What is Currency conversion?

Currency conversion is a fundamental process integrated into the payment flow that involves converting one currency into another. It is highly relevant for businesses that operate internationally and deal with transactions in multiple currencies. As Customers do not need to take extra steps while dealing with a different currency, the exchange sequence ensures convenience and has the potential for higher conversion rates.

The Key elements of Currency conversion

Currency conversion encompasses some key elements that should be considered before you decide to dive deeper into its process. Take a look at the scheme below to get familiar with what influences Currency conversion in the first place.

Currency pairs include Base and Quote currencies that participate in the exchange process.
Conversion spread is the difference between the Ask and Bid prices. The smaller the spread, the higher the liquidity for the identified currency.
Fees signify the charge applied when converting one currency into another. Our system differentiates the Fee rate and Fee fixed.
The Exchange rate is the final estimated rate calculated after adding rates and fees.
Business context is an overview of business cases that can influence the currency exchange process and either force some limitations or require changes to the Currency conversion essentials.
Market fluctuations make exchange rates sensitive to changes based on various factors, including interest rates, economic data, etc. These constant variations affect the amount of currency that can be converted into another currency.

The main advantages based on business cases

Flawless payment process

Currency conversion enables businesses to handle transactions in various currencies, facilitating smooth payment procedures and avoiding complexities or misunderstandings. Regarding the international e-commerce landscape, Currency conversion* enhances the shopping experience and tends to increase sales. The Customers can view the prices and make payments in any currency from the Merchant’s list. Our system makes the appropriate calculations under the hood after the Payment Request is made.

Cost optimization

Accurate Currency conversion greatly benefits expense management. It simplifies financial reconciliation for big enterprises and makes tracking and handling funds and fees in a single currency easier.

Merchant flexibility

The opportunity to set the exchange rules and choose the most suitable exchange rates impacts the Merchant’s overall experience and adds a certain level of adaptability to the payment process. To be more precise, Merchants can request payments in currencies that differ from the ones presented in a Payment scheme. Thus, the system initiates the internal conversion. It allows the Merchant to receive payments or make payouts in their chosen currency while Customers make their payments after selecting the currency from the ones proposed by the Merchant.

Real-time rate updates

The data is stored from third-party sources, enabling instant conversion with real-time accuracy. Thus, live updates serve as a foundation for reliable Currency conversion in e-commerce, marketplaces, and enterprises.