The scoop on multi-currency merchant accounts

The scoop on multi-currency merchant accounts

Multi-currency merchant accounts allow merchants to accept online payments (usually through credit card processing) from customers located all over the world. This allows the merchants to effectively market and sell their wares on a global scale. For example, a customer in Beijing visits a merchant website where items are priced in U.S. dollars. This customer clicks on a drop-down box that allows him or her to change the displayed currency from U.S. dollars to yuan. Other currency options may also be displayed in the drop-down box. During checkout, the customer pays for the selected items with yuan, while the merchant still collects the funds in U.S. dollars.

Merchants actually have two options when it comes to accepting payments made in different currencies. A domestic merchant account is usually capable of processing multi-currency transactions. The disadvantage with such an account is that the processing bank will place a limit on the total transaction amount allowed in a month. Therefore, such an account is impractical for high-volume businesses. A multi-currency merchant account, which can be opened via a domestic or international merchant account, allows high-volume multi-currency transactions. In this case, the bank will charge a fee (usually a percentage of the total sales) for the service. Some banks will also require a minimum processing amount per month.

While having a multi-currency merchant account allows the merchant to compete in a global marketplace, there are some concerns as well. Maintaining a multi-currency account can be expensive. While the account provider might offer the first international currency for free, additional currencies will probably be assessed a fee. The provider will also usually charge higher monthly maintenance fees for a multi-currency merchant account, and credit card processing for international currencies may cost more. There might also be a fee for account set-up.

Fraud, especially credit card fraud, is another concern with multi-currency merchant accounts. Many countries are not as heavily regulated as the U.S. regarding consumer safety and credit card processing security. International merchant accounts have been estimated to lose up to $50 million in revenue per year, according to the Merchant Risk Council's Annual Merchant Fraud Survey. The following countries are well-known to have issues with online security: Ukraine, Indonesia, Yugoslavia, Lithuania, Egypt, Romania, Bulgaria, Turkey, Russia, Pakistan, Malaysia, Israel, Venezuela, Nigeria, and several other African nations.

Merchants can protect themselves from fraudulent online activity and credit card processing by making sure that their merchant account provider requires transaction verification via CVV and AVS. Software programs can also be helpful for performing "fraud scrubs" prior to any international transaction being completed.

In summary, having a multi-currency merchant account can be of great benefit to the merchant who is hoping to increase sales revenue and brand exposure. When dealing with international sales, however, it pays to be aware of the transaction costs involved, and to take precautions against the risk of fraud.

Published: October 26,2023