Why Should Businesses Consider Multi Currency Wallets?
The pandemic and its consequences have led to an acceleration in a series of existing trends among consumers and businesses. Seamless cross-border transactions are vital for the world to get back on its feet, as economic activities resume. With this in mind, new developments need to be considered, such as restructuring of supply chains and cross-border trade. What should also be kept in mind is that the demand for eCommerce, contactless payments, instant transfers, and the propensity for digital transactions has received a boost over the past year.
For businesses operating internationally, efficient handling of cross-border payments is crucial to survive in this new world. Small and Medium Enterprises (SMEs), in particular, need to tap into innovation to strengthen their payment infrastructure. For starters, they are crucial to the global economic recovery since they account for 90% of all global businesses and 50% of the employment worldwide.
For years, the hefty transaction costs and slow processes have hounded their operations and impacted their bottom lines. The global average cost for remittances stood at 6.38% of the transaction amount in Q1 2021. Globally, banks on average charge 10.66% of the amount sent.
A multi-currency wallet can hugely improve many aspects of business finances and streamline the financial management process. Moreover, it allows hyperlocal banking for global customers.
Benefits of Multi-Currency Wallets for Businesses
It should be easy and inexpensive to connect to suppliers and customers across the world if companies want to sell their products and services globally. A multi-currency wallet can help in several ways:
1. Faster Transfers and Payments
Speed of payments is an important aspect in effective cash flow management. In a 2020 study on Maltese companies to identify financial and non-financial factors that can lead to insolvency, cashflow emerged as the most significant factor. If small businesses don’t have working capital when they need it the most, they could find themselves losing out on opportunities. This compels them to apply for working capital loans, which banks are always hesitant to provide to small businesses and start-ups. In addition, international transfers can be extremely slow, often taking days.
Multi-currency wallets can enable local collection for individual currencies. Users can take advantage of local payment networks, which means payments are processed faster and cheaper. Businesses can further optimise the payment process by turning to a local supplier to fulfil buyer requirements. By allowing customers to process payments locally, they can enhance their customer experience. So, if a business is taking raw materials from Europe, they can simply pay in euros. If a customer in the US wants to pay in US dollars, the company can allow them to do so too. Overall, streamlined payments ensure steady business operations and timely payments. This also helps circumvent the higher cost of transfers.
2. Avoid Hefty Transaction Costs
Banks tend to charge high fees for international payments. Many corporate bank accounts can charge a fee for simply maintaining the account. These charges can amount to a significant sum for businesses operating several accounts.
With a multi-currency wallet, not only can many of these costs be reduced, but it also ensures greater transparency. FX fees are transparent, and multiple accounts can be created on a single platform for free.
For instance, companies can receive money in their local currency, which means they don’t have to be at the mercy of exchange rate fluctuations to exchange foreign currencies into the local currency. Similarly, they pay suppliers in their local currencies and help them avoid such fees too, leading to improved relationships. It is a chance for companies to diversify their revenue drivers.
Multi-currency business accounts offer a lot of convenience for companies to become efficient and productive. Managing multiple bank accounts for different currencies is tedious and inefficient, and wastes time. For instance, it takes a lot of time for account reconciliation across various currencies, plus we need to consider the fees and exchange rate differences. Usually, this includes logging into many different platforms and collating all information into an excel sheet. Apart from that, it’s a complex endeavour to set up and manage bank accounts in multiple jurisdictions worldwide. Sometimes, it can be all but impossible.
For small businesses with international clients, this process is expensive. Managing employee expenses worldwide, across different bank accounts also involves similar challenges. For instance, when businesses issue employees with various cards, one for each currency, how do they monitor limits and expenses properly?
Rather than opening multiple business accounts, a multi-currency wallet can help them streamline their bookkeeping and financial processes.
4. Offer Online Services in Different Regions
The ability to offer customers to pay in their native currencies is a big deal, especially for SaaS, subscription-based companies, and eCommerce stores. A multi-currency business account lets such businesses avoid shopping cart and pricing page abandonment. For instance, if a business is based in the US, and its customers are in Australia or Canada, it is a simple mistake for buyers to assume that the $ symbol in the price is not in terms of the US dollar. This can then lead to unpleasant surprises during the checkout stage, when they eventually realise that the price was in US dollars all along, a stronger currency with respect to the Australian and Canadian dollar.
While cart abandonment has many reasons, this is also a prime one and companies need to do everything to elevate the customer experience.
For subscription-based businesses, say a B2B SaaS product, the concept of price localisation is extremely important. A customer might take that one-time chance to make the payment in a foreign currency, but will definitely not do so every time, with the possibility of getting billed a different rate each month, due to fluctuating exchange rates.
Thus, multi-currency account support is a serious opportunity for business growth.
At Fyorin, we understand the pain points of businesses conducting international transactions. We offer online multi-currency accounts, where businesses can create multiple virtual IBANs under their name for free, for a smooth reconciliation process, without the need for multiple bank accounts. They can create multiple wallets for each client or cost centre, as and when needed. We enable businesses to transact in 41+ currencies with transparent FX fees.
Contact us to know how our all-in-one global banking ecosystem can help you.