Last editedMay 20233 min read
Traditional payment gateways have been a game changer for small businesses, enabling swift, cost-effective online payments. While many of these are set up to take cross-border payments, they often come with the high-cost burden of currency conversion fees. If you’re thinking of expanding your business overseas, there are many benefits of using a multi-currency payment gateway. They not only reduce the cost of conversion fees but offer a more user-friendly and secure shopping experience. Here’s a closer look at how multi-currency payment gateways work, as well as how they differ from traditional gateways.
What does it mean to have a multi-currency payment gateway?
To better understand multi-currency payment processing, it helps to quickly give a rundown of how a traditional payment gateway works. Payment gateways are the technology enabling online payments. The gateway is the customer-facing portal that lets customers check out. They provide their card or banking details for authorisation and approval. Normally, these payments are taken in your home currency – GBP. Overseas customers can pay in their own home currency, which is then converted into GBP through an intermediary step. This comes at a high cost to the merchant, who pays the currency conversion fee as well as additional per-transaction fees.
By contrast, a multi-currency payment gateway is set up to take payments in different currencies with greater flexibility. Payments can be settled in a selection of different global currencies to cut down on costs. For example, a customer might pay you in USD. You could then settle and withdraw the funds directly into your UK-based account without paying extra fees to convert the funds into GBP first. Shoppers can choose the currency of their choice, increasing conversion rates at checkout. When you integrate a multi-currency payment gateway into your website, this means the shopper can choose to view product prices in the currency they prefer.
There are clear benefits to both customer and merchant. To start with, you save money on conversion fees. You’ll then be able to pass on these savings to international customers in the form of competitive pricing. When customers can choose their preferred currency, they’ll feel safer completing the sale. And by settling funds internationally, you can provide consistent pricing.
To see a multi-currency solution at work, we can look at how SiteMinder used GoCardless to expand its global reach. This hotel marketing and distribution software now operates in over 160 countries, necessitating a joined-up payment strategy. The company was using multiple traditional payment gateways and associated banks before switching over to a global solution. By using the multi-currency capabilities of GoCardless partnered with Zuora, they were able to run everything through a single integration instead to cut down on processing fees.
How does a multi-currency payment gateway work?
Here’s how multi-currency payment processing works, step by step.
The customer is redirected to the payment gateway from your checkout page, where they enter their payment details.
The payment gateway sends the payment details to the appropriate payment processor, which is usually your bank.
Your bank finds the correct payment network, such as the card issuer, routing the details for authorisation.
During settlement, the money goes straight to your merchant account in the preselected currency, rather than being converted at your expense.
In other words, you can set the currency you prefer. A shopper chooses their language and currency preferences at the time of purchase, which are automatically adjusted into your currency of choice for settlement.
The overall benefit of multi-currency payment gateways is therefore a smooth, frictionless shopping experience. The customer enjoys the flexibility of shopping in the currency of their choice, while the business enjoys the cost-saving reduction in conversion fees.
Features to look for in a multi-currency payment gateway
It’s important to compare features carefully to find the right multi-currency payment gateway for your business. Here are a few highlights to search for:
Smooth currency exchange
Transactions can take several business days to clear, yet foreign currencies are constantly fluctuating. This means the price of an item changes between sale and settlement if the currency changes significantly – an issue known as FX risk. A good multi-currency payment gateway reduces this risk by fixing the currency rate until settlement. Some also use a live market rate at the time of the transaction.
Number of currencies available
Another factor to consider is whether the payment gateway supports the currencies your customer prefers. Before signing up for any new service, be sure to check the list of supported currencies to ensure your target market is on there. Otherwise, you’ll miss out on the primary benefits of using these types of gateways.
Fraud protection
Reduce the risk of international payment fraud by choosing a solution with built-in detection and protection tools. The best solutions reduce chargebacks, cut down on payment failure, and reduce fraud with intelligent protection.
Flexible integration
The best multi-currency payment gateway will integrate easily with your existing systems. Does it fit into your ecommerce platform? Does it work with your invoicing tools? Make sure it’s compatible with your existing payments and accounting software for easy integration. For example, GoCardless integrates with over 350 partners, which means it fits seamlessly into your systems.
How can GoCardless help you trade cross borders with multi-currency payment gateways?
If you need to settle payments in multiple currencies, there’s no better solution than GoCardless. It’s cost-effective for both start-ups and businesses dealing with large international sales volumes. Pay less on conversion fees for better profit margins. Customers can pay in their home currency, which is settled at the best rate in your own currency – minus the costly fees. There’s also no need to set up a foreign bank account with all the red tape that entails.
GoCardless currently is set up to support international payments from over 30 countries, all at the real exchange rate. Powered with Wise, your customers get the best possible rate while your business saves time, money, and stress.
