The Benefits of Multi-Currency Accounts for International Payments

The Benefits of Multi-Currency Accounts for International Payments
Sukanya29 November 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 come: 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 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.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 is 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. 

How Does a Multi-Currency Account Work?

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. 

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