The Importance of a Multi-Currency Payment Gateway

In another couple of years, the ecommerce market in the Middle East is likely to reach an impressive worth of $50 billion. as per a recent report from Deloitte. This sharp growth is being driven by the increasing penetration of mobile devices, a noticeable spike in the number of tech-savvy, mostly millennial shoppers, and the convenience of buying anything from anywhere. Digital revolution is also helping online businesses to expand beyond geographical boundaries, reach customers in the remotest of places, and boost sales and revenue in an unprecedented way. However, multi-currency payment gateway integration is essential if you want international transactions to go smoothly and without any security bumps.

What you need is a gateway that helps you navigate currency-related intricacies and rules in various countries, so that customers can enjoy a seamless experience and you can receive payments on time. Multi-currency support in payment gateways makes life easy for customers who prefer to use their own currencies for payment and avoid the hassle of conversions. As a business, you benefit too, since you can streamline, track, and manage transactions with better efficiency and in less time, whether you are receiving payments from shoppers or paying international vendors. Now, let’s find out more about the processing of a multi-currency payment, some common roadblocks involved, and the how a payment gateway powered by advanced technology is changing the game.

Multi-Currency Payment Processing – What Really Happens?

Ensuring currency diversity for online businesses can arm global shoppers with much-needed flexibility and expand the base of customers significantly. However, you first need to know how the process works. Here is a quick overlook:

• Order placement and currency exchange – When a shopper places an order in their chosen currency, your processor automatically converts the amount into the currency you use. This conversion occurs at the exchange rate.
• Transparency – The total payment amount then pops up in front of the customer in their local currency, so they can complete the purchase without worrying about transparency, fluctuations in the exchange rate, and unexpected conversions fees.
• Multi-currency transactions – Your payment processor then facilitates seamless multi-currency transactions by employing tools for managing the exchange rate. It enables you to set an exchange rate margin too.
• Protection against exchange rate fluctuation – A fee is charged over and above the existing market exchange rate to protect you against fluctuating exchange rates and handle the cost of currency conversion.
• Settlement of funds – Once currency conversion is complete, fund settlement happens in your base currency.

Executing a Multi-Currency Payment Step-By-Step

Growing your business with multi-currency capabilities requires you to understand every step involved in the payment process. This will give you a clear idea about the customer’s checkout experience and help you choose the ideal gateway for fast and glitch-free transactions. The steps outlined below also hold true if you are paying foreign suppliers, in which case, you will be the customer.

1. Customer makes a purchase decision – The cycle is triggered when a customer decides to buy a particular product or service and checks if your site supports multi-currency payments.
2. Customer selects a currency – They then peruse the different currency options on the payment page and select an international currency or their local one.
3. Gateway shows the payment amount – Once the customer picks a currency, your gateway converts the product’s price into the said currency and displays it. The amount is determined by the existing exchange rate and includes fees charged by you or the payment processor.
4. Customer checks payment breakdown – The shopper reviews the displayed amount and checks the fees levied for international transaction, currency conversion, etc.
5. Customer selects payment mode – Post review, the customer chooses a payment method, be it wire transfer, credit card, digital wallet, etc.
6. Customer provides financial details – In this step, the customer supplies all payment-related information, such as name on the card, billing address, card or account number, phone number, and so on.
7. Gateway processes payment – Next, the multi-currency payment gateway integration accepts the data entered and processes the transaction in the currency chosen by the customer. The payment is approved and completed after your processor communicates with relevant card networks and financial institutions.
8. Customer account is debited & merchant account is credited – After payment authorization, the customer gets a message that shows the transaction is complete. The necessary amount is deducted from the shopper’s account in their local currency and credited to your account after conversion to your base currency.
9. Fund settlement happens – You can retain the received amount in the base currency or get it converted to your local currency. Remember that the time required for fund settlement depends on the amount in question and where the money is supposed to go.
10. Payment confirmation reaches the client – Lastly, the customer receives a payment confirmation from your end, covering the transaction ID, details, and payment amount.

