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How does a merchant account handle currency conversion for international transactions?

Curious about Merchant account

How does a merchant account handle currency conversion for international transactions?

When it comes to currency conversion for international transactions, a merchant account typically offers options to handle different currencies. Here's how a merchant account can handle currency conversion:

1. MultiCurrency Support: A merchant account with multicurrency support allows merchants to accept payments in various currencies. This means that if you have customers from different countries, they can make payments in their local currency. When a customer initiates a transaction in a foreign currency, the merchant account provider will handle the currency conversion.

2. Dynamic Currency Conversion (DCC): Some merchant accounts offer a feature called Dynamic Currency Conversion. With DCC, when a customer makes a payment in a foreign currency, they are given the option to convert the transaction amount into their home currency at the point of sale. The customer sees the converted amount and can choose to proceed with the transaction in their own currency. The merchant account provider or payment processor handles the currency conversion and charges a conversion fee for the service.

3. Settlement in Merchant's Base Currency: Regardless of the currency in which a transaction is conducted, the settlement of funds into the merchant's account is typically done in the merchant's base currency. For example, if a merchant's base currency is Indian Rupees (INR), all transactions processed through the merchant account, regardless of the currency in which they were made, will be converted to INR at the prevailing exchange rate and settled accordingly.

4. Exchange Rate Management: The merchant account provider or payment processor usually applies an exchange rate to convert the foreign currency into the merchant's base currency during settlement. The exchange rate may be determined by the provider or sourced from a reliable financial institution or currency exchange platform. It's important for merchants to review the exchange rates and any associated fees charged by their merchant account provider to ensure competitive rates and transparency.

5. Currency Conversion Fees: Merchant account providers may charge currency conversion fees for handling foreign currency transactions. These fees can be a fixed percentage or a flat rate per transaction. It's important to consider these fees when evaluating the costeffectiveness of using a merchant account for international transactions.

By offering currency conversion options, a merchant account allows businesses to expand their customer base and provide a seamless payment experience to customers from different countries. However, it's important to assess the currency conversion capabilities, associated fees, and exchange rates provided by the merchant account provider to ensure they align with your business requirements and offer competitive rates.

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