Reducing Currency Conversion Costs
Traditional payment processors do charge about 2-4% in hidden markups on currency exchange reducing international profit margins. For example, new-age challengers like Wise (previously called TransferWise) for Business or Revolut Merchant Services can keep accessing near-interbank rates by keeping balances in several currencies to enable individual businesses to access EUR, GBP, USD, and some additional currencieswhen converting those currencies into another rather than waiting in order to do the conversion as soon as possible. Implementations differ technically–for some it’s a conversion right at checkout; for others the move is straight into local currency accounts. For Shopify shops, there are apps like Multi-Currency Converter Ultimate that automatically just show local prices when one pays through your gateway’s best available rate.
Implementing Transparent FX Pricing
To maximize savings, configure your payment gateway to defer to customers’ home currency for debits instead of the merchant’s converting currency. This effectively averts DCC (Dynamic Currency Conversion) charges that are imposed by some processors. Integrate your gateway with a multi-currency business account offered by companies like Airwallex or Payoneer to diminish the need for conversion. Demand complete transparency on FX fees from processors—most brag about “zero FX fees,” but in reality, they make up for it with wider exchange rate spreads. A handful of more mature gateways allow the option of lock-in forward contracts to secure favorable rates for later settlements during times of severe market unrest; this may also be beneficial. Hence, any conversion would be carried out with payments settled, to the outmost possible extent, in the initial transaction currency before the alteration of currencies, thus avoiding the capture of any changes in rates.
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