By Rob Marriott

Offering multi-currency pricing (MCP) solutions for international payments is a great option for your customers to pay for your products in their local currency. In the two options below, the way merchants approach pricing and the technical considerations are quite different. 

Fixed Multi-Currency Pricing. In this model, the merchant displays all product pricing in their customer’s local currency (MXN for example). The merchant is responsible to maintain their product catalog in each local currency where they will sell.  Website sales are also in the local currency, but the funding is deposited in USD into your US bank account.

Pros:

  • Pricing can be fixed and won’t change daily.
  • Customers see pricing in their local currency during the entire shopping experience (not only at checkout)
  • Customers aren’t surprised at checkout when they see the pricing in their local currency
  • No need for additional development work to integrate the currency rate lookup API
  • All the same benefits of MCP: higher authorization rates, no foreign transaction fees, lowers chargeback rates, and funds settle in USD

Cons:

  • Maintain a separate pricing catalog for each foreign currency you use
  • Possible foreign exchange exposure. You will need to keep a watch on currency fluctuations between the local currency and USD.
  • Account for the MCP fee in the local currency conversion from USD

Dynamic Multi-Currency Pricing. As the merchant, you display all product pricing in USD.  At the checkout page, the merchant’s iFrame calls the Nexio “Rate lookup” API which provides a daily exchange rate so the merchant can convert the USD pricing into the local currency. By charging in the customer’s local currency, the merchant avoids having the customer charged an additional foreign transaction fee by their credit card issuer.  FX rates and pricing will change daily, but merchants will always receive the full USD amount of the sale settled on every transaction, minus regular processing fees.

Pros:

  • You only need to maintain one price catalog in USD vs. a catalog for each local currency
  • Customers may see more value in a US product vs. a domestic product
  • MCP fee is added in automatically with the daily exchange rate
  • All the same benefits of MCP: higher authorization rates, no foreign transaction fees, lowers chargeback rates, and funds settle in USD

Cons:

  • Pricing changes daily (every 24 hours) so recurring customers will see varying prices 
  • Customers see USD pricing up until checkout when they finally see the local currency pricing.  

Both MCP options are sound strategies for selling internationally and are a great starting point for testing new markets. Remember the top two reasons for using either of these options are:

  1. Higher authorization rates (issuing banks in other countries are more likely to decline a transaction they see coming in a foreign currency, in this case, USD.)
  2. Eliminate most foreign transaction fees.  When charging your customers in USD, you inadvertently pass FX fees and exposure to them. Their issuing bank will charge a fee to convert from USD to their home currency. Customers don’t like seeing a second unexplained charge show up on their credit card statement. This often results in complaint calls to customer service, potential refunds, and or even chargebacks.

 Whatever strategy you use, consider MCP for your next market as you expand your company into more international markets.