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Multi-currency Payment Gateway: Definition and How It Operates

Explore how multi-currency payment gateways can simplify global transactions and expand your business into international markets.

A person is checking their credit card number to finalize online shopping a red neon line a red neon line
Paulina

Paulina Twarogal

Content Specialist
Andrzej Puczyk

Andrzej Puczyk

Head of Delivery

With more e-commerce businesses around and a growing number of customers comfortable with online shopping, the payment landscape has changed. What customers expect now are safe, convenient payment options, and a seamless checkout experience. To meet these expectations and expand the online customer base, businesses have turned to payment gateways as a solution. 

However, things might get a little bit more complicated for companies offering their products and services across borders. After all, there are 195 countries, each having its own payment systems and rules. So, multiple currencies, strict regulations, and different needs of global customers are just some of the things that might give modern businesses a headache.

This is where a multi-currency payment gateway becomes an indispensable tool for any international business. Since it lets retailers accept different currencies, it opens the door to reaching more online customers. It all sounds like a simple recipe for success, doesn’t it? Well, it may be, but first, let’s understand what exactly a multi-currency payment gateway is and how it works. Then, let’s explore its benefits and discover how to implement this solution into your business.

Key takeaways:

  • Multi-currency payment gateways make international transactions smoother and faster.
  • There are benefits for both businesses and customers, from improved customer experience to expanded market reach.
  • Currency support, conversion rates, and security are some of the important factors for businesses to consider when choosing a provider.

Definition of multi-currency payment gateway

A graphic showing what a multi-currency payment gateway is. There's a map of the world with icons of various currencies connected by a payment gateway.

A multi-currency payment gateway takes cross-border transactions a step further by streamlining the process. It enables companies to accept payments in different currencies, automatically convert currencies, and simplify the buying process for international customers.

In general, this solution helps businesses broaden their market reach, enhance customer satisfaction, and foster trust with international buyers. How do multi-currency payment gateways contrast with conventional ones? In order to gain a better understanding, let’s compare the main distinctions between the two:

FeaturesTraditional payment gatewayMulti-currency payment gateway
Currency supportSupports transactions in a single, local currency.Allows for transactions in multiple currencies.
User experience Limited to local currency, which may confuse international customers.Provides localized shopping experiences and better comfort for international customers.
Currency conversionRequires customers or businesses to use external services for currency conversion.Automatically handles currency conversion within the gateway.
Global reachBest suited for local or regional transactions.Facilitates seamless global transactions.
Regulatory complianceAdheres to local regulations only.Complies with various international regulations and simplifies cross-border sales.
Transaction feesOften comes with extra transaction fees for international transactions.Optimized to minimize fees for international transactions.
Settlement processTypically settles in one currency. This can complicate accounting for international sales.Settles in multiple currencies, simplifying international financial management.

How does a multi-currency payment gateway work? 

By allowing payments in various currencies, a multi-currency payment gateway facilitates transactions between businesses and global customers. Even though the payment process involves a few steps, it occurs virtually instantaneously. Here’s a step-by-step look at how it works:

A graphic showing a step-by-step process of how a multi-currency payment gateway works

  1. A buyer makes a purchase: When a customer visits an online store, they can choose their preferred currency to view product prices. Prices displayed in their selected currency offer a localized shopping experience.
  2. Payment processing: Having decided to make a payment, a customer is taken to the checkout page where the payment gateway shows the total amount in the customer’s chosen currency. The consumer provides their payment information, such as credit card numbers or digital wallet credentials, and confirms the payment.
  3. Currency conversion: The transaction amount is automatically converted by the payment gateway from the client’s currency to the base currency of the company. To ensure accuracy, this conversion uses real-time exchange rates.
  4. Authorization request: The gateway securely sends the payment details to the issuing bank (the customer’s bank) for authorization.
  5. Authorization response: The issuing bank verifies whether the customer has sufficient funds and sends the authorization response (approved or declined) back to the payment processor.
  6. Transaction processing and fund transfer: If accepted, the processor sends a signal to the gateway to withdraw funds from the customer’s bank account. The money is then sent from the client’s bank to the merchant’s account.
  7. Confirmation and completion: Once the transfer is done, the payment processor sends confirmation messages to both the merchant and the customer, completing the transaction. 

Typically, the entire process is completed in less than three seconds.

Multi-currency solutions vs. card provider currency exchange 

Businesses must decide between using multi-currency options or relying on card providers for currency exchange when conducting global transactions. Both approaches have pros and cons, impacting operational efficiency and customer satisfaction.

Multi-currency solutionsMulti-currency solutions offer:

  • customized experiences for global customers;
  • direct transactions in different currencies;
  • more favorable exchange rates;
  • and lower foreign transaction fees.  

They use live market rates instead of hefty markups. Multi-currency options can be added to e-commerce platforms and POS systems, offering a more flexible and customer-friendly approach.

