What is multi-currency pricing (MCP) and how can it give businesses a competitive advantage?
If you’ve ever sold goods or services outside your home market, you’ve probably run into annoying issues when it comes to dealing with currencies.
According to our Cross-Border eCommerce report, 93% of consumers claim that seeing products priced in their local currency impacts their decision to purchase. However, offering this functionality can be complex for businesses.
And then there’s the fees. Some providers operate as a middleman between the merchant and their customer, loading on hefty charges when they receive and transfer funds across currencies.
With Airwallex’s multi-currency pricing (MCP) functionality, we’ve farewelled the middleman to give your customers the best possible experience, and slash fees. So, could MCP become the MVP of your financial toolkit?
What is multi-currency pricing (MCP)?
Multi-currency pricing is a strategy that allows businesses to display and sell their products or services in multiple currencies, tailored to the locations of their customers. This approach enables customers to see prices in their local currency. Meanwhile, the business can choose to receive the transaction settlement in their preferred currency.
How does multi-currency pricing (MCP) work?
Let’s take a look at the journey your customers’ funds will take through MCP.
Firstly, you’ll receive a quote from Airwallex’s FX system and select the currency you want to show on your website, based on the quote you’ve received (see further details on how this process works below!).
Your customer then makes their purchase in their home currency on your website.
After the transaction has settled, funds flow into Airwallex’s FX engine, converting into your preferred currency before appearing in your nominated account.
What are the benefits of multi-currency pricing (MCP)?
In short? A great MCP functionality unlocks multiple pathways to growth. But if you want to go deeper into the details, there’s six key benefits to gain.
1. Cost efficiency
Leveraging Airwallex's FX capability can help reduce the costs associated with currency conversions. This is because Airwallex can offer competitive exchange rates and lower fees compared to traditional banking methods.
💡Bonus Fact: How is Airwallex able to offer such competitive rates for MCP?
Unlike many other providers, we own the international financial infrastructure and rails that facilitate money movement around the world. This means that, while many of our competitors pass on exorbitant fees to use external rails, we just tap into our very own - helping you save and operate more efficiently. How good!
2. Reduced currency risk
By receiving transaction settlements in your preferred currency, you can better manage your exposure to foreign exchange rate fluctuations. This helps to stabilise your cash flow and makes financial planning more predictable.
3. An improved customer experience
The painful interpreting of foreign currency while online shopping is a universal experience, which often leads to cart abandonment (yikes!).
By pricing goods and services in the most suitable currency for customers, you make the purchasing process more familiar to them. This can lead to increased customer satisfaction and higher conversion rates.
💡Did you know…
That with Airwallex you can also offer more than 160 payment methods to your customers? With 77% of consumers claiming they are likely to abandon their cart if their preferred payment method is unavailable, offering their preferred way to pay can give you a huge edge!
Visa, Mastercard, Amex, WeChat Pay, GrabPay, Trustly, PayPal… The list goes on (and on and on)!
4. Global expansion
MCP supports businesses looking to expand internationally. By offering local currency pricing, you can make your products and services more accessible and appealing to a global customer base, thereby facilitating growth in new markets.
5. Operational simplicity
The MCP functionality streamlines the process of handling multiple currencies. This reduces the administrative burden on your finance and operations teams, allowing them to focus on other critical aspects of the business.
💡Bonus Feature: Airwallex’s integrations make operations a breeze
Take efficiency one step further with Airwallex’s suite of integrations, including with popular accounting platforms like Xero and Netsuite. With your Airwallex data instantly syncing with these platforms, end-of-month reconciliation becomes easier than ever.
6. Competitive advantage
Providing customers with the option to pay in their local currency can differentiate your business from competitors who may not offer this flexibility. This can improve your brand's reputation and attract more international customers in a crowded market.
Five easy steps to integrate with Airwallex MCP
Is getting started with MCP easy? You bet! Airwallex customers can follow these four straightforward steps to integrate.
1. Get the latest quote from our system to show prices in your preferred currencies.
For example, if you want to display prices in Philippine Pesos (PHP) but receive payments in US Dollars (USD), you can fetch the current exchange rate for USD to PHP using our Quote API.
2. Secure your exchange rate for a specific time frame.
The longer you lock in the rate, the longer Airwallex will manage the currency risk for you. We offer three options:
Up to 24 hours
24 to 48 hours
48 to 72 hours
3. Leverage the collected rate to update the prices you display to your consumers.
What does this look like? Let's say you're selling a pair of shoes in the Philippines that cost you USD$15. To avoid losing money, you can check the USD to PHP exchange rate for tomorrow's transaction. If the rate is 56.18, you can price the shoes at more than 842.7 PHP (15 * 56.18) to ensure you cover your costs.
4. Process payments with the normal flow.
Let the dollars (or whatever currency your customers are paying with) roll in!
5. Once the payment is settled, you'll get the money in your preferred currency, using the exact rate you got earlier.
Back to our shoes example! If you priced the shoes at 900 PHP and someone bought them on June 11, 2022, at 3 PM using a Visa card, you'd receive the money on June 14 (assuming it takes 3 days to process). After the 2.9% card fee, you'd get around $15.56 USD (calculated as 900 PHP / 56.18 exchange rate).
Ready to get started with MCP?
If you’re ready to unlock all the opportunities that MCP has to offer, we’re here to make it happen! Get in touch with our friendly team today to learn more about how MCP can help you do better business.
This information doesn’t take into account your objectives, financial situation, or needs. If you are a customer of Airwallex Pty Ltd (AFSL No. 487221) read the Product Disclosure Statement (PDS) for the Direct Services available here.
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Izzy is a business finance writer for Airwallex. She specialises in thought leadership that empowers businesses to grow without boundaries.
