Is Your Multi-Currency Payments Setup Heading for Disaster?

If you're dealing with different currencies in your business, setting up a multi-currency feature is a complex process where errors can easily occur. A bad setup can lead to headaches for you and your customers. In this blog, you’ll learn about the dangers of a bad multi-currency setup and how you can solidify your multi-currency system for efficient cross-border payments using Flutterwave.

What is a Multi-Currency Setup?

A multi-currency setup allows a business to display prices and accept payments from customers globally. This is important for businesses looking to sell products or services to customers in different countries, allowing them to shop and pay in a familiar currency.

With a multi-currency setup, customers can pay in their preferred currency, making shopping straightforward regardless of how prices are listed.

How Does Multi-Currency Payment Processing Work?

Multi-currency payment processing involves several steps behind the scenes to handle transactions across different currencies:

1. Customer Initiates Payment: A customer browsing your site in their local currency (e.g., NGN) decides to make a purchase. The price is displayed in NGN.
2. Payment Information Sent: The customer proceeds to checkout and enters their payment details. This information, along with the transaction amount in NGN, is sent to your payment gateway.
3. Currency Conversion (if applicable): The payment gateway or your system, using real-time or near real-time exchange rates, converts the NGN amount into your business's settlement currency (e.g., USD).
4. Authorization Request: The payment gateway sends an authorization request to the customer's bank (via the card networks like Visa or Mastercard, if it's a card payment). The customer's bank authorizes the transaction in their local currency (NGN).
5. Authorization Response: The authorization response is sent back through the network to the payment gateway and then to your system.
6. Settlement: At the end of each business day (or a defined period), the authorized transactions are submitted for settlement. The funds are transferred from the customer's bank, converted to your settlement currency (USD) by the payment processor or bank, and deposited into your business's merchant account.
7. Reconciliation: Your business reconciles the transactions, matching the payments received in your settlement currency back to the original transactions initiated in the customer's currency.

This process requires accurate exchange rates, a robust system to handle the conversions, and the ability to manage funds in potentially multiple currencies before settlement.

How Multi-Currency Payments Mistakes Hurt Everyone

Implementing the wrong multi-currency setup represents a serious challenge that can trigger refunds, fines, and churn, costing you significant money. Multi-currency issues impact both businesses and customers in these ways:

For Businesses:

1. Exchange Rates: One of the biggest problems you'll face when implementing a multi-currency setup is exchange rates. Money changes value all the time. If you're not careful, you can sell for too little or even overcharge your customers.

2. Commissions and fees: Whenever you convert money, payment companies take a share. These fees pile up fast and can eat right into your profit margins. Not factoring these commissions and fees into your costs means they will directly reduce your profits, causing you to lose money on sales.

3. Complex Tax Regulations: Each country enforces unique rules about selling products, especially for international sales. You need to understand Value Added Tax (VAT), Goods and Services Tax (GST), and other taxes. Mistakes in these areas can result in serious consequences for your business.

4. Operational Complexity: Managing a multi-currency setup requires extra effort. You might need multiple bank accounts and payment systems, complicating your accounting process. These additional steps consume both time and money.

The Ripple Effect on Customers
The issues your business faces from a wrong multi-currency set-up creates a major ripple effect on your customers. Imagine a customer sees a product priced at ₦50,000, but at checkout, they are charged ₦53,500 due to unexpected conversion fees or unfavorable rates. This kind of confusion and lack of transparency leads to customer frustration, distrust, and abandoned carts. A lack of transparency about the true cost in the customer's local currency creates a lack of trust and confidence in the business.

Customers expect you to be honest and consistent with your pricing. Otherwise, they will assume that you aim to deceive and exploit them.

If people are uncertain of the overall cost or don't have enough money to pay cash, they will likely leave without buying anything. Unhappy customers may leave negative reviews, which can hurt your business. A negative experience with currency handling can lead to unfavorable publicity that deters potential customers.

Problems Developers Face With Multi-Currency Setup

Imagine a scenario where you pull rates from an API, cache them, and then get hit with a stale value. Prices are wrong for hours, and no one notices until users complain. This is just one example of the technical hurdles developers face when setting up multi-currency support, as illustrated by the code snippet below attempting to fetch exchange rates.

 /** * Example fetching exchange rates from an API */ async function getExchangeRates(baseCurrency, targetCurrencies) { try { const response = await fetch( `https://api.exchangerates.io/latest?base=${baseCurrency}&symbols=${targetCurrencies.join( "," )}&apikey=YOUR_API_KEY` ); if (!response.ok) { throw new Error(`HTTP error! status: ${response.status}`); } const data = await response.json(); return data.rates; // Returns an object like { 'EUR': 0.92, 'GBP': 0.79, ... } } catch (error) { console.error("Error fetching exchange rates:", error); return null; } } 

To begin with, you have to integrate a payment system that handles many currencies. Each of these payment systems has a unique implementation, and you must ensure they all communicate with each other without any issues. When implementing this system, you'll face another immediate challenge: keeping your prices accurate. Maintaining the correct prices of your products requires obtaining exchange rates in real time. Exchange rates fluctuate constantly, so you need a way to get the latest rates and update your prices instantly.

