The Benefits of Multi-Currency Accounts for International Payments
September 18, 2023
The world of commerce has jumped over every global boundary, where international payments have become the norm.
The world of commerce has immense opportunities: a global presence with customers willing to pay for your products or services. But what about payments? Foreign currency payments involve never-ending steps of currency conversions and handling numerous overseas bank accounts. Even if you are brave enough to invest so much time and effort, the biggest hurdle is yet to be experienced: Fluctuating Exchange Rates.The resulting system makes it highly challenging to keep track of all the international payments.However, the solution is to open a multi-currency account.A multi-currency account is a specialised account that can take some of the hassle, time consumption, and expense out of dealing with multi-currency international payments.
What are Multi-Currency Accounts?
A multi-currency account allows an individual or a business to receive, pay, and hold multiple currencies within a single account. You can deposit or withdraw cash in multiple currencies seamlessly.Contrary to traditional bank accounts, multi-currency accounts allow you to manage and hold multiple currencies in a single account. Furthermore, multi-currency accounts offer lower charges on foreign currency transactions, which can be vital in creating a cost-effective payment solution, especially if you make multiple international payments daily.
At around $83 billion, India stands as the largest global market for inward remittance flow, followed by China and Mexico. Since 2016, India has witnessed a steady rise of CAGR 8% in its cross-border remittance. However, if your business is amidst the cross-border transaction flow, it requires a tailor-made financial solution.
In India, some large banks, digital fintech startups, and financial institutions are embracing the demand for such accounts and are offering multi-currency accounts to individuals and businesses.
The accepted currencies in a multi-currency account range between 30-200 depending on the financial institution. However, a multi-currency account facilitates, at minimum, transacting in the following currencies:
- U.S. dollar (USD)
- Euro (EUR)
- Canadian dollar (CAD)
- Australian dollar (AUD)
- Japanese yen (JPY)
- Singapore dollar (SGD)
- Pound sterling (GBP)
- Hong Kong dollar (HKD)
Streamlined International Payments
A multi-currency account works on the principle of real-time currency conversion based on the prevailing exchange rate at the time of the transaction.For example, if you have received payment from an international client from the US in USD, you can hold the payment in USD in your multi-currency account. If you have to pay a client in USD, you can use the current funds for direct payment without converting your local currency to USD.Moreover, you also have the facility to convert the funds you have received in USD in your local currency as per the current exchange rate and convert it again to another currency to make global payments. The process makes it easier for an individual or a business to streamline international payments and ensure currency diversification as they can hold various currencies in a single account.
Some multi-currency accounts come with additional features which can help in increasing the return potential. For example, some multi-currency accounts may offer interest on the balances held in different currencies, while some may offer access to foreign exchange markets.
Cost Savings and Exchange Rates
A multi-currency account offers the flexibility of holding the received payments in foreign currency or converting the funds to any preferred currency. This feature allows you to capitalise on favourable exchange rates without reducing the payout by paying the fee charged by traditional bank accounts.
For example, you can hold funds in your multi-currency account in US dollars and convert them to another preferred currency when the exchange rate is higher, resulting in a higher payout. As there are no costs involved regarding currency conversions, you can save a hefty amount, as traditional bank accounts charge Rs 750 to Rs 1,000 per transaction.
Benefits Beyond the Surface
Although most businesses use multi-currency accounts to speed up cross-border transactions compared to traditional banking methods, the benefits extend beyond the surface.
1. Building a Trustworthy Reputation
Maintaining a multi-currency account can enhance a company’s reputation as it depicts its presence on a global scale. If a company accepts payments in multiple currencies, it contributes to the perception that it is well-established, capable, and has a significant international presence.
Furthermore, a company with a multi-currency account makes it easier for international companies or customers to do business with the company, which may increase the customer base in the long run.
2. Elevating Customer-Centricity
A business is best managed with a customer-centric approach, which focuses on providing a seamless experience to customers, including preferred payment terms. A company with a multi-currency account may have a competitive edge in the global market.
With a multi-currency account, international customers can pay in their preferred currency, offering them greater convenience. The customer-centric approach derived through payments in preferred currencies positively impacts customer loyalty and retention.
3. Facilitating Cross-Border Relationships
The success of a company is derived from strong relationships with international partners and suppliers. A company with a multi-currency account is better positioned to complete timely payments to its partners and suppliers as the transactions are quick and hassle-free.
This efficiency can majorly attract and retain global partners who want to conduct business without unnecessary delays and foster strong cross-border relationships.
Multi-currency accounts offer practical benefits that go beyond mere financial convenience. You can receive or make international payments and hold multiple currencies for currency diversification within the same account. The account ensures that you capitalise on favourable currency exchange rates without shelling out conversion fees, thus increasing the payout margin substantially.
Furthermore, a multi-currency account can be instrumental in building and nurturing stronger relationships with international partners and suppliers by demonstrating flexibility, transparency, reliability, and cost-effectiveness in your business dealings. This, in turn, can lead to improved trust and collaboration, ultimately benefiting your business.Skydo is a unique platform that simplifies receiving international payments, provides live foreign exchange rates, and charges a flat fee per transaction. It creates virtual accounts to accept payments from the US, UK, Canada, and European continents. There is also a multi-currency account to let you receive payments in various currencies in addition to the ones mentioned earlier, which you receive in your bank account in your local currency. It mitigates the compliance burden as the amount does not stay in the virtual accounts when it is remitted.
By signing up on Skydo, you can make the most of your cross-border transactions with a one-stop payment solution.