Challenges Facing Global Payments

Whether you accept payments in multiple currencies, make payments to globally situated suppliers, or have subsidiaries in diverse geographies, managing foreign exchange and currency can be time-consuming, tedious, and expensive. While overcoming challenges in global payment processing is possible with an automated and tech-powered gateway, you need to be aware of the key problems first:

• Unpredictable conversion costs (currency conversion fees, bank charges, fluctuations in exchange rate)
• Complicated operations (accounting adjustments, currency conversion, reconciliations) increase administrative effort and risk of mistakes
• Currency-related risk for both customers and merchants (currency fluctuations and volatile exchange rates negatively affect cash flow)
• Risk of cyberattacks due to gaps in the payment processor
• Complex relationship with foreign banks (language barriers, difficult communication, time differences)
• Slow processing speed due to greater scrutiny by multiple intermediaries along the payment chain
• Limited number of currencies supported by some gateways
• Varying international payment regulations in different regions
• Difficulty in tracking international payments and poor visibility into the process

Benefits of Multi-Currency Payment Gateways

Payment Gateways powered by technological revolutions like artificial intelligence and machine learning can help you accept and make multi-currency payments efficiently, affordably, and with precision. You won’t need to maintain relationships with multiple banks in different countries. Instead, you can leverage automation to make the global payment system more streamlined, lower the risk of currency fluctuations, and obtain insights to improve your business’s profitability strategically. It can save you time, energy, and free up more resources for core business operations and ideation. Some of the other key advantages are detailed here:

• Smooth Foreign Exchange Activities – You can rest assured that payments will be processed at the latest exchange rates and the risk of volatility will be managed effectively. In case you are paying foreign suppliers, you won’t need to worry about having enough money in your local bank account or rushing to purchase foreign currency if you want to place a large order suddenly. Leading payment gateways can fund a virtual account in your chosen currency, convert to the local currency, and carry out payments in an automated way. This way, you can maintain a healthy relationship with vendors and suppliers.
• Automatic Invoicing – In case you sell subscription-based services in different currencies, an advanced payment gateway will create and send invoices in the currencies required, based on preset rules. This will save time and eliminate human errors related to currency conversion. Moreover, you won’t need to remember to send invoices on time or worry about customers forgetting to make recurring payments every month, quarter, or year.
• Exchange Rate Locking – Some gateways allow customers to lock in a rate for a certain period of time, so any change can be prevented before the payment is done. This can build goodwill over time and encourage customers to make repeat purchases.
• Currency Risk Management – The best-automated payment processors protect you against fluctuations in the exchange rate through special tools and hedge strategies. This way, you can maintain a positive cash flow even if currencies move unfavorably.
• Easy Reconciliation – To simplify accounting and reconciliation, top payment gateways convert funds received in multiple currencies into the local currency you use as a merchant. This happens automatically and reduces manual effort.
• Compliance – Regulations associated with international payments are different across geographies. Luckily though, payment gateways backed by automation can ensure compliance at every stage without manual intervention. They can alert you in case of any fraudulent activity, verify transaction details, and even generate insightful reports.
• Hassle-free Integration – The best multi-currency gateways are easy to integrate with e-commerce platforms and enterprise resource planning systems. This makes it easy for foreign customers to execute payments in their local currencies without getting diverted from your site. It inspires confidence in shoppers and earns their trust.
• Smart Tracking – Automated payment processors can track all transactions in real-time, providing updates to both merchants like you as well as customers. This speeds up the entire process and troubleshoots issues before they magnify. You can also identify ways to improve the checkout experience further and introduce more security measures if required.

In a Nutshell

So, now that you realize the many benefits of multi-currency payment gateway integration and how the process works in reality, are you ready to choose the right gateway for your online venture? Take out time to research the various options available, compare the services and charges of different providers, and go through testimonials of their past clients before taking a decision. Assess your business’s distinct needs and consider its size and type as well while making the choice. To scale internationally and thrive despite unpredictable currency movements and exchange rate volatilities, you need a powerful payment gateway like PayTabs that is fast, efficient, and absolutely secure. It will help you gain more control over transactions, comply with regulations in different countries, minimize or eliminate human errors, and take decisions driven by real data – everything that you need for a better bottom line.