Product guide
Mastering FX Forwards
Our mission: reducing currency risk
With market rates changing constantly, you can’t always predict what you’ll spend on a foreign currency transaction you’ve planned in advance.
Forward contracts help you reduce this risk by locking in an exchange rate between 2 currencies, until a set future date or time window.
With Revolut Business, you can book and manage contracts in USD, GBP, and EUR using FX Forwards. Here's how we price our contracts to provide you with the best possible rates.
1. A look at pricing
The basics of pricing
When creating a forward contract, financial institutions and brokers offer you a forward exchange rate, which you can lock in for a future transaction. This rate is different from the current exchange rate (or spot rate), which you can use for day-to-day exchanges.
To determine the final fixed exchange rate (or net rate) for each contract, providers combine the forward rate with a contract fee or markup.
When you book a contract with us, you get transparent pricing with no hidden fees. Let’s break down how we price FX Forwards, and compare our methods with other providers’.
How are forward rates set?
Financial institutions and brokers use something called forward points, which are determined by the market based on the interest rates between 2 currencies. If one currency has a higher interest rate, it'll typically be more expensive to borrow and cheaper to lend, affecting the forward points.
Providers can add or subtract these points from the current exchange rate of a currency pair to set forward rates. When forward points are in your favour, many providers will keep some of them from your final forward rate — resulting in a better deal for them, and a worse rate for you.
At Revolut Business, we always include forward points in your final rate, which helps us give you the most competitive fixed rate for that contract.
2. Net rates in action
How net rates work — and help you save
Imagine a fictional UK-based wholesaler of children's toys, called Wooden Toys Ltd, is considering 2 potential contracts from different providers — one with forward points, and the other one without. Let’s compare them.
GBP exchanged
Forward points
GBP/USD forward rate
Markup
GBP/USD final rate
USD bought
Rates and forward points are illustrative only.
How do they compare?
As the table shows, Contract B offers a better final fixed rate for Wooden Toys Ltd because the provider added forward points in their favour. Thanks to this, their GBP is worth $4,000 more than the same amount with Contract A, which doesn’t include forward points.
And that’s just for a single contract — imagine how much you may be able to save across all the contracts you book for your business by choosing a provider that offers forward points.
3. Why FX Forwards?
Full control of your portfolio
With FX Forwards, you can immediately access up to £500k in contracts without a credit check, and get a set exchange rate up to 12 months in advance. View rates, set dates, and create contracts yourself — with 24/7 access via your Revolut Business account.
Protect your profits with FX Forwards
We hope this guide's helped you understand how we price our forward contracts and how they can protect your global business finances from currency risk. For more information, visit our FX Forwards webpage.
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