Card provider currency exchangeWhen a customer pays in a foreign currency, the card provider automatically handles the exchange. The provider sets the exchange rate and may add a markup. Extra foreign transaction fees (usually around 2-3%) may also apply. 

This method, ​​though easy for customers, can lead to:

  • higher costs;
  • and lack of control as the rates and fees are determined at the point of sale.

Key benefits of multi-currency online payment gateway

a graphic showing the key benefits of using a multi-currency payment gateway

Multi-currency payment gateways provide significant value to businesses and customers alike. Let’s take a look at how offering many currency options transforms the payment process across borders, bringing greater convenience to customers.

Improved customer experience

A multi-currency payment gateway gives customers a seamless payment experience by allowing them to pay directly in their local currency. When customers have to pay in a foreign currency with a fluctuating exchange rate, they can be confused and frustrated. They appreciate feeling safe and enjoy the flexibility of shopping in the currency of their choice. 

That’s especially important when 92% of consumers prefer to purchase on websites that show prices in their local currency. Almost 50% of surveyed US and UK consumers say that they would abandon purchases if they can’t use their local payment methods.

Expanded market reach: Fueling business expansion

Giving customers the option to make transactions in multiple international currencies helps businesses grow their customer base beyond their domestic market. Such companies find it easier to tap into international markets and attract customers from all around the world. The reason for this is quite simple. Shopping in a home currency is more convenient. Satisfied customers are more willing to make a purchase and this, in turn, leads to increased sales and growth opportunities.

Faster payment processing 

Multi-currency payments streamline the process, making them more time-efficient and convenient than traditional cross-border transactions.

Multi-currency paymentsTraditional cross-border transactions
  • No currency exchange needed
  • 3 seconds processing time
  • Beneficial for customers
  • Quicker access to funds
  • Financial operations optimization
  • Requires currency exchange
  • 1-3 working days processing time

Enhanced business efficiency

Payment gateways simplify financial processes by effectively handling international transactions. These platforms: 

  • streamline currency control;
  • cut down on administrative costs and errors;
  • offer thorough payment data;
  • and enhance financial performance with insights.

Use cases of multi-currency payments

Multi-currency payments are useful for a variety of commercial purposes.

Flexibility for e-commerce 

Unlike brick-and-mortar stores, online shopping is commerce without boundaries. It gives merchants a global customer base and opens the world of products to international and domestic consumers. Here, multi-currency payments help merchants lower expenses and simplify the process of accepting e-commerce payments from international consumers.

Global businesses and secure supplier relations 

Multinational companies with suppliers abroad often need to make international payments to replenish their inventory. Not having multi-currency payment processing could result in significant currency conversion fees. This, in turn, may harm their business relationships with international suppliers.

Nonprofit organizations: Avoid fees on global donations 

Non-profit organizations that have interests in foreign countries often need to send significant donations in other currencies. They can save money on international transactions by using multi-currency payment processing. It prevents significant cuts to aid funds for communities in need.

Multi-currency payment gateway and AI

A graphic with statistics about Multi-currency payment gateway and AI

Artificial intelligence is transforming cross-border payments. Although still in the early stages, the impact of AI is already visible. It makes multi-currency payments faster, more secure, and more efficient. For example, 87% of customers who have used a GenAI service are thrilled with the beneficial impact AI has on their shopping experiences.

AI-driven multi-currency gateways: Benefits vs. risks

With its advanced algorithms, AI analyzes transaction patterns and identifies any anomalies to detect and prevent fraud in real time. By automating currency conversions and transaction processes, on the other hand, it improves transaction efficiency and speed. It’s a response to increasing consumer demands for instant outcomes. Furthermore, AI enhances user experience by providing automated support. In fact, 73% of consumers are open to AI-powered chatbots for customer service, and 60% have already used voice assistants to make purchases.

Related Reading: AI in Retail: Key Trends and Use Cases

However, there are some potential risks that come with these advantages. In the end, AI deals with confidential financial information worldwide, which could lead to data privacy worries. Other issues include  algorithmic biases that might affect the fair treatment of international customers, reliability challenges, and the complexity of ensuring compliance with varied international regulations.

 Other issues include:  

  • algorithmic biases that might affect the fair treatment of international customers;
  • reliability challenges;
  • complexity of ensuring compliance with varied international regulations.

Multi-currency payment gateways: future trends to watch

With technology advancing steadily, AI’s role in financial transactions is set to keep growing. What is expected to come includes more advanced AI algorithms, broader natural language processing usage in customer interactions, and enhanced collaboration between AI and other emerging technologies such as blockchain. AI is likely to remain a fundamental influence, shaping the future of streamlined, safe, and tailored transactions.

What is expected to come includes:

  • more advanced AI algorithms;
  • broader natural language processing usage in customer interactions;
  • enhanced collaboration between AI and other emerging technologies such as blockchain.

