Every Money Transfer And Remittance Term You Need To Know: Letter F

Last updated: October 05, 2022

FedWire

FedWire (formerly Federal Reserve Wire Network) is a payments network within the US operated by the US Federal Reserve and participating banks. FedWire is used to facilitate real time wire transfers and other electronic payments within the US.

FedWire handles a lot of payment network traffic. In 2016, for example, FedWire processed 148 million transfers worth USD 766 trillion.

Also see: Domestic Wire Transfer, International Bank Transfer, International Wire Transfer, SWIFT, SWIFT Code, Wire Transfer, Wire Transfer Fee
Further reading: How Do International Wire Transfers Work?
The Top 7 Best US Banks for International Wire Transfers

Fixed Exchange Rate

When you send money internationally with a money transfer company, you may get a fixed exchange rate for your transaction. What this means is that the exchange rate will not change anymore during the course of your transaction as it progresses to next steps.

In other words, your money transfer will get paid out at the exchange rate you got when the transaction started regardless of how long it takes for it to clear. In best cases, this means you save money if the exchange rate dives lower. Similarly, in the worst cases, you lose money as the future exchange rate on the transaction clearing date may be higher.

Also known as: Guaranteed Exchange Rate, Locked-in Exchange Rate
Also see: Exchange Rate, Floating Exchange Rate, Indicative Exchange Rate, Variable Exchange Rate
Further reading: Currency Exchange Rates: What Are They, How They Change, and More
What Is a Remittance and How Does It Work?
How To Make The Most Of Your Remittance

Fixed Fee

A fixed fee on an international money transfer is a fee that is independent of the amount you send. In other words, it does not change as the transfer amount changes. For example, a money transfer company may charge you a fixed fee of USD 3 on money transfers you send from the USA to India, regardless of whether you send USD 50, USD 500 or USD 5,000.

The opposite of a fixed fee would be a variable fee that depends on the transfer amount. Usually, variable fees are expressed as a percentage, hence they go up and down as the amount you want to send increases or decreases.

Also see: Currency Conversion Fee, Free Money Transfer, FX Fee, Percent Fee, Wire Fee, Wire Transfer Fee
Further reading: Currency Exchange Rates: What Are They, How They Change, and More
What Is a Remittance and How Does It Work?
How To Make The Most Of Your Remittance

Floating Exchange Rate

A floating exchange rate on a money transfer means that you will get the exchange rate on the day the transaction clears. In other words, you do not get the exchange rate applicable at transaction initiation time. Instead, you will get the current exchange rate at the time of transaction completion.

Floating exchange rates can be a double edged sword. If rates go up, you get to gain, and if they go down, you can lose some money.

Also known as: Indicative Exchange Rate, Variable Exchange Rate
Also see: Exchange Rate, Fixed Exchange Rate, Guaranteed Exchange Rate, Locked-in Exchange Rate
Further reading: Currency Exchange Rates: What Are They, How They Change, and More
What Is a Remittance and How Does It Work?
How To Make The Most Of Your Remittance

Foreign Exchange

The term foreign exchange broadly represents any transaction that involves 2 currencies. This aspect automatically involves currency exchange happening between the said currencies at an exchange rate.

Anytime you travel or work overseas, or make purchases from overseas supplies, or send money to friends and family abroad, you are doing a foreign exchange transactions.

Also known as: ForEx, FX
Also see: Foreign Exchange Rate, FX Rate
Further reading: 5 Key FX Concepts You Need to Know
Currency Exchange Rates: What Are They, How They Change, and More

Foreign Exchange Rate

The exchange rate applied to foreign exchange transactions involving 2 currencies is called foregin exchange rate. In other words, it is the price you pay in your local currency to buy the foreign or overseas currency.

For example, if you buy British Pounds at the Heathrow Airport in London by selling US Dollars, the rate you get would be the USD/GBP foreign exchange rate.

Also known as: Currency Exchange Rate, Exchange Rate, FX Rate
Further reading: 5 Key FX Concepts You Need to Know
Currency Exchange Rates: What Are They, How They Change, and More

ForEx

ForEx is a shorthand term for foreign exchange, which is a monetary transaction that involves 2 different currencies. The relative value of one currency as compared to the other is the exchange rate at which the trade happens.

Also known as: Foreign Exchange, FX
Also see: Foreign Exchange Rate, FX Rate
Further reading: 5 Key FX Concepts You Need to Know
Currency Exchange Rates: What Are They, How They Change, and More

Financial Process Exchange (FPX)

Financial Process Exchange (FPX) is a popular payment network in Malaysia. It is managed and operated by the PayNet group, which includes Bank Negara Malaysia (BNM), the Central Bank of Malaysia. The best thing about FPX is that you do not have to share your bank account information when making payments.

