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The Benefits of Setting Up a Multi-Currency Bank Account in 2023

The Benefits of Setting Up a Multi-Currency Bank Account in 2023

16 Dec 2023

There is a brand-new method of communication and collaboration emerging every year. Thanks to technology, you can communicate with loved ones on the other side of the world, buy products or services from businesses overseas, and make payments around the globe.

The issue? Most nations have distinct currencies, so sending money abroad and exchanging money out of dollars can quickly become problematic.

In this scenario, you need something acceptable in different parts of the world. The solution is a multi-currency account. Quite obviously by the name of it, you can send money or receive it more quickly with a multi-currency account. A worldwide currency account gives you more freedom and eliminates borders, whether you use it for personal or professional use.

What is a Multi-Currency Account?

The word "multi-currency account" means holding multiple currencies simultaneously. It's a bank account that enables the sending, receiving, and storing of many currencies. A multi-currency account allows you to utilize a single account number for each type of currency rather than opening multiple bank accounts with various account numbers to keep track of.

Many organizations that provide financial services can assist you in opening a multi-currency account. These companies frequently handle the Australian Dollar, Chinese Yuan, Hong Kong Dollar, United States Dollar, British Pound, Singapore Dollar, Japanese Yen, and other currencies.

British citizens can open multi-currency accounts with businesses like Wise Multi-Currency Account and Starling Bank. There are even more international organizations to choose from, including Citibank and HSBC. To discover the ideal form of account for your financial needs, consider all your possibilities before opening your foreign currency account.


How Does a Multi-Currency Account Work?

A multi-currency account functions quite similarly to a regular bank account. You can anticipate being able to perform everyday account actions, such as:

  • Withdrawing money 
  • Sending and receiving payments 
  • Having access to your money for checks or electronic transfers 
  • Earning interest on your account balance, though the services will vary depending on where you open your account (depending on the institution)

The same fees that apply to standard bank accounts may also apply to your global currency account. There could be costs on withdrawals, available prices, transfer fees, and other charges.

You can ask the agent before creating your account to learn more about the type, cost, and frequency of these fees.

You should only anticipate additional services for your multi-currency account beyond that. Because of your existing bank accounts, most of them will be intuitive and familiar.


Benefits of setting up a Multi-Currency Bank Account

Here are some benefits of setting up a multi-currency bank account: 

1: Reduce currency exchange fees

A multi-currency account may be the best option to minimize foreign exchange fees. A conversion fee will be assessed for any payments made or received in other currencies in a single currency account. This cost can be high when dealing with banks. These fees can pile up and represent a sizable expenditure for companies operating in many currencies while money transfers.

Money can be stored in the "non-home" currency with a multi-currency account; there is no requirement to convert, though the firm may choose to do so at any time.

While there is frequently a minor fee for currency conversions within the multi-currency account, conversion prices are significantly decreased due to the reduction in the frequency of currency conversions.

2: Streamlined reconciliation and accounting

Managing the difference between invoices in one currency and payments in another is one of the challenges of running a business in different currencies.

Due to the ability to receive payments in the foreign currency used for the invoice, there are fewer overall transactions to track when using a multi-currency account. For financial reporting purposes, amounts in foreign currencies may occasionally need to be changed into the "home currency," but this is not always essential (rather than continually).

3: Manage currency fluctuations to your benefit

Some major currencies have experienced significant, unexpected declines during the past few years. A firm can decide to convert currencies when the exchange rate is in its favor and postpone doing so when the exchange rate is unfavorable since multi-currency accounts make it simple to execute currency conversions at any time.

However, with a single currency account, the business is compelled to absorb the results of any unfavorable movement.

4: To lock in prices, combine with FX forward contracts.

Forecasting the final payment amount when a company contracts with clients in a currency other than its own might be challenging. When a payment is made using a single currency account, the business is subject to the foreign exchange rate that the bank or fintech uses.

However, a business can accept and keep payments in a client's preferred currency and then lock in a future exchange rate to convert to the home currency at a predetermined later period by combining a multi-currency account and an FX forward contract.

5: Simplicity of one account and interface

Maintaining many separate accounts in various currencies can be required if you don't have a multi-currency account (foreign currency account). Transferring funds between multiple accounts makes it more difficult for entrepreneurs to have a "quick snapshot" of their financial situation and adds needless complexity for smaller enterprises.

Modern multi-currency accounts have user-friendly interfaces that clearly show how much money the company possesses in each denomination.

International business expansion necessitates a dependable system for sending and receiving payments in multiple currencies. Businesses can reduce foreign exchange costs and transfer money overseas more quickly and efficiently by using multi-currency accounts.

6: Speed

The quickness of turnaround is crucial for cash flow. Cross-border payments are typically slower than domestic payments. Still, if you can work with local currencies, transactions will be more effective and completed quickly because you will use local payment networks. Additionally, a multi-currency account managed online or through an app immediately gives you access to your account, no matter where you are.

7: Reduce transaction costs 

Each bank may charge a fee for maintaining the account if you have separate accounts in various nations. Furthermore, additional costs might not be revealed because the transaction chain is more intricate and usually opaque. As payment is handled through correspondent banks—the global banking network—you can be charged additional costs. You may hold all the currencies that correspond to your customer and supplier bases with a single multi-currency account, and you only have to pay one account fee.

What are alternatives to a Multi-Currency Account?

Using money transfer services like ACE Money Transfer, you can send money to over 106 countries and territories without a multi-currency account. You can send money using your current bank account in person or online. You usually won't need to open a new bank account to enjoy the same ease.

Bottom Line

Regular foreign transactions can be made much simpler with multi-currency accounts, whether for business or pleasure. You can send money and receive it swiftly and affordably if you can deal with multiple currencies in one account. Furthermore, ACE Money Transfer is a better option if you only make overseas payments from the UK, Europe, Canada, Switzerland, and Australia.


What is a multi-currency bank account, and how does it work?

A multi-currency bank account is an account that allows you to hold and transact in multiple currencies. It works by providing you with separate currency wallets within a single account, making it convenient for international transactions.

What are the benefits of having a multi-currency bank account in 2023?

Some benefits include reduced foreign exchange fees, the ability to hold and manage multiple currencies in one account, easy access to global markets, and the flexibility to send and receive payments in various currencies.

How can a multi-currency bank account help individuals and businesses in 2023?

Individuals can benefit by saving on currency conversion fees when traveling or making international purchases. Businesses can streamline their international operations, manage foreign exchange risk, and expand their global reach more efficiently.

Are there any downsides or considerations when setting up a multi-currency bank account?

While multi-currency accounts offer many advantages, some banks may charge maintenance fees or require minimum balances. It's essential to compare different options and understand the terms and fees associated with each account.

Can anyone set up a multi-currency bank account in 2023, or are there specific requirements?

Many banks offer multi-currency accounts to individuals and businesses. The specific requirements can vary between institutions, so it's advisable to check with your chosen bank to understand their eligibility criteria.

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