AI is likely to remain a fundamental influence, shaping the future of streamlined, tailored, and legitimate transactions.

Key factors to consider when choosing a payment gateway provider

Choosing the right payment gateway provider involves considering several important factors, especially if you plan to offer multi-currency transactions.

An image with key factors that business must take into consideration before implementing multi-currency payment gateways

  1. Smooth currency exchange process: A reliable payment gateway should provide smooth currency conversion for efficient transaction processing with no major delays or hidden fees
  2. Number of currencies available: Ensure that the payment gateway supports a wide range of currencies to help you cater to a global customer base without complications.
  3. Fraud protection: Robust fraud prevention measures are critical to safeguard businesses and customers. Look for payment providers that use advanced AI and machine learning (ML) algorithms to detect and prevent fraudulent activities in real time.
  4. Compliance and regulations: Check if a payment gateway complies with international regulations and standards like PCI DSS (Payment Card Industry Data Security Standard). It’s really important as this not only protects your business from legal issues but also builds trust among your customers.
  5. Flexible integration options: The payment gateway should also offer flexible integration options that are easily customized to fit existing systems and workflows.

Step-by-step process of implementing a multi-currency payment gateway 

Choosing a payment gateway provider also means selecting the payment gateway technology they offer. Providers such as Stripe or PayPal include the payment gateway as part of their service. So, once you’ve chosen your provider, you’re set with their gateway—there’s no need to choose a separate gateway.

Related Reading: Integrating Stripe, PayPal, and More: A Comparative Analysis of Payment Gateways

At this point, an important question arises: How can you implement a payment gateway into your application or website? The process itself isn’t that complicated. However, to make sure you’re on the right track, you might consider following the steps below.

A process showing 5 stages of multi-currency payment gateway implementation

Step #1: Understand your payment gateway 

Figure out what kinds of payments it can handle and if it supports various currencies and offers key features like dynamic currency conversion. Also, find out if you need a separate merchant account or if your payment gateway provider includes both the gateway and merchant account in one solution. 

Step #2: Integrate the gateway into your platform

Start with connecting the payment gateway to your website or app, and follow these steps: 

  • Sign up and get API keys.
  • Decide between using a hosted payment page (use a button provided by the gateway) or a custom integration (you’ll need to write code).
  • Follow the provider’s instructions and work with a technical team to set it up correctly.

Step #3: Configure currency settings

Set up the payment gateway to handle the currencies you plan to accept. Configure exchange rates, if needed. Also, ensure that payment options are tailored to your business needs. This step is essential for delivering a seamless experience for international customers.

Step #4: Test the system and implement security measures

Test the payment gateway and check if it functions correctly. Run test transactions in different currencies. Once you make sure everything from processing transactions to currency conversion works as expected, you can move on to implementing robust security measures. To avoid fraud and data breaches, set up SSL certificates, use encryption, and follow PCI DSS standards.

Step #5: Monitor and optimize 

Continuously monitor its performance. Review transaction reports and customer feedback to identify any issues or areas for improvement. Additionally, make an effort to frequently update and enhance the system to ensure its security and effectiveness.

Neontri’s expertise in payment solutions

The right multi-currency payment gateway can be a game-changer for businesses. But the process itself might be challenging. Neontri’s over 15-year expertise can guide you through the whole process—from selecting the right gateway and making sure it works error-free. Let us help you reach more customers around the world. Reach out to us

Final thoughts

Implementing a multi-currency payment gateway is a strategic choice that can greatly influence the worldwide success of your business. By taking into account target audience, selecting the correct payment gateway provider, and adhering to recommended payment methods, brands can construct a smooth and safe payment process for customers.

FAQ

What is the good average settlement time for different currencies? 

In general, 2-5 business days. The average multi-currency settlement time can vary based on the payment gateway provider and the supported currencies. However, the standard settlement period for most currencies is 2 business days. Currencies from emerging markets may take longer, though. For example, it can take between 3 to 5 business days as there might be some additional banking and regulatory processes.

Does the multi-currency online payment gateway enhance user experience? 

Yes, an international online payment gateway significantly enhances user experience. First of all, it allows customers to pay in their preferred currency. This simplifies the whole payment process and increases comfort, and showing the exact amount in their own currency reduces confusion. Moreover, it builds trust with international customers and reduces cart abandonment that usually results from unexpected conversion fees or unfamiliar currency totals at checkout.

What are the pricing models for using a multi-currency payment gateway? 

There are typically a few pricing models. A per-transaction fee that ranges from 1.5% to 3.5%, a monthly subscription for additional features, a one-time setup fee, and a currency conversion fee added to the exchange rate. Some providers may also charge for extra services. These may include chargeback management and advanced reporting. Thus, it’s important to compare these structures to find the best fit for your business.

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Agata Tomasik
Agata Tomasik
Board Member
Head of Outsourcing
agata.tomasik@neontri.com

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