In regard to international money transfer, if you are in Malaysia, you can pay for your money transfer with FPX. In that sense, FPX is a local payment method.

Also see: Local Payment Method, Payment Method
Further reading: Payment Methods for Money Transfer

Free Money Transfer

A free money transfer happens when you pay 0 fees on your transfer. This may happen when money transfer companies do not charge any fees, or they provide promotional free transfers to be more competitive compared to other remittance companies.

One thing you need to watch out for is a bad exchange rate. You may get a fee-free transfer, but a worse exchanger rate will end up costing you a lot as a hidden fee.

Also see: Currency Conversion Fee, Fixed Fee, FX Fee, Percent Fee, Wire Fee, Wire Transfer Fee
Further reading: Currency Exchange Rates: What Are They, How They Change, and More
What Is a Remittance and How Does It Work?
How To Make The Most Of Your Remittance

FX

The term FX is an abbreviation for foreign exchange (also called ForEx in short), and simply conveys the fact that there were 2 currencies involved in a particular transaction.

For example, you make a purchase from an overseas merchant, and pay them in their local currency. This transaction would qualify as an FX transaction since 2 currencies will get exchanged in value.

Also known as: Foreign Exchange, ForEx
Also see: Foreign Exchange Rate, FX Rate
Further reading: 5 Key FX Concepts You Need to Know
Currency Exchange Rates: What Are They, How They Change, and More

FX Broker

An FX Broker is an organization that provides a financial platform that can be used by various participants to buy and sell currencies. Parties that use an FX Broker may include FX Trader and international banks.

Much like any platform provider, an FX Broker company makes money by taking a small amount on every transaction happening on their systems.

Also see: Currency Exchange Broker, FX Trader, Money Transfer Agent
Further reading: 5 Key FX Concepts You Need to Know
Currency Exchange Rates: What Are They, How They Change, and More

FX Fee

Whenever you make a foreign exchange transaction, the company, platform or agent that helps you realize the transaction will charge a fee for providing their services. This fee is called the FX Fee.

FX Fees can be a fixed amount, or a percent based fee that changes with the amount being exchanged between the currencies.

Also known as: Currency Conversion Fee
Also see: Fixed Fee, Free Money Transfer, Percent Fee, Wire Fee, Wire Transfer Fee
Further reading: 5 Key FX Concepts You Need to Know
Currency Exchange Rates: What Are They, How They Change, and More

FX Markup

FX Markup is a measure of the cost of a foreign exchange transaction calculated in terms of how much lower is the exchange rate you get vs the interbank exchange rate (also called the mid-market exchange rate). It is calculated as a percentage difference of the exchange rate you get versus the interbank exchange rate.

The below formula captures how FX Markup is calculated:
FX Markup = (Transaction rate - Mid-market rate) / Mid-market rate * 100

FX Markup is a great way to compare exchange rates from various companies to see which deal is better as compared to others.

Also see: FX Margin, FX Spread, Interbank Exchange Rate, Mid-Market Exchange Rate
Further reading: 5 Key FX Concepts You Need to Know

FX Margin

FX Margin is a term used in FX Trading and represents the money that the trader needs to deposit with the FX Broker to be able to place their FX trade. The goal is to have the FX Trader submit an amount of money as a collateral or security in lieu of the FX trade they want to place.

Also see: FX Broker, FX Markup, FX Spread, FX Trader
Further reading: 5 Key FX Concepts You Need to Know

FX Rate

FX Rate is simply the foreign exchange rate applicable for inter-conversion of funds between 2 currencies. The FX Rate is expressed as a ratio between source and target currencies involved in the conversion.

For example, GBP/PHP implies the conversion of British Pounds to Philippine Pesos.

Also known as: Currency Exchange Rate, Exchange Rate, Foreign Exchange Rate
Further reading: Currency Exchange Rates: What Are They, How They Change, and More

FX Spread

FX Spread is the difference between the Bid FX Rate (also called the Sell FX Rate) and the Ask FX Rate (also called the Buy FX Rate).

Sometimes, FX Spread is also called currency conversion spread or exchange rate spread. However, the term FX Spread is much more common.

Also see: Ask FX Rate, Bid FX Rate, Buy FX Rate, FX Margin, FX Markup, Pip Spread, Sell FX Rate
Further reading: 5 Key FX Concepts You Need to Know

FX Trader

An FX Trader is a financial entity (individual or organization) that buys and sells foreign exchange in an effort to make money. The process of buying and selling currencies is called placing FX trades.

FX trades are done on an FX trading system which is generally provided by financial organizations called FX Brokers.

Also see: FX Broker, FX Margin, FX Markup, FX Spread
Further reading: 5 Key FX Concepts You Need to Know