Across the Board

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How to choose currencies for my e-business?

CurrenciesChoosing specific payment methods is one thing that’s crucial when you implement payments on your website. You decide to include your customers’ favorites, naturally, and those you can afford. In the end the whole business has to be profitable. Still, entangled in all these musings, it is quite easy to forget about another factor: the currency.

If your main market is located only in the USA, or in Great Britain, or in western countries of European Union, you may not be aware that money comes in different currencies. You’ll be fine using just dollars, euros or pounds. Probably you won’t have to bother with anything else. But if you’d like to go absolutely global or aim for countries that have their specific currencies, some basic analysis is not only recommended, but will simply save you a lot of money.

Give’em what they want

The basics here are very simple – customers should be able to pay with their national currency.

It’s also good to allow payments with some “global currencies”. American dollars are usually a good choice, and if you plan to sell in Europe – euro and British pounds could be also recommended.

Choosing the right currencies doesn’t require much effort, yet it is absolutely crucial. It’s not just being nice and offering some more currencies – you simply allow your future customers to pay.

Transactions and settlements

The currencies you show to your customers are transaction currencies. This means they will be able to pay with the preferred currency. But you also have to receive the money. Of course you can own separate bank accounts in each and every currency that you offer to your customers – and perhaps if you accept only dollars and euro this might be a good choice.

But imagine you accept 10 currencies. Or even 100. Maintaining separate accounts for such number of currencies is not only impractical, but also expensive (well, you have to pay for company bank accounts). You can overcome the first inconvenience with a good payment system that will merge all the payment data. But you can be sure that banks won’t give you anything for free.

This means you will have to decide which currencies will be your settlement currencies. These need to be chosen wisely. One of the simplest strategies here is to determine the currencies in which you get most of your payments. Using them as settlement currencies will allow you to avoid unnecessary currency conversion. And you will probably want to do that, because usually such conversions mean additional fees or at least using rates of exchange defined by banks or payment processors.

For example if you receive 50% of all payments in euro and 40% in Swiss Francs (let’s say the remaining 10% is everything else), it’s probably best for you to choose EUR and CHF as your settlement currencies.

What to remember?

Know your customers, know your market and make sure the settlement currencies are chosen wisely. A day of research can save you lifetime of misery… Or at least a few months of trouble.

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Ania is interested in all things design, as well as popular literature and film. She writes about the pretty side of credit cards and e-business. She's also responsible for some neat infographics and spends her free time writing short fantasy stories. An avid reader of graphic novels, she tries in vain to finish one herself. Has a credit card and is not afraid of using it online. Owner of a rather wicked sense of humor.

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