The days of setting up overseas bank accounts to avoid hefty bank currency fees are long gone. Though, you wouldn’t have thought it when logging onto your online highstreet banking app, where overseas transactions incur $/£ 30 flat fees and 4% exchange spreads…
Putting aside outdated traditional banks, a multi-currency account is a way to handle cash in different currencies from around the world. These are common among new fintech firms, such as money transfer companies and brokerages.
The beauty of a multi-currency wallet is the administration, first and foremost. Signing up to somewhere like Wise or Revolut takes a matter of minutes. A few hours after account validation, you’re now legally capable of opening not just an account to send and receive Pounds, but to send and receive 30+ currencies.
For example, opening a New Zealand Dollar account involves zero interaction or admin with New Zealand or its laws – the money transfer company has this sorted already. Instead, you simply open a virtual account in NZD, and instantly be ascribed a bank account number to receive NZD into. It costs nothing to use and sets up all of the available currency accounts.
Multi-currency for online sellers
This has been revolutionary for online sellers, who are constantly getting ripped off from the likes of Amazon, eBay, and other marketplaces. These marketplaces tend to see currency differences between buyers and sellers as an opportunistic money making opportunity.
So, they “take control” of the currency themselves, letting you sell in whatever country you like, but the marketplace will convert that money into your base currency for you – as if it’s a favour.
Of course, it couldn’t be further from the truth. What’s going on behind the scenes is that they’re taking a large spread when converting the currency, often as high as 4%, which the seller loses out on when receiving the funds.
Multi-currency accounts have gotten round this by giving the power and control back to the seller. Now, a British seller can set up a Euros account for receiving funds from French, Spanish, and Lithuanian sales, for example, along with a Krone account for Danish sales.
This means that the seller is receiving the full amount that the product is being sold for (besides inevitable marketplace sellers fees), avoiding that 4% fee. Furthermore, sellers can keep hold of these foreign funds for as long as they want, choosing when is best to convert themselves – be it hedge, wait, or leave and use later.
The spread that most multi-currency accounts will charge is between 0% and 1%. It’s very possible to convert funds for pretty much the interbanking rates, whilst other companies charge a very small fee.
The difference can be enough to save sellers tens of thousands of pounds a year in poor exchange rates and transaction fees.
Choosing a multi-currency account
First and foremost, if you’ve only ever used high street banks and internal marketplace currency solutions then you’re in for a treat, as picking between companies will be like a kid in a sweet shop.
To first compare multi-currency accounts in the UK we should round up the top 5 companies.
Payoneer is certainly an industry veteran at offering multi-currency accounts, and have been used by sole traders for many years now. With a massive 4 million customer base worldwide, businesses are used to dealing with Payoneer, so it’s certainly one of the most standard options.
Payoneer are regulated all around the world, with offices everywhere and a small £/$ 1 minimum transfer. This is a common option for Amazon sellers, and it’s important because it’s almost half the price (2% exchange fees) compared to PayPal’s 3.5% / 3%.
Revolut and Wise
However, we can do better than 2%. Revolut and Wise are two different companies, but they’re worth grouping together as they’re very similar. Both companies are British, with very low margins (0% during market hours for Revolut, often 0.5% for Wise) though these can sometimes differ.
Both Revolut and Wise have around 21 to 49 currencies supported, depending on if you’re selling or only buying. Both companies pride themselves on accessibility and speed, with gorgeous apps that are a dream to use, clear UX of accounts, and very user-friendly.
MoneyCorp is one of the oldest FX solution companies around, being founded in 1979, yet have done very well to keep up with technological developments. Where MoneyCorp differs from Wise and Revolut is that they’re less focused on one-click slick apps, and have more bespoke support.
For example, Wise and Revolut have no over-the-phone support unlike MoneyCorp. In fact, MoneyCorp has a dedicated dealer to build a relationship with and gain bespoke advice, along with hedging possibilities. The business solutions are therefore much more sophisticated, but if these aren’t required and you’re only looking for basic, fast spot exchanges, then it may be overkill.
OFX is like MoneyCorp, only they’re even more focused on sophisticated solutions – and further from that one-tap Wise/Revolut experience. Some transfers will actually require a phone call, and cannot be done on the app – though this is usually for unique transfers.
OFX have an impressive 55 currencies supported, with a dedicated dealer, hedging possibilities, and sophisticated business solutions. OFX are often a choice for those wanting larger volume transfers, as they gain preferable varied rates, plus the minimum transfer is £/$100.
Of course, deciding on one company will be up to the needs of the individual. However, these companies have no account fees, no deposit fees, and signing up takes a matter of minutes. So, it’s sensible to have multiple, multi-currency accounts… Accounts…
Generally, you’re better off picking one for small, frequent transfers, and one that handles hedging, larger transfers, and a dedicated dealer. So, a combination of Wise and OFX, for example, or Revolut and MoneyCorp.