01 September Best Practices to Manage Currencies from Global Marketplaces
So you’ve got your Amazon shop up and business is brisk. Your Amazon store is driving new orders and you ask yourself why you didn’t start your online business sooner. Then you think about gaining access to new customers in new markets.
It’s only natural to think first of the other English-speaking countries so you can easily replicate what you’re doing in the US in a marketplace serving a new audience. In particular, expanding to Canada, the UK, and Australia comes to mind. With this opportunity comes new considerations for your business to manage. For instance, if you aren’t already transferring money from one currency to another, this can be one of the most stressful things to manage. To help alleviate some of the anxiety, here are some best practices to consider.
1. Look beyond your bank
While it may seem logical to ask your local bank to help you convert money from your marketplace revenues, you likely will pay both transfer fees and added margin (usually added to the currency rate) for the privilege of making the exchange. There are several currency specialists including OFX who have unique products – like multi-currency accounts – designed to help you manage marketplace proceeds in multiple currencies.
2. Review the options provided by the marketplace
Many marketplaces have their own currency conversion capability that is readily available. Remember, currency is not their main concern and they may not give you a great rate on the conversion. Some charge as much as 5% on top of the prevailing “wholesale,” “mid-market” or “interbank” rate. This is no bargain. Most importantly, be sure to compare providers by asking them directly about fees or margins on each transfer and know exactly how much you will get in your preferred currency.
Let’s define what the wholesale rate, mid-market rate, or interbank rate is. This is the rate banks use to exchange large amounts of currency with each other. Conversion tools use this rate to give you an indication of how the currency markets are moving. Yet almost no one gets these rates. Instead, banks and currency exchange providers like OFX add a fee or a reasonable margin on top of the rate. What matters is how much is added. Generally speaking, if you are working with a company that specializes in currency exchange you may get a better rate than a bank or marketplace that provides the service because their clients ask for it – not because they specialize in it.
3. Understand how currency exchange markets work
Don’t be intimidated by the prospect of ever-moving exchange rates. There are many factors that influence currency exchange rates, with the largest being interest rates and geo-political activity. Exchange rates are constantly in flux. They’ll favor you some weeks and work against you other weeks. If you pay attention you can start to see trends. You can also turn to specialists like OFX to help you think about managing currency and controlling costs for recurring payments.
By using a multi-currency account such as the OFX Global Currency Account, you can avoid a lot of currency exchange by receiving marketplace proceeds in any of seven currencies. The best multi-currency accounts also allow you to hold balances and pay suppliers in different currencies so you can more easily manage your entire marketplace portfolio.
4. Rely on personal service when you need it
When it comes to your money, it’s expected that you will be concerned that your money will arrive securely at your intended destination. Many online currency specialists have 24/7 customer support that can help you understand the details of your transfer and make sure everything is set up properly, regardless of which time zone you are in. When you talk to a currency specialist you can also receive insight and strategies to help you manage currencies based on what the experts are seeing. At OFX, there are OFXperts available 24/7 to speak with, who help marketplace sellers keep their online businesses running smoothly around the clock.
Managing a global business on marketplaces around the world is easy in some ways and hard in others. With the right tools and support you can streamline and simplify some of your business workflows – especially managing marketplace proceeds in multiple currencies. Brought to you by OFX. Moving money globally. OFX doesn’t just offer great rates. You receive access to 24/7 phone support from currency experts when you need it, and a seamless digital platform when you don’t.
Questions? Contact Will Moffett at firstname.lastname@example.org or (925) 209-1648.