Multi-currency
Accepting payment in customers' currencies and settling in yours.
Multi-currency processing lets you present prices and take payment in several currencies, then settle to your account, sometimes in the original currency, sometimes converted at an FX margin. Local-currency pricing improves international conversion; watch the conversion spread each processor charges.
How it works
Two charges usually sit on an international sale, and neither is the one you negotiated. The conversion margin comes first, commonly in the region of 1% to 2% above the mid-market rate and higher with some providers. Then the cross-border or international card fee, often around 1%, which applies whenever the card was issued outside your own country. Together they can add more than your entire processing markup, so an international mix changes which processor is actually cheapest for you.
Which of you pays for the conversion depends on how you price. With local pricing you display and charge in the customer's currency, and the swap happens on your side when the processor settles, either into a currency-specific balance you hold or into US dollars at the processor's rate. Charge in dollars instead and the customer's issuing bank does the conversion, adding its own foreign transaction fee to their statement. Hold a balance in a currency you also spend, on suppliers or contractors, and you avoid the margin entirely.
The margin never shows up on a statement, because it is baked into the exchange rate rather than itemised as a fee. You can work it out. Take the amount your processor settled before card fees, divide by the amount the customer was charged, and compare that rate with the mid-market rate for the day. Refunds are the other trap: many processors convert them back at the rate on the refund date, so a rate that has moved leaves you short.
Worked example
EUR 5,000 of euro sales in a month, at an assumed mid-market rate of $1.08, is $5,400 of value. Convert at a 2% margin and you receive about $5,292, so the spread alone costs $108. Add the cross-border fee of 1%, roughly $54, and currency handling has taken $162 before a single card fee.
Frequently asked questions
- Do I need a bank account in every currency I sell in?
- Almost certainly not. Most processors will convert foreign sales and pay them into your home account, which is both the default and the simplest thing to run. Local accounts only start paying for themselves when you hold enough volume in a currency to care about the conversion margin, or you have costs in it, suppliers or staff, that you can settle without converting twice.
- What is a cross-border fee?
- Often around 1%, charged when the customer's card was issued in a different country from your merchant account. It is separate from currency conversion and it applies even when the sale is in your own currency, so a US business selling to a Canadian shopper in dollars still pays it. Check whether a quoted headline rate includes it. Many do not.
- Should I price in my customer's currency or charge in US dollars?
- Price locally if international sales matter to you. Shoppers convert better when the price is in the currency they think in, and nothing surprising turns up on their statement afterwards. Dollars are cheaper for you on paper, since the conversion cost shifts to the cardholder, but you pay for it in abandoned carts and in disputes from buyers who did not expect the amount their bank took.