (payment time), EUR strengthens to 1.07. Your costs are now:

• Supplier costs: €3,500 per person = $3,740 at 1.07 = actual cost $4,065 - Your margin: $435 per person (33% margin loss)

On a 20-person tour, you just lost $4,300 in profit due to FX.

Solution: Forward contracts
Lock the EUR/USD rate when you sell the package (or finalize pricing). You know you will need €70,000 for the tour in August. Lock 1.10 rate in January.

Result:

• August arrives, EUR is at 1.07, but you pay at locked 1.10 rate

• Your €70,000 costs $77,000 at locked rate (not $81,500 at spot rate)

• You saved $4,500 and preserved your margin

When to lock rates:
Early bird pricing (6–12 months out): Lock as soon as you confirm enough bookings to commit to tour
Standard booking (3–6 months out): Lock rates within 30 days of finalizing pricing
Last-minute departures (<3 months): Consider spot risk acceptable or use short-term forwards

Partial hedging approach:
If you are uncertain about final group size, lock 70% of estimated costs and leave 30% flexible. As bookings confirm, add additional forwards to cover the remaining exposure.

5. Optimize payment timing and workflows

Travel agencies make 10–50+ international payments weekly during peak season. Optimizing workflow saves hours and reduces errors.

Beneficiary management:
Store verified supplier details for every hotel, guide, and activity provider. Xe maintains IBAN, SWIFT, and account details securely so repeat payments take seconds, not minutes of data entry.

Batch payments:
Instead of sending 20 individual wire transfers for an upcoming tour (hotels, transport, guides, etc.), send all EUR payments in one batch. This ensures:

• Consistent FX rate across all suppliers

• Reduced admin time (one approval vs. 20)

• Lower total costs (no per-transaction fees)

• Easier reconciliation (one batch reference)

Example: You have 15 suppliers for an Italy tour totaling €25,000. Send one batch payment with 15 beneficiaries instead of 15 individual wires.

Scheduled payments:
When you book a tour 6 months out, you know hotel deposits are due in 90 days and balances in 150 days. Schedule these payments at booking time:

• Set date, amount, beneficiary, and locked FX rate

• Payment executes automatically on specified date

• No manual intervention needed; reduces forgotten payments

Mobile payments:
Tour managers often need to pay on-site suppliers during trips. Xe mobile app allows authorized users to send payments from the road—critical for emergency transportation, unplanned activities, or tipping guides.

Payment reconciliation:
Export all transactions with tour names, departure dates, and supplier categories. Import into accounting software (QuickBooks, Xero) to match invoices and track profitability by tour.

6. Build destination-specific FX strategies

Each destination has different supplier payment norms, currency volatility, and timing requirements. Tailor your approach by region.

Europe (EUR, GBP):

• High volume, frequent payments

• Stable currencies but meaningful swings (5–10% annually)

• Strategy: Multi-currency wallet for EUR/GBP + forward contracts for major tours

• Timing: Hotels want deposits 60–90 days out; balance 30 days before arrival

Asia (JPY, THB, VND):

• More fragmented suppliers (small hotels, individual guides)

• JPY and THB relatively stable; VND has restrictions

• Strategy: Multi-currency wallet for JPY/THB; on-demand for VND

• Timing: Varied; Japanese hotels often require full pre-payment 14 days out

Latin America (MXN, PEN, COP, ARS):

• Emerging market volatility - ARS particularly risky due to chronic inflation and devaluation²

• Strategy: Lock 100% of ARS exposure immediately; multi-currency wallet for MXN

• Timing: Pay as late as possible (preserve USD), but lock rate early

Australia/New Zealand (AUD, NZD):

• Commodity-linked currencies (volatile)

• Smaller booking volumes for most U.S. agencies

• Strategy: Forward contracts for confirmed groups; spot for individual travelers

• Timing: Standard 60-day deposits, 30-day balances

Africa (ZAR, USD):

