Started an Online Business? How to Manage Payments

Closeup of money including US dollars and foreign currency
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The rise of unemployment and bankruptcies has been off the charts since Spring.

In this time of lockdowns, social distancing, and otherwise restricted mobility, many turn to the Internet for work by moving their businesses online, starting new businesses or side hustles to supplement their income.

Becoming freelancers is also getting more popular. And all these people who go online in search of work should also go global as local jobs can be scarce or competitive in this climate. If they choose to offer their freelance services globally, this means they also need a more efficient system of accepting and/or sending payments than their regular bank account.

Multi-currency accounts by FX (foreign currency exchange) companies are a great solution for them.

Who Needs a Multi-Currency Account Today?

Without a doubt, online merchants are people who can benefit from multi-currency accounts the most. And today the number of these merchants has increased drastically. The COVID-19 pandemic has changed the e-commerce industry permanently in regard to customer behavior.

But it’s also pushed millions of people to make selling online into a side hustle or even their main business.

Since the pandemic resulted in millions of layoffs and people reevaluating their income streams, turning to freelancing, online selling, and other internet-based jobs is the only solution for many.

And to make as much money as possible from these kinds of jobs, one must offer their services globally so a multi-currency account has also become a necessity for millions of freelancers.

Pretty much everyone who is trying to make money online can benefit from one. Even if you only need to use a few types of currencies right now. This kind of account leaves a lot of room and flexibility for growth and international expansion but most importantly, it allows cutting your costs.

Another group of people that can benefit from a multi-currency account are investors. Like many other alternative forms of income, it’s rapidly gaining popularity in the wake of the pandemic crisis. Micro-investing, in particular, is on the rise because it’s easy to start with.

But everyone with capital can greatly benefit and reduce their risks by diversifying their portfolio. A multi-currency account will enable you to manage multiple international investments and maximize returns.

How Does a Multi-Currency Account Work?

In essence, having a multi-currency account is like having bank accounts in several countries.

However, you manage all of them through one central focal point, which is your FX company’s account. Leading companies all offer online and web apps you can use to manage with ease.

The exact structure and mechanics of these accounts vary depending on the provider. So does the number of currencies supported and operations you can perform with them. Usually, you’ll be able to accept payments in various currencies from residents of many countries. For these people, it will look a lot like making a local transfer.

For instance, let’s say you live in the U.S. and have a client in London. Having a FX account will let you invoice them like a local and receive money usually with no fees depending on the company.

Some accounts today also allow you to not only hold the balance in multiple currencies but also allow for local and international transfers. Of course, you can also withdraw your money from the account in your domestic currency and transfer it to your main bank account.

Top Multi-Currency Accounts to Choose From

Today there are many FX companies that offer multi-currency accounts. But as this industry is rather new and unregulated, these accounts differ quite a bit. This means that you should always start your search by looking at the best multi-currency accounts compared and remember that each of these has its own strengths and weaknesses. Therefore, each of them can be the “best” depending on your exact needs.

Leading global providers of these accounts today are:

Borderless account by TransferWise is one of the most popular and affordable options for small frequent transactions. It allows you to hold the balance in 50 currencies and is very easy to use. The best thing about TransferWise is its transparency as you can clearly see how much every transaction will cost you using its website calculators.

This brand is also the leader of the industry. Therefore, you can be sure your account is as secure as possible. It’s available in the U.S. and the minimum transfer amount is $1.

Revolut Multi-Currency Account is rather straightforward and simple. It’s great for frequent small transfers. The company charges no fees and offers very good FX rates.

The account supports up to 28 currencies. The app is very easy to use even for complete beginners.

One of the best options for online sellers and business transfers is the OFX Global Currency Account. The company has the widest global reach and over 20 offices. The minimum transfer amount is $100.

Also, you pay no account fees with OFX. Therefore, it can offer great savings for businesses that need to make fairly big transfers often. The company is also available in the US.

Moneycorp is one of the oldest companies in the industry, but not the cheapest. The minimum transfer with this company is $250. However, you’ll get better rates as the transfer volume grows.
So if you need to make large transfers, this offer might be more beneficial compared to the ones that are cheaper at first glance.

Alibaba currently owns WorldFirst and the takeover offered this company great opportunities. Now, WorldFirst offers some of the best rates and overall cheapest services. It’s geared specifically for online merchants and has many useful extra services, but it’s not available in the US for now.

How Much Money Can You Save with a Multi-Currency Account?

The exact amount of money you can save using a multi-currency account will vary for every business. However, those savings can definitely go into thousands a year. Just imagine, one international transaction through an Amazon Currency Converter costs you about 4.5% of the transfer volume. This is the money you lose on every single sale due to hidden fees and bad FX rates. The cost of a similar PayPal payment is around 3.5%.

However, TransferWise can cut this number to less than 0.75%. Other top FX companies offer different rates, but all of them very favorable. Therefore, the cost of your transfers can go even below 0.3% and close to the mid-market FX rate.

Also, don’t forget that multi-currency accounts also have lower fees overall and often offer additional services. One thing’s for sure, they’ll help you save some money in the long run!

Read More: 5 Pitfalls to Avoid When Starting Your Side Hustle

Guest Author: Kate Bregovic has been working in the financial planning and investment services industry for over 10 years. Now being a freelance writer, she is well equipped to provide advice on a wide array of areas. Follow her on Facebook!