Today’s marketplace is becoming ever more diverse and globalized. As a result, customers are increasingly demonstrating their preference of submitting their international payments in their local monetary denomination. Therefore, multi-currency payment processing is becoming the rule rather than the exception for many of today’s growing companies. Learning how it is impacting businesses of various types can help you to come to an understanding of how this flexibility might even work for your own retail operation regardless of its type or focus.

For ecommerce businesses.

When companies sell their products in international markets, the internet is a vital conduit that makes secure purchases and efficient communication between merchant and customer possible. Regardless of the payment method the customer prefers, the merchant must have a plan for cross-border payment processing and an ecommerce and multi-currency payment processing vendor in place. This platform includes a secure gateway that facilitates the transfer of money between the customer’s bank account and the business’s merchant account.

When a customer makes an ecommerce purchase using their own currency, the payment processor uses currency conversion software to change the transaction amount into the merchant’s base currency. This initial step in the process is called currency conversion and is usually done at the foreign exchange rate that is in place at the time. Before the purchase goes through, the customer has the opportunity to see exactly what they will pay in their local currency.

The reality is that foreign exchange rates fluctuate frequently, and there are also other costs that a merchant incurs for currency conversion. The good news is that there are ways to cushion the impact of these charges. Payment processing companies provide sellers with tools that allow them to set up an exchange rate margin or markup. Once the currency is converted, the funds, including anything gained via these markups, can be settled in the merchant’s base currency.

There are a number of steps that a customer encounters during ecommerce multi-currency payment processing. First, the buyer selects the products to be purchased as well as the local currency they want to use. The currency is then converted by the merchant’s secure payment gateway based on the exchange rate and any merchant-imposed markup fees. The customer then should carefully review the payment, conversion fees, and all of the other components to be sure everything is correct.

The buyer then chooses their payment method, i.e., credit or debit card, PayPal, Apple Pay, wire transfer, etc., and enters the required payment data. The system then communicates with banks and card networks to process the transaction. Once authorized, the funds will be deducted from the customer’s account in their local currency and sent to the seller’s merchant account. The transaction is settled with the merchant, who should also send a receipt and confirmation notice to the buyer.

For subscription-based businesses.

Gaining a global reach is now available to businesses of all types, including those that use a subscription model to market some or all of their products or cloud-based services. One of the most effective ways to earn the trust of international customers and inspire them to agree to recurring billing is to give them the option to pay in their local currency. When sellers offer this option, they send a subtle message that they are willing to take extra steps to make the shopper comfortable.

Multi-currency payment processing for subscription businesses is similar in many ways to that used in standard ecommerce companies. The merchant’s international ecommerce software can be configured to display the full breakdown of what the customer will pay, including foreign exchange and conversion costs. As with local recurring billing, buyer and seller come to an agreement about the amount to be charged, the account or credit card from which payments will be drawn, the frequency of payments, the date (usually every month) when the withdrawal will occur, and the duration of the arrangement. The difference is that the international subscription-based payment will take place using the customer’s preferred currency to ensure there is maximum transparency from start to finish.

Currency conversion makes global payments in the subscription milieu seamless and understandable for customers regardless of their countries and currencies. Once they sign on to recurring billing, they and the merchants from whom they buy can benefit from the predictability, convenience and enriched relationship that this arrangement promotes.

For international businesses.

Each day, millions of customers make purchases that cross borders in the U.S., Europe, Asia, and Africa. Multi-currency transactions make it possible for businesses with an international reach to enhance their personalized relationships with customers who may live thousands of miles from the company’s headquarters.

Without the sophisticated processing software provided to sellers by their merchant account providers, payments in different currencies would be a nightmare. However, these programs can calculate all of the components of cross border payments in real time, including the exchange rate and all fees associated with the local currency. As a result, the customer knows exactly what charges they will pay for each of their multi-currency transactions, minimizing the chance that they will get any nasty surprises when their credit card bill comes.

Conversion costs, currency exchange rates, and taxes combine to make selling internationally a complex and daunting proposition. Fortunately, today’s ecommerce software makes it possible for sellers to accept currencies and payment methods of many types, thus improving the shopping experience, inspiring trust and improving their own internal business operations. Regardless of size or scope, multi-currency payment processing for different business types constitutes a win-win for buyers and sellers alike.