Handling the various ways currencies are represented is another task developers need to handle. You’ll break the price display if you forget commas in European formats, use the wrong decimal points, or put the symbol in the wrong place. Some locales use commas as decimal points (like in much of Europe), while others use periods (like in the US). The currency symbol might be placed before or after the value. Your payment system has to render those correctly based on the customer's currency and locale. Here's a simple JavaScript example using Intl.NumberFormat to handle this formatting:

 // code snippet from a multi-currencey handler function // Format according to locale conventions const formatter = new Intl.NumberFormat( currencyLocales[targetCurrency] || "en", { style: "currency", currency: targetCurrency, currencyDisplay: "symbol", // Adjust decimal places for currencies like JPY that don't use them minimumFractionDigits: targetCurrency === "JPY" ? 0 : 2, maximumFractionDigits: targetCurrency === "JPY" ? 0 : 2, } ); 

If you have a website and mobile app, you will need to ensure that the multi-currency functionality operates consistently across all platforms. Your customers need to have the same experience regardless of how they shop with you.

Keeping track of which currency the customer selects is also important. When users select Euros, they should see prices in Euros as they view your site. You must have a means to store this preference, possibly through cookies or by accessing their account if they have logged in.

Anticipate that things will go wrong, and ensure that your system can recover from errors gracefully. What if the exchange rate service fails? What if a payment does not go through? Your system must be built to handle these issues without crashing or presenting false information.

Best Practices: Setting Yourself Up for Success

To avoid these problems, you should keep the following in mind:

• Offer Real Multi-Currency Payment: Don't just show prices in different currencies; allow customers to complete the entire transaction in their preferred currency. This means integrating with payment gateways that support settlement in multiple currencies.
• Be Transparent with All Costs: Clearly display the product price, shipping fees, taxes (like VAT or GST), and any potential conversion fees upfront in the customer's selected currency. No surprises at checkout!
• Localize Pricing Strategically: Simply converting a price based on the current exchange rate might not be optimal. Research local market conditions, competitor pricing, and purchasing power to set prices that are competitive and ideal in each region.
• Offer Local Payment Methods: Beyond major credit cards, offer payment options popular and trusted in specific regions, such as local bank transfers, digital wallets, or regional card networks.
• Implement a Clear Currency Switcher: If your system doesn't automatically detect the customer's preferred currency, provide an easy-to-find and intuitive currency switcher that allows users to select their desired currency at any point.
• Thorough Testing: Rigorously test your multi-currency setup with different currencies, payment methods, devices, browsers, and geographical locations to catch potential bugs before they impact customers.
• Have a Transparent Refund Policy: Clearly explain how refunds are processed when dealing with different currencies, including who bears the cost of any exchange rate fluctuations or fees during the refund process.
• Prioritize Security and Compliance: Ensure your system adheres to global security standards (like PCI DSS) and complies with all relevant financial regulations in the regions you operate.

Using Flutterwave For Your Multi-Currency Payments Setup

If you’ve already run into these problems, Flutterwave handles the hard parts so you don’t have to build from scratch. Flutterwave supports over 150 currencies, so you can reach customers almost anywhere without needing to integrate with countless individual payment processors.

Flutterwave also provides an easy-to-use API that developers can add to their websites or apps. These include an Exchange Rate API and Live Exchange Rate APIs to help you get real-time currency values and keep your pricing accurate. It handles automatic currency conversion and exchange rate management, taking a big weight off your shoulders.

With Flutterwave, you can also receive payouts in your preferred currency, simplifying your finances. Security is also a top priority, and Flutterwave follows strict standards like PCI DSS to protect sensitive payment data. Flutterwave also offers Verification APIs to help you verify customer and account details, adding another layer of security and trust.

Businesses like GetEquity leveraged Flutterwave to accept over 150 currencies, allowing them to serve a truly global audience without building complex multi-currency handling themselves. Airlines like Air Peace rely on Flutterwave for seamless and secure payment processing for both local and international flights, highlighting its ability to handle high-volume, critical transactions across borders.

Whichever way you choose to integrate Flutterwave into your application, you can create a smooth multi-currency experience for your customers.

Wrapping Up

Setting up multi-currency support is important for global business growth, but it comes with significant challenges. By understanding these pitfalls and implementing the right best practices, you can create a smoother experience for both your business and your customers.
Services like Flutterwave provide the functionality and features you need to handle the complexities of international payments, while letting you focus on building your business.

If you’re revisiting your payments setup, start by auditing your currency handling. And if you’re ready to simplify it, check out how Flutterwave fits in.