We are now more connected than ever before. I bet that if you pull up your latest 10 transactions most of them were international, which is why multi-currency accounts are starting to make sense.
Banks and international payments convert currencies automatically when the payment is made, but you’ll be surprised at how much money you lose on poor conversion rates and other fees in the process. With the boom of the gig economy, we are not only talking about online payments. People now work in different countries, the freelance sector is on the rise, and all of that means that there are more international transactions.
So, if you are someone who sends or receives money from a different country frequently, maybe you need to start thinking about opening a multi-currency account.
The big question is, are multi-currency accounts so revolutionary that we should all consider them?
Why Do Businesses Need Multi-Currency Accounts?
The world has gone digital and there is no running away from that. We have e-commerce giants like Amazon, Alibaba, and Shopify that we use every day to buy all sorts of things. On top of that, it has become easier than ever before for businesses to sell products or services on the global market.
This globalization has opened many new opportunities for business growth, and the numbers tell the same story. Global e-commerce sales are rising every year, and they are already generating several trillion dollars every year, and the majority of them are coming from cross-border transactions.
But as globalization sorted out problems and made businesses available to the whole world, it also created some problems. Okay, maybe they are not problems, but something to consider when running a business.
So, what’s the big issue? Well, since most of the transactions are cross-border payments, this means that businesses must deal with multiple currencies, exchange rates, and transaction fees. This might not sound like a big deal, compared to the benefits that come with globalization, but it is something to consider, especially for businesses with small profit margins.
These fees and poor exchange rates can eat a significant portion of their profits, and nobody wants that. So, is there are solution?
Fortunately, there is one – multi-currency account.
The Benefits of Multi-Currency Accounts
So, if you are a business that is operating on the global market, here are a couple of reasons why you should consider getting a multi-currency account.
First of all, it is cost-effective. These types of accounts usually have lower transaction fees compared to traditional banks, and it kind of makes sense. After all, they are specifically created for cross-border transactions, which is why they usually have lower fees. On top of that, you can hold different currencies and exchange them when you think the time is right. This is also great for businesses that operate in two or three different markets.
The next benefit is quite a big one, and again it is about saving money. These types of platforms usually have more competitive exchange rates and you’ll be able to see the exchange rates in real-time. In other words, you can manage your finances better, which means that you’ll end up getting better exchange rates than traditional banks.
Multi-currency accounts are also designed for cross-border transactions, which means that the transactions are swift. What does this mean? Well, it means that they have a smooth cash flow and transactions are completed much faster.
Lastly, if all of these things are not enough, multicurrency accounts also simplify the process a lot. They help you juggle through different accounts that hold different currencies. And better finance management usually means lower costs.
If you are running a global business, you can open a multi-currency account here.
Who Benefits from Multi-Currency Accounts?
Whether you’re a globetrotting entrepreneur, a digital nomad, or a multinational corporation, a multi-currency account can be a valuable asset. Let’s break it down:
- Small Businesses: E-commerce has opened doors for small businesses to compete globally. Multi-currency accounts help them manage international sales more efficiently, without getting bogged down by hefty bank fees.
- Freelancers: If you’re a freelancer working with clients from different parts of the world, receiving payments in multiple currencies can be a nightmare. A multi-currency account lets you receive, hold, and convert currencies as needed.
- Corporations: For large businesses with operations in multiple countries, managing finances across different currencies is crucial. Multi-currency accounts offer better control over foreign exchange risks and ensure timely payments to suppliers and partners.
Challenges with Traditional Banking
You might be wondering, “Why not just stick to my trusty traditional bank?” Well, let’s talk about the challenges businesses face with conventional banking when it comes to international transactions:
- High Fees: Traditional banks often charge exorbitant fees for currency conversion and international transfers.
- Slow Processing: Cross-border payments through traditional banks can take several days, affecting cash flow.
- Complexity: Managing separate accounts for different currencies increases administrative work and costs.
- Lack of Transparency: Banks may not always offer transparent exchange rates, leading to unexpected costs.
How to Choose a Multi-Currency Account
Now that we’ve established the benefits of multi-currency accounts, how do you choose the right one? Here are some factors to consider:
- Fees: Look for accounts with low or no transaction fees. Some fintech companies offer competitive rates compared to traditional banks.
- Currencies Supported: Ensure the account supports the currencies you frequently deal with. Some accounts support over 40 currencies.
- Integration: Check if the account integrates with your existing accounting software for seamless financial management.
- Reputation and Support: Choose a provider with a good reputation and reliable customer support to assist you in navigating international transactions.