Multi-currency processing
Cardflo enables merchants to process transactions in multiple currencies. This capability supports global sales and improves customer experience by displaying prices and processing payments in local denominations.
Our platform handles the complexities of currency conversion and settlement, facilitating international market reach for high-risk and enterprise businesses.
- Category
- Acquiring
- Capabilities
- 10
- Available on
- All plans
The overview
Multi-currency processing enables a merchant to accept payments in various global denominations while receiving settlement in their preferred base currency.
This functionality sits within the acquiring layer of the payments stack, requiring the merchant to hold a Merchant Identification Number (MID) with an acquirer that supports multiple currencies.
When a customer initiates a transaction, the gateway communicates with the acquirer to determine the exchange rate and authorisation requirements.
The process involves two primary stages: the presentment currency, which the cardholder sees at checkout, and the settlement currency, which the merchant receives in their bank account.
Efficient multi-currency setups minimise the impact of foreign exchange (FX) volatility and reduce the likelihood of cross-border transaction declines.
By utilising local acquiring networks, businesses can often avoid the high fees associated with international card schemes, ensuring that the currency displayed during the authorisation matches the cardholder’s billing currency to prevent unnecessary conversion costs at the issuer level.
How it works
Currency Presentment at Checkout
The merchant identifies the cardholder’s location via IP address or BIN lookup. The gateway then presents the transaction amount in the local currency of the shopper.
This step is critical for maintaining price transparency and ensuring the customer understands the exact amount that will appear on their bank statement.
Authorisation and FX Conversion
Upon submission, the authorisation request travels through the gateway to the acquirer. If the transaction currency differs from the merchant's settlement currency, a conversion occurs based on the mid-market rate plus a specified spread.
The issuer then authorises the transaction in the requested local denomination.
Clearing and Scheme Processing
The transaction details are sent to the card schemes, such as Visa or Mastercard, for clearing. The schemes calculate the interchange fees and scheme fees based on the cross-border nature of the payment.
Accurate currency coding during this stage is essential to avoid additional surcharges or miscalculated fees.
Settlement and Reconciliation
The acquirer settles the funds to the merchant account. Depending on the configuration, the merchant may receive funds in the original transaction currency or converted into their functional currency.
The resulting report provides an ARN and breakdown of the exchange rates used for accounting and reconciliation purposes.
Why it matters
Authorisation Rate Optimisation
Issuers are more likely to approve transactions that are presented in the cardholder's home currency. When a transaction is processed as a domestic-like payment through local acquiring, it reduces the risk of fraud flags associated with international activity.
This alignment between the presentment currency and the BIN country helps in minimising soft declines related to geographic discrepancies, ultimately improving the successful capture rate for global sales.
Operational Transparency and FX Management
Handling multiple currencies requires precise reconciliation to manage foreign exchange risk. By controlling the conversion process rather than leaving it to the cardholder's bank, merchants can better predict the final settlement amount.
This reduces the number of retrieval requests and disputes that arise when customers do not recognise the converted amount on their statements, protecting the merchant's relationship with the acquirer and scheme.
Use cases
International E-commerce Operations
Retailers selling to customers across Europe, North America, and Asia use multi-currency processing to display local pricing, reducing cart abandonment caused by currency confusion or unexpected bank fees.
SaaS Subscription Models
Software providers use multi-currency capabilities to charge recurring fees in the customer's native currency, ensuring consistent billing amounts and reducing dunning issues caused by fluctuating exchange rates.
Travel and Hospitality Services
Global booking engines process payments in the currency of the destination or the traveller's home country, providing a familiar checkout experience for high-value transactions.
High-Volume Digital Goods
Digital marketplaces aggregate sellers and buyers globally, requiring a platform that can handle diverse currencies to facilitate split settlements and complex payouts.
By the numbers
Industry data suggests a typical increase in authorisation rates when merchants present prices and process transactions in the cardholder’s local currency versus a foreign denomination.
This represents the standard range of foreign exchange markups applied by acquirers and gateways during the conversion from transaction to settlement currency.
Benchmarks indicate that international shoppers are less likely to abandon a checkout process when the final total is displayed in their native currency.
Related terms
Talk to our team about a live rollout on your acquiring stack.
What you get with Multi-currency processing
- Support for over 150 transaction currencies to facilitate global market penetration.
- Settlement availability in major currencies including GBP, EUR, USD, and regional denominations.
- Automated mid-market exchange rate updates to ensure accurate pricing at the point of sale.
- Smart routing of transactions to local acquirers to minimise cross-border interchange surcharges.
- Dynamic currency conversion options allowing cardholders to choose their preferred payment denomination.
- Detailed reconciliation reports showing transaction currency, settlement currency, and applied FX rates.
- Integration with multiple Merchant Identification Numbers for regionalised currency handling strategies.
- Mitigation of issuer-led currency conversion fees for improved customer satisfaction and retention.
- Support for alternative payment methods that require specific local currency configurations.
- Compliance with PSD2 and SCA requirements across different currency zones and jurisdictions.
A short scoping call, then a written plan for your MIDs.
Questions about Multi-currency processing
How does multi-currency processing affect interchange and scheme fees?
Interchange and scheme fees are often higher for cross-border transactions. When a transaction is processed in a currency foreign to the acquirer's region, schemes may apply a cross-border fee.
However, by using a multi-currency setup that routes transactions through local acquiring MIDs, merchants can often qualify for domestic interchange rates.
This requires the transaction to be processed in the local currency and settled through a local entity, effectively reducing the cost of acceptance for international volume.
What is the difference between multi-currency processing and dynamic currency conversion?
Multi-currency processing allows the merchant to set the price in a specific currency, which is then processed as that denomination through the entire lifecycle.
Dynamic Currency Conversion (DCC) occurs at the point of sale, where a cardholder is offered a choice to pay in their home currency or the merchant's local currency.
DCC typically involves a visual disclosure of the exchange rate and a markup, whereas multi-currency processing is usually managed by the merchant's backend settings.
Can a merchant receive settlement in a different currency than the transaction currency?
Yes, this is a standard configuration. A merchant may accept payments in Japanese Yen (JPY) but choose to receive settlement in British Pounds (GBP).
The acquirer or the PSP handles the conversion before the funds are deposited into the merchant’s bank account. This is often preferred by businesses that wish to centralise their treasury operations but sell into diverse geographic markets without needing bank accounts in every country.
How is the exchange rate determined for international transactions?
The exchange rate is generally based on the daily wholesale rates provided by major financial institutions or the card schemes themselves. Acquirers typically add a small percentage, known as an FX spread, to the base rate.
This spread covers the risk of currency fluctuations between the time of authorisation and the time of settlement. Merchants should monitor these rates within their gateway reports to ensure the conversions align with their expected margins.
Does multi-currency processing increase the risk of chargebacks or disputes?
Properly implemented multi-currency processing can actually reduce disputes. If a customer is charged in their own currency, the amount they see at checkout matches the amount on their bank statement.
Problems arise when a merchant displays one currency but processes in another, leading to hidden bank fees for the customer. Transparency in the transaction currency helps avoid 'amount unrecognised' disputes and retrieval requests, as the cardholder is not surprised by FX adjustments.
Are there specific technical requirements for handling multiple currencies via API?
Yes, the merchant’s API request must include the ISO 4217 currency code for every transaction. The gateway must be capable of mapping these codes to the appropriate acquirer route.
Additionally, the merchant’s internal systems must be able to store and reconcile these different currency values, ensuring that the accounting software handles the exchange rate differences between the transaction date and the settlement date for tax and reporting purposes.
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