A Beginner’s Guide to Managing Multi-Currency Accounts: How to simplify global payments

From AUD to ZAR: A beginner’s guide to managing multi-currency accounts

Over the past decade or more, business processes have undergone a digital transformation, and an accelerated one at that. This has opened global opportunities for many businesses.

As demand for global payment capabilities has grown, providers, including financial institutions, Fintechs, neo banks, and specialized money services businesses have developed new products and services in response. Digital, real-time and near real-time payment methods have become available in many jurisdictions. Each has benefits and limitations.

Here, we’ll look at one of those tools: multi-currency accounts. MCAs are single accounts that can offer safe, secure, and efficient access to a range of currencies and a range of payment methods. We hope our introduction addresses your questions from start to finish—from AUD to ZAR.

What is a multi-currency account, and why might I need one?

If you are trading internationally, having access to multiple currencies can give you a competitive advantage. The ability to send and receive payments in local currencies relieves your vendors and customers of the burden and cost of currency conversion, giving you more visibility and control. Further, allowing your customers to pay in their local currencies can save them money and increase trust—making it easier for them to buy from you.

There are different types of multi-currency accounts, with different capabilities and features.

How and where do I get a multi-currency account?

• Your local bank

Some banks offer FX accounts in addition to their base currencies (a US dollar account offered by a Canadian bank, for example, or a UK bank that offers euro accounts). You may be able to keep incoming funds in your accounts for future payables in that same currency, or convert to your home currency when needed.

These arrangements may carry maintenance charges and international wire fees, in addition to currency conversion costs. Check with your bank on fees and to see if this is right for you.

• An international bank

It can be challenging, costly, and time consuming for businesses to open accounts in other jurisdictions—or to open foreign currency accounts with a bank.

Some countries require a local presence; others require an in-person meeting; with others, opening a local account may not be an option at all.

Many US banks offer access to FX accounts, but the accounts may be held with an intermediary banking partner, not directly offered by the bank. That arrangement, though convenient, might result in delayed payments and additional banking fees, in addition to transaction and conversion fees.

• Fintechs and MSBs

Some Fintechs offer multi-currency capabilities from their platforms. Fees could include an account opening fee and maintenance fees in addition to conversion and transaction fees.

Many money services businesses partner with global banks and liquidity providers to offer access to currency accounts in the provider’s name (called ‘nostro’ accounts). The provider, as the account holder, typically sends and receives payments on the business’ behalf, which can cause some delays. These arrangements can be more cost-effective than other options, and often with lower transaction fees and tighter currency spreads. Some providers charge on a per-transaction basis, with no maintenance fees. But customers abroad may be wary of sending payments to a third-party on your behalf.

Whether you choose your bank, an international bank, or a payments technology provider, you should weigh the pros and cons of each option.

“Named” Multi-Currency Accounts

Along with many banks who offer FX accounts, some MSBs and Payment Service Providers offer multi-currency accounts in a business’s name. Advantages may include fewer processing delays and lower fees for customers paying for goods and services, and better traceability.

Locally domiciled accounts may also give you—and your customers—access to additional payment rails. Beyond SWIFT wire payments, ACH (or iACH) payments travel on local rails and can be more cost-effective than SWIFT wires. Some real time rails, including the UK’s Faster Payments (FPS) and the EU’s SEPA, may also be available.

Visibility and cash management can be simplified as well: if you can see all your incoming and outgoing balances in one place, on one platform, you may save yourself time and fees by reducing double FX conversions and transfers between entities.

Some providers charge account opening and maintenance fees for their multi-currency accounts; make sure you understand the costs, capabilities, and fee structures—and any additional set-up costs if you need to enable more currencies.

Can multi-currency accounts be integrated with my accounting platform or ERP?

In the digital age, your ERP may be a kind of command centre for your business processes, as a provider’s online platform might be your ‘satellite centre’ for global payments. Many providers offer file upload capabilities and integrations with popular business software platforms, which can support and streamline the management of payment files, reconciliations, and reporting.

Features to look for in a multi-currency account

When you are considering a multi-currency account, or any service provider, for that matter, first decide what is most important to you. It could be access; cost; flexibility; reach; efficiency, but it needs to ft your business needs.

• Ease of use

An online platform compatible with your ERP or accounting platform, and the ability to handle high volumes of payments in and out, might also be considerations.

• Regulatory framework and security

It’s important to be aware of the provider’s licensing framework and regulatory alignment, as different jurisdictions have different requirements. Security of systems is also important.

Don’t discount reputation either. Check reviews and ask for references. A ‘chemistry check’ may also be a good indicator that you’ve found the right partner.