What is multi-currency?

Francis Mercer
6 mins

  • Knowledge hub

In a global economy, the ability to trade across borders is a fundamental driver for growth. However, finding a ‘multi-currency’ solution which is reliable and cost-effective is a challenge for many small businesses trading internationally. In this blog, we explore what that solution means for businesses and why it is so important.

A short multi-currency history

The problem of trading across borders is not a new one. When trade was first established between humans, goods were traded physically for other scarce goods. Some time later, governments, at first wishing to control the economic activities of their citizens, started to issue currency in the form of coins - the first currency can be traced as far back as 5000 years to the Mesopotamian shekel. As trade volumes and activity grew, currency took the place of goods on one side of the exchange. Then, with the introduction of bank notes, one party in the transaction would trade a promise to pay a certain amount at a later date instead of a valuable item.  

However, these transactions became more complicated when trading across borders. If a trader needed to trade with someone from a different area (now we’d call this a country, but the concept of nation states or trading zones wasn’t always as clear-cut in ancient times), they would still need to offer goods in exchange for other goods. As the world markets became inextricably linked in the early modern era, international trade needed its own currency. Gold became a common rate of exchange. To make sure transactions were fair, regardless of local currency and custom (this continued into the last century) exchange rates were pinned to the gold standard.

Alongside the gold standard, one currency acted as the exchange rate ‘marker’ for practical purposes. The Spanish dollar, pound sterling and then the US dollar were used as the dominant currency so that traders could set a fair price for their goods. Under that system, exchange rate fluctuations and the logistical barriers to trading in multiple currencies still posed problems.

Now, with the growth of digital systems that can convert money accurately and at near-zero cost at the click of a button, the ‘multi-currency’ era is here. The idea of ‘multi-currency’ actually refers back to the earliest forms of international trade - being truly ‘multi-currency’ (or even ‘omni-currency’) is effectively the same as being ‘currency-less’. Multi-currency strips down the physical barriers to international trade allowing businesses to unlock serious opportunities for growth.

What multi-currency means for businesses

If your business trades internationally or if you pay suppliers abroad, then you’ve probably already heard the term ‘multi-currency’ or used a multi-currency solution. If you’re still using a traditional bank for your multi-currency needs, you might find that there’s a better way to help build your business globally.

Let’s imagine an e-commerce business from Cyprus that sells educational toys for children, called ToyLearn. They source their stock from a factory in Australia and pay the supplier in local currency. Their website was designed by a company in the UK and their employees are based remotely all over Europe - their design team is based in Denmark and they work with a team of engineers based in Poland. Clearly ToyLearn needs to make payments in multiple currencies, not just euros.

So far, ToyLearn has been using its business bank to exchange currency and transfer money internationally. This causes four main problems:

Problem 1: The bank charges a lot for multi-currency payments.

It’s a common misconception that ‘global’ banks are well positioned to offer multi-currency solutions. Most banks operate in local silos and are set up to operate within a local market, making international payments difficult to process. Costs vary between providers, but it’s rare that a business bank can compete with a digital-only solution - as a rule of thumb, most banks operate with very high costs, which they tend to pass on to customers by increasing margins on services like multi-currency transfers.

Problem 2: The bank includes hidden fees and charges.

When making a multi-currency payment, ToyLearn’s financial controller, Maya, wants to know how much the supplier will receive, but also the amount that will be debited from ToyLearn’s business account. Maya only sees the final amount due to arrive at the supplier. This means the final amount charged to ToyLearn to make the transfer is not transparent, causing difficulties with cash flow management when making their larger supplier payments.

Problem 3: The bank defaults to using expensive, inconvenient systems for international payments.

ToyLearn’s owner has experienced several examples of delays with transfers not being traced through the system, leading to difficult conversations with suppliers. The bank uses SWIFT to fulfil its multi-currency payments - a system that was created in 1973. It’s secure and usually reliable, but it’s also expensive and complicated for outsiders to understand.

Problem 4: Clunky, expensive solutions

Finally, the user experience with ToyLearn’s current provider is clunky and the annual cost for their banking is high.

A better multi-currency solution

With all that hassle and additional cost, ToyLearn’s financial controller Maya is looking for a new multi-currency solution. Here’s why a solution like Intergiro could help:

Solution 1: Fair FX rates.

At Intergiro, we use live wholesale FX rates to calculate the price of your multi-currency transfer. That means you can be sure you’re getting the most up-to-date rate of exchange for your multi-currency payment.

Solution 2: No hidden fees and charges

Alongside our fair rates, we always show you the fee for your multi-currency transfer at the point of transfer. We even give you a discount on your FX fees if you are signed up to our Growth or Professional packages to help your business to build, adapt and thrive.

Solution 3: Our multi-currency payouts use local payment networks

When you make a payment using Intergiro’s multi-currency transfers, the payment is processed using the local payment networks in the home country of your supplier. This not only keeps costs lower than other alternatives such as SWIFT, but it also gives you and your supplier peace of mind as they receive payment via a trusted local payment method.

Solution 4: User-friendly, cost-effective solutions

Our clients tell us Intergiro’s business accounts are really easy to use, and our packages can help businesses reduce the cost of their banking services by offering a flexible toolkit at a fair price. You only pay for the services you need and you’ll always get a seamless experience with friendly customer support at your fingertips.

Opening a business account with multi-currency transfers

If you’re opening a business account at Intergiro, the process takes minutes. After completing an initial application and answering a series of questions to help us to get to know you and your business, we’ll ask you to name which currencies you would like to hold in the account.

Once approved, we’ll set you up with a business account to hold euros. From there, you’ll be able to make payments out in eight currencies, as well as euros via SEPA transfers (USD, GBP, SEK, NOK, DKK, PLN, AUD, CAD).

With our business accounts, you’ll also benefit from all of our live and upcoming functionality, from virtual and physical cards to cash flow management tools, all through the same platform.

If you’re ready to go today, click here to start your Intergiro business account application now.