What is a multi-currency payment gateway, and why is it important for merchants selling across borders?
The increasing ease and simplicity of payment gateway technology has played an instrumental role in enabling e-commerce businesses to grow over the past few years.
As the main interface between the front and back ends of an online payment, the payment gateway is responsible for providing customers with a seamless and secure checkout process. When it comes to cross-border sales, the payment gateway plays an even more important role in helping merchants to efficiently process global online transactions while maintaining a good user experience.
Merchants selling across borders need to choose their payment gateway provider carefully. In addition to offering limited global functionalities, many payment gateways come with some costly fine print in the form of unpredictable foreign currency fees. For one-off payments, this might not be a huge issue. But over time, these fees add up, and they can cripple your online business before it’s had a chance to lift off.
Read on for an overview of all of the essentials about multi-currencies support, foreign exchange, and cross-border transactions – and what to look for when it comes to choosing the right international payment gateway.
What does it mean for a payment gateway to support multiple currencies?
Key benefits of a multi-currency payment gateway
How does a multi-currency payment gateway work?
Features to look for in a multi-currency payment gateway
Summary: The importance of a multi-currency payment gateway for cross-border sales
Multi-currency payment gateways let you accept and make payments through an online portal with currency flexibility that is designed to support the needs of global customers.
A true multi-currency payment gateway should enable merchants to settle in multiple currencies. For instance, if your customer pays you in GBP, you can settle and withdraw in GBP without being forced to convert to your own currency first.
Here’s another example: an e-commerce business located in the EU can use a multi-currency payment gateway to receive payments in US dollars and withdraw US dollars without being hit with foreign currency transaction fees. This helps merchants to easily accept payments from international customers and widen their reach.
As an e-commerce merchant, a multi-currency payment gateway helps to drive more efficient global sales. But while many payment gateway platforms label themselves as multi-currency because they accept different international currencies and payment methods – they don’t actually allow merchants to settle up in different currencies behind the scenes. This raises costs for merchants, while making payments less efficient.
So why is a multi-currency payment gateway so important for merchants doing business across borders – and what role do local settlements and processing play?
Settling transactions in multiple currencies helps merchants do more business internationally. By using a payments gateway that features a foreign exchange solution, you’ll be able to reduce conversion fees and improve margins. This can have a big impact on profit margins and the ability to keep prices competitive.
A multi-currency payment gateway also allows your customers to pay directly in their home currency, making the checkout process much faster and more efficient.
Moreover, merchants can settle and hold funds in multiple currencies without having to go through the currency exchange process – making it easier (and cheaper) to pay suppliers or other contractors in international regions.
The technology behind a multi-currency payment gateway also uses advanced security measures to protect payment data. Furthermore, merchants can use the settlement of currencies to assist in mitigating currency fluctuations.
A multi-currency payment gateway delivers the following experience to shoppers:
If the customer used a traditional payment gateway, the money would typically go through a forced conversion where the sum is exchanged from its original currency into your receiving currency.
With a multi-currency payment gateway, this doesn’t happen. The money goes straight through to your nominated bank account, and is held in the received currency.
When looking into the best multi-currency payment gateway for your business, be sure to check that it has these key features:
A multi-currency payment gateway must have all the currency options you need. Check the full list of supported currencies before signing up with any platform. If a gateway cannot settle and withdraw in your accepted currencies directly, you won’t be able to reap the benefits of accepting payments in multiple currencies.
To amplify this feature, at PayU we offer International Currency Payout (ICP) – a currency conversion service that helps merchants make withdrawals from their shop’s balance in a currency other than the transaction currency. This helps to reduce currency fluctuation risk that might arise from daily conversions into USD or EUR..
ICP also helps merchants to increase sales by offering new customers the ability to pay in their local currency – improving conversions by helping to localize the checkout experience. By helping customers to avoid foreign transaction fees charged by many issuers, you improve customer loyalty and brand attachment.
One issue faced by both merchants and customers during the currency exchange process is the fluctuation of a local currency between transaction acceptance and settlement.
As a result, the final settlement in the billing currency may vary. This fluctuation is known as an FX risk, which can be reduced through the use of a payment gateway equipped with the right features.
To manage FX risk more effectively, merchants can hedge the risk by fixing the rate through the payment provider until the transaction is ultimately settled – or by using a live rate to execute the deal on the same day or moment. Merchants can find both of these two options in PayU’s FX solution.
A good payment gateway also ensures that the account has built-in fraud protection tools along with support for managing different 3DS protocols in different markets. This helps merchants maintain appropriate security while also reducing chargebacks and increasing payment approval rates.
When it comes to fraud protection, expanding internationally comes with various challenges. Keep a close eye on transactions from IP addresses from outside your country, and make sure that you’re dealing with actual fraudulent activity before contacting the customer. Examine orders where a customer uses an anonymous email service – it’s a common method fraudsters use because such services make it harder to detect fraud.
PayU’s Anti-Fraud Module helps to achieve these goals by analyzing massive numbers of transactions, identifying new fraud methods, and applying these insights to all transactions. In doing so, the solution instantly flags, denies, or challenges any suspicious transaction for human employees to manually review it.
At the same time, merchants can make use of PayU’s smart routing functionality in order to enable custom rules which configure global transactions through the appropriate 3DS flow – and ensure that legitimate transactions don’t get caught up in the anti-fraud dragnet. With Instant Retry, part of the Smart Routing Engine, merchants can set rules in order to retry declined transactions through different routing configurations.
When it comes to selling internationally, the right payment gateway should reduce your workload and help get you up and running faster.
To be sure of this, make sure that your preferred payment gateway offers flexible integration with your existing payment stack. Look for convenient features like low-code options to integrate into your website or hosted payment pages which you can create at the click of a button.
To capitalize on the growing demand for digital products and services across borders, merchants must choose a payment gateway which localizes the checkout experience while minimizing fees for both buyer and seller.
Fortunately, there are global multi-currency payment gateway solutions that merchants can turn to in order to provide customers with convenient and affordable checkout experiences tailored to different currencies and markets.
By providing local currency options and localizing the payment experience, merchants can eliminate extra fees for currency conversion and make it easier for international customers to shop in their store. In doing so, merchants build trust, brand attachment, and loyalty in new markets.
In addition to making themselves more accessible to new customers, a multi-currency payment gateway helps merchants save money themselves on currency conversion, lowering FX risk and increasing flexibility when it comes to doing business in multiple currencies around the world.