Transaction costs

Transaction costs: the costs of the deal itself, not of the goods. The idea was described by Ronald Coase and developed by Oliver Williamson. They include finding a partner, negotiations, checks, paperwork, monitoring performance and protection against the deal falling through.

What makes up the cost of a foreign trade payment

For an importer, transaction costs are easy to see in a single payment to a supplier:

• the bank’s or agent’s fee for the transfer;
• the FX markup when converting roubles into foreign currency;
• fees of correspondent banks along the chain;
• costs of documents and currency control;
• lost time: the money is in transit, the goods have not shipped;
• repeat costs if the payment was returned and has to be sent again.

Some of these costs are visible at once, others show up only after payment.

What to watch for

Comparing offers by the “fee” line alone makes no sense. A low fee often comes with a high FX markup, and vice versa. Compare the total in roubles for the specific amount in foreign currency the supplier will receive. Ask who pays the correspondent banks’ fees: the payer, the beneficiary, or whether they are shared.

A separate cost item is uncertainty. If the rate and the fee are known only after the debit, risk is built into the price.

When VEDmost arranges the payment, the rate and the fee are fixed in the payment order before the roubles are debited, and you don’t pay the broker separately. Tell us your current rate, and we’ll look for a lower rate in our pool; if we can’t find one, we’ll say so: Compare your rate.