What is a multi-currency account?
A multi-currency account (MCA) is a type of bank account that permits a user to receive, pay, and hold money in more than one currency. The main feature of a multi-currency account is that the account details such as beneficiary and account number stay the same for all currencies.
If your company does business Internationally, you may need foreign bank accounts to support growing global operations in different countries.
When dealing with foreign currency, you might face many inconveniences such as High conversion fees and security issues.
However, a multi-currency account will protect you from these perils.
How does a multi-currency account work?
A multi-currency bank account works exactly like a standard bank account but with the alternative to transact in different currencies.
So you can hold money, transfer, deposit, make payments and withdraw funds at home or abroad in the currency of your choice.
Normally, you can easily exchange money between currencies within the account, whenever you want.
As you’d expect, most multi-currency accounts offer online banking, and some offer mobile applications, debit cards, checkbooks, and overdrafts. Some also offer different interest rates depending on the currency you hold.
As with a standard bank account, some transactions incur fees, such as for depositing or withdrawing payments in currencies over a certain value, or for deposits and/or transfers of currency notes.
Why multicurrency accounts matter
Benefits of having a multi-currency account
As a foreigner or a businessman who works with international clients, you should be able to enjoy some benefits of holding a multi-currency account.
- