Minimizing loss during two-way currency transfers involving foreign entities
The solution was to get a foreign bank in each country we do business in. Get a credit card processor there, and simply make our money and keep our money in that country, and taking quarterly gains from those accounts and bringing them to the US account.
Suppose you're a European Company, selling say a software product to a US company. As much as you might want the US company to pay you in Euros they might insist (or you'll lose the contract) that you agree pricing in USD.  The software is licensed on a yearly recurring amount, say 100K USD per year payable on the 1st January every year. In this example, you know that on the 1st Jan that 100K USD will arrive in your USD bank account.   You will want to convert that to Euros and to remove uncertainty from your business you might take out an FX Forward today to remove your currency risk.   If in the next 9 months the dollar strengthens against the Euro then notionally you'll have lost out by taking out the forward.   Similarly, you've notionally gained if the USD weakens against the EURO.    The forward gives you the certainty you need to plan your business. Basic arbitrage is the (near-)simultaneous purchasing and selling of things that are convertible.   The classic example is the international trading of equities. If someone in London wants to purchase a hundred shares of Shell for 40 GBP ea. and someone in New York wants to sell you a hundred shares of Shell for 61 USD ea., you can buy the shares from the guy in New York, sell them to the guy in London and convert your GBP back in to USD for a profit of $41.60 minus fees.  Now, if after you buy the shares in New York, the price in London goes down, you'll be left holding 100 shares of Shell that you don't want. So instead you should borrow 100 shares in London and sell them at the exact same time that you buy the shares in New York, thus keeping your net position at 0. In fact, you should also borrow 4000GBP and convert them to USD at the same time, so that exchange rate changes don't get you. The website http://currencyfair.com/ provides a service which gives you both a decent exchange rate (about 1% off from mid-market rate) and a moderately low fee for the transfer: 4 USD for outgoing ACH in the US, 10 USD for same-day US wire. For the reverse (sending money from the US to EU) the fees are: 3 EUR for an ACH, 8 EUR for a same-day EUR wire. It has been online for quite a while, so I assume its legit, but I'd do a transfer for a smaller sum first, to see if there are any problems, and then a second transfer for the whole sum. A currency broker will give you the closest rate to the interbank rate. Retail banks and money transfer companies take a spread (the difference between the interbank rate and the rate that they charge you) that is significantly higher than a broker. So search for a broker and get quotes for the amount you wish to transfer. Although I do not know about US Institutions; In India Banks have adopted a mix of features that mitigate the risk. Some ways that are used are; In theory, when you obtained ownership of your USD cash as a Canadian resident [*resident for tax purposes, which is generally a quicker timeline than being resident for immigration purposes], it is considered to have been obtained by you for the CAD equivalent on that date.  For example if you immigrated on Dec 31, 2016 and carried $10k USD with you, when the rate was ~1.35, then Canada deems you to have arrived with $13.5k CAD. If you converted that CAD to USD when the rate was 1.39, you would have received 13.9k CAD, [a gain of $400 to show as income on your tax return].  Receiving the foreign inheritances is a little more complex; those items when received may or may not have been taxable on that day. However whether or not they were taxable, you would calculate a further gain as above, if the fx rate gave you more CAD when you ultimately converted it. If the rate went the other way and you lost CAD-value, you may or may not be able to claim a loss. If it was a small loss, I wouldn't bother trying to claim it due to hassle. If it's a large loss, I would be very sure to research thoroughly before claiming, because something like that probably has a high chance of being audited. I live in europe but have been paid in usd for the last few years and the best strategy I've found is to average in and average out. i.e. if you are going in August then buy some Euro every few weeks until you go. At least this way you mitigate the risk involved somewhat. You didn't specify where in the world you account is - ScotiaBank operates in many countries. However, for large amounts where there is a currency conversion involved, you are almost guaranteed to be better off going to a specialist currency broker or payments firm, rather than using a direct method with your bank (such as a wire transfer). Based on my assumption that your account is in Canada, one provider who I have personally used with success in transferwise, but the best place to compare where is the best venue for you is https://www.fxcompared.com In the off chance that this is an account with Scotiabank in the United States, any domestic payment method such as a domestic wire transfer should do the job perfectly well. The fees don't matter for larger amounts as they are a single fee versus a percentage fee like you see with currency conversions. If possible, I would open a Canadian bank account with a bank such as TD Canada Trust. You can then have your payments wired into that account without incurring costs on receipt. They also allow access to their US ATM network via TD Bank without additional costs. So you could use the American Affiliate to pull the funds out via a US teller while only bearing the cost of currency conversion. If that option can't work then the best route would be to choose a US bank account that doesn't charge for incoming wire transfers and request that the money be wired to your account (you'll still get charged the conversion rate when the wire is in CAD and the account is in USD). I doubt you're going to find anywhere that will give you free outgoing wires unless you're depositing a huge amount of money like $500K or more. An alternative would be to find a bank that offers everything else you want and use XETrade for very low cost online wires. I've used them in the past and can recommend their services. Most banks won't charge for incoming wires. I have accounts at E*Trade Bank that don't charge any fees and I can do everything online. You might want to check them out. E*Trade also offers global trading accounts which allow you to have accounts denominated in a few foreign currencies (EUR, JPY, GBP, CAD and HKD I think). I don't think there is a fee for moving money between the different currencies. If your goal is simply to diversify your money into different currencies, you could deposit money there instead of wiring it to other banks. Several possibilities come to mind: Several online currency-exchange brokers (such as xe.com and HiFx) offer very good exchange rates and no wire transfer fees (beyond what your own bank might charge you).  Get French and American accounts at banks that are part of the Global ATM alliance: BNP Paribas in France and Bank of America in the USA.  This will eliminate the ATM fee. Get an account at a bank that has branches in both countries.  I've used HSBC for this purpose. If you buy foreign currency as an investment, then the gains are ordinary income. The gains are realized when you close the position, and whether you buy something else go back to the original form of investment is of no consequence. In case #1 you have $125 income. In case #2 you have $125 income. In case #3 you have $166 loss. You report all these items on your Schedule D. Make sure to calculate the tax correctly, since the tax is not capital gains tax but rather ordinary income at marginal rates. Changes in foreign exchange between a transaction and the conversion of the proceeds to USD are generally not considered as income (i.e.: You sold a property in Mexico, but since the money took a couple of days to clear, the exchange rate changed and you got $2K more/less than you would based on the exchange rate on the day of the transaction - this is not a taxable income/loss). This is covered by the IRC Sec. 988. There are additional rules for contracts on foreign currency, TTM rules, etc. Better talk to a licensed tax adviser (EA/CPA licensed in your State) for anything other than trivial. "Other responses have focused on getting you software to use, but I'd like to attempt your literal question: how are such transactions managed in systems that handle them? I will answer for ""double entry"" bookkeeping software such as Quicken or GnuCash (my choice). (Disclaimer: I Am Not An Accountant and accountants will probably find error in my terminology.) Your credit card is a liability to you, and is tracked using a liability account (as opposed to an asset account, such as your bank accounts or cash in your pocket). A liability account is just like an asset except that it is subtracted from rather than added to your total assets (or, from another perspective, its balance is normally negative; the mathematics works out identically). When you make a purchase using your credit card, the transaction you record transfers money from the liability account (increasing the liability) to the expense account for your classification of the expense. When you make a payment on your credit card, the transaction you record transfers money from your checking account (for example) to the credit card account, reducing the liability. Whatever software you choose for tracking your money, I strongly recommend choosing something that is sufficiently powerful to handle representing this as I have described (transfers between accounts as the normal mode of operation, not simply lone increases/decreases of asset accounts)." "Yes, you effectively need to ""double count"" when shifting balances between foreign accounts." Bingo. And remember, hedge funds are for a specific kind of investor (UHNW, institutional) as a *hedge* against when things go bad.   I won't argue against the fees being exorbitant. And I certainly think that the explosion of funds has led to a lot more people just trying to beat the market (instead of providing a differentiated strategy).   HFs will always get slammed in times like this because of what they charge. But any of the good ones (at least on the equities side) are always likely to struggle to beat the benchmark when the benchmark is a roaring bull. Some judgement really should be reserved for times of distress