• Many lodges quote in USD (simpler) or ZAR ZAR is emerging market risk

• Strategy: If USD-priced, no FX needed; if ZAR, lock immediately when booking

• Timing: Safari lodges often require 50% deposit at booking, 50% 60 days pre-arrival

Payment method preferences by region:
Europe: SEPA transfers (EUR) or SWIFT (GBP)
Asia: SWIFT or local systems (Japan uses domestic transfers)
Latin America: SWIFT preferred; some accept PayPal (expensive)
Africa: SWIFT or Western Union (remote lodges)

Annual savings calculator for travel agencies

Estimate your potential savings by comparing current FX costs to Xe Business costs.

*Assumes typical credit card + wire transfer mix at 4–5% blended cost
**Assumes 0.5–1% FX markup with no transaction fees

Key insight: Mid-size agencies ($2M volume) save enough annually ($75K) to hire an additional travel consultant or fund significant marketing expansion.

FAQ

How quickly can I access funds in my multi-currency wallet?

Payments from multi-currency wallets are typically same-day or next-day, depending on destination country and banking hours. Significantly faster than 3–5 day international wires.

Do I need to hold large balances in each currency?

No. Start with 2–4 weeks of upcoming supplier payments in each major currency (EUR, GBP, JPY). Fund incrementally as tours book rather than holding 6 months of exposure.

What if my tour cancels after I locked a forward contract?

If you locked €20,000 for a tour and the tour cancels, you still must exchange €20,000 at the locked rate. Options:

1. Apply to a different tour in the same currency

2. Hold the currency in your wallet for future use

3. Convert back to USD (you will realize gain/loss vs. spot rate). Build flexibility by locking only 80% of expected costs until booking is confirmed.

Can I use Xe for domestic USD payments?

Xe specializes in international and multi-currency payments. For domestic USD payments to U.S. suppliers (domestic airlines, hotels, attractions), continue using your existing bank or payment system.

How do I track which payments go to which tour?

Use payment references and notes when sending payments through Xe. Include tour name, departure date, and booking reference. Export transaction history regularly and import into your tour accounting system for profitability tracking.

What about credit card points/rewards?

Business travel credit cards offer 1–2% rewards but charge 4–6% total FX costs. Net cost: 2–4%. Xe costs 0.5–1% with no rewards. Net savings: 1.5–3.5%. You save more with Xe than you earn in credit card points on international payments.

How Xe helps

Once you have built your tour program, reliable FX tools protect your margins and simplify supplier payment logistics.

Hold 10+ currencies in one account.
Multi-currency wallets let you pre-fund EUR, GBP, JPY, and other currencies, then pay suppliers instantly without repeated conversions.

Lock package costs when you finalize pricing.
Forward contracts let you lock rates for 30–365 days, ensuring your quoted tour price remains profitable even if currencies move against you.

Pay 50+ suppliers in one batch.
Batch payments streamline payment workflows by sending EUR to 15 hotels, JPY to 8 guides, and GBP to 5 activity providers—all in one go.

Automate recurring supplier payments.
Scheduled payments execute hotel deposits and balances on specified dates at locked rates, reducing manual workload and missed payments.

Send fast, tracked payments.
Global payments arrive in 1–2 days (vs. 3–5 days for traditional banks), improving supplier relationships and earning preferred agency status.

Citations

¹ U.S. Travel Association — Travel agency economics and profitability data
² International Monetary Fund — Argentina currency and economic data
³ American Society of Travel Advisors — Travel agency business practices
⁴ Bank for International Settlements — Exchange rate data and trends
⁵ Travel Weekly — Travel industry trends and supplier relationships

Information from these sources was taken on November 10, 2025.

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Disclaimer:
The content within this blog post is for informational purposes only and is not intended to constitute financial, legal, or tax advice. All figures and data are based on publicly available sources at the time of writing and are subject to change. Actual conditions may vary depending on location, timing, and personal circumstances. We recommend consulting official government resources or a licensed professional for the most up-to-date and personalized guidance.