Looking to sell internationally? Understanding global currencies and how to approach and optimize for “presentment currency” and “settlement currency” are central to any competitive global business strategy. Building a strategic understanding of these terms can give you a significant leg up. In fact, rethinking your approach to currency compatibility leads to better offerings for customers and more revenue opportunities in international eCommerce.
What Are Presentment Currencies?
Presentment currency refers to the currency the customer is charged in — it should almost always match the currency displayed at checkout. Businesses should ask themselves: how do your buyers in the different geographies you serve want to pay? Those are the presentment currencies you should offer.
Without the right technology to expand presentment currency options based on the customer’s location, you may deter international customers. Think of it this way: have you ever been on a trip abroad, seen something for sale in the location’s currency and paused to quickly calculate the exchange rate? Chances are the object’s price was listed in the local currency, which made you stop to do the math.
The same phenomenon occurs online: the lack of local currencies can leave buyers struggling with calculations when purchasing from a foreign vendor. Friction enters the buyer’s journey, and vendors see an increase in cart abandonment. More impressive, however, are the benefits of using the right presentment currencies: on average, our customers see a 12% increase in authorization rates.
Presentment currency options have expanded with the rise of payment technology and knowledge of customers’ locations and language preferences. Yet, businesses may not have an all-encompassing payment technology solution to fully attract and retain all potential customers.
What Are Settlement Currencies?
If presentment currencies relate more to the customer, then settlement currencies relate more to the seller. Settlement currency is the currency a vendor selects to be paid out in and the currency in which funds are sent to the vendor’s bank account. You can have one settlement currency or multiple, depending on the functionality of your payment processor and the availability of accounts.
Your choice of settlement currency can be either a significant source of costs or savings for your business. For example, if a business charges in EUR but is paid out in USD, the business could incur FX, or foreign transaction, fees that could be avoided if paid out in EUR instead, matching the presentment currency.
Some processors are limited in the number of settlement currencies offered. The right payment processor would allow the business to charge in EUR and be paid out in EUR, like-for-like, without adding FX fees.
Rethink Currencies for a Positive Business Impact
It’s easy to see how an outdated approach to both presentment currencies and settlement currencies can create a friction-filled environment for businesses and their customers that results in less profit over time.
When it comes to presentment currencies, you need a solution that lets you charge customers in the currency familiar to them, based on their region. The right technology lets vendors present as many currency options as needed to customers, eliminating friction in the checkout process and increasing conversions (so no more cart abandonment). When customers see prices and symbols they understand, they will be less likely to leave the checkout page.
When it comes to settlement currencies, it’s important to have a processor that offers the currencies you need for customers in the countries where you sell today and in the future. You also want to look for a solution that includes many like-for-like currencies so you can keep FX costs under control. After all, reducing fees means increased profits.
A Payment Solution That Meets Your Presentment Currency and Settlement Currency Needs
You need a payment solution that will allow your customers to pay in the currencies they want and then allow you to be paid out in the currency you want. This often requires opening multiple accounts and integrating with different payment solution providers to tackle different regions. That can tie up scarce technical resources for a considerable amount of time.
The right payment solution should simplify operations as well as currencies. For instance, BlueSnap gives you one merchant ID (MID) connected to a global network of acquiring banks, eliminating the need to use multiple integrations in order to achieve a global footprint.
A single account also significantly reduces manual effort and complexity across currencies, reporting data and payouts. All of this saves you time and money and removes any limits to your global business strategy.
Now that you know more about strategically approaching different currency types, learn how Bluesnap’s Global Payment Platform takes the effort out of international eCommerce. Let’s talk!
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Frequently Asked Questions
What is presentment currency (also known as authorization or shopper currency)?
The currency in which the shoppers purchase goods or services from the merchant.
What is a settlement currency?
The currency in which the merchant receives funding.
What is an acquiring bank vs. an issuing bank?
The acquiring lender bank, or acquirer, acquires the transaction on behalf of the merchant. The issuing bank, or issuer, serves the customer. It issues credit and manages the cardholder’s funds. These terms apply to where the banks lie within a transaction process. One bank may serve as an acquirer for one transaction, and then as an issuer for a different transaction.
How do digital payments work?
Whether for B2B card processing or B2C card transactions, digital payments work the same:
- The gateway captures the transaction request and either encrypts or tokenizes the information, then routes it to an acquiring bank.
- The acquiring bank (which provides your merchant account) takes ownership of the transaction request. Its job is to get authorization for the transaction.
- The issuing bank assesses the request: Does the customer have sufficient credit or funds? The issuing bank generates a response — yes or no — and sends it back to the acquiring bank via the card network.
- The acquiring bank sends the response back to the payment gateway.
- The payment gateway’s final job is to present the answer either back to the merchant or to the shopper directly (if you’re using a hosted payment page).
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