Advances in communications and other technologies mean that even a seller located thousands of miles from a potential buyer is only a click away. As a result, more and more retailers are making the decision to sell their wares to customers in other countries. That leads to the need to do business using a variety of types of money: pounds, euros, yen, and many more. However, before you take this major step, you should learn the facts about international payment processing.
International payment processing defined.
The accounting system of any company that sells products or services internationally must contain an added layer of complexity to allow for these transactions. Different countries have their own sets of individual reporting and accounting requirements that sellers must follow. In general, multinational companies must address issues including:
- Converting foreign currencies to their “home” or local currency.
- Creating consolidated reports using one type of currency.
- Following the separate regulations of each country in which they do business.
- Revaluing currencies according to natural fluctuations in their worth over time.
- As you might imagine, addressing these needs requires some seriously specialized systems.
Features of our multi-currency program.
The same technological innovations that have made it easier to do business with people in other nations have also facilitated the complex processes involved. Using specialized software, you can make your international payments easier by taking advantage of features like the ability to:
- Multi-Currency Pricing (MCP) is a service allowing merchants to price goods and charge customers in international currencies, while receiving deposits in USD.
- Set Pricing in virtually any currency on website on goods, services, invoices, vouchers, and journal entries.
- We control the exchange rate updated daily and the fx conversion. No need for you to do manual conversions.
- Accurately understand fx gains and losses. Our system will reconcile any differences between the exchange rates at the time a payment was charged and when it is settled.
- Revalue open transactions at the end of a payment period so that you can modify the pricing on billing amounts according to any fluctuations in the exchange rate.
Without these valuable components, you would find it much more challenging to serve your foreign customers accurately and efficiently.
Should your business accept payments in other currencies?
While it is true that foreign customers can readily make payments to your website using Visa or Mastercard regardless of whether you have taken any additional steps at all, it is in your best interest to expand your transactions for several reasons.
For one thing, doing so makes for happier customers and fewer chargebacks stemming from cross-currency pricing disputes. Buyers will always appreciate knowing exactly how much they will be charged for their purchases without needing to go through the hassle of calculating exchange rates and guessing at any markup fees they might be charged. You come off far better as a seller if you make everything transparent.
In addition, you can save on administrative costs, particularly when it comes to product returns. If you originally charge a customer for their purchase in their own currency, they will receive a refund in that same medium that takes changes in the exchange rate into account.
Questions to ask before setting up multi-currency payments.
There are various important considerations to resolve before you get your foreign payments rolling. These include the following:
- Determine the type of restatement you want to use. This process involves converting one or more currencies into your local one in order to produce accurate consolidated reports. These include balanced currency restatements (consolidating currencies into one in order to make reporting easier); detailed currency restatement (ideal when you do business with financially volatile economies, this system maintains a second set of books in a more stable currency for reporting purposes); and “As If” repost (using a single exchange rate to compare actual costs against budgeted amounts. This system is used if you want to remove fluctuations in currency exchange rates over time for comparison purposes).
- Determine the ledger types you want to use. These will probably include the AA (actual amounts) ledger for transactions in the local currency, CA (foreign currency amounts) ledger for transactions in the foreign currency, and the XA (alternative currency) ledger if you use the detailed currency restatement method. This contains transactions in the denominated currency. You may also choose to implement additional types of ledgers, depending on your needs.
- Determine how you will post multinational currency balances. There are two ways: mixed balances that do not separate transaction amounts into distinct currencies; and currency balances, which separate the transaction amounts in the local currency in both AA and CA ledgers.
It is impossible to accept multinational currencies without establishing a relationship with an excellent payment processing company. In general, your payment management structure should help you to minimize declined transactions, reduce customer frustration and dissatisfaction, keep costs low, and reduce concerns such as the holding of foreign currencies.
Once you have decided to augment your business by accepting foreign currency, your next challenge is to choose the best payment processor. Inovio is at the forefront of providing sellers with gold-standard international currency payment processing that allows for a frictionless customer and merchant experience. At Inovio, we make it our mission to provide platforms that are cost-effective, highly efficient, flexible and easy to use for all parties involved. Our top-tier customer service makes getting to know our products intuitive, and our flexibility allows you to make modifications as your business needs change. Entrust your international currency needs to a company that has your success as priority number one. Call Inovio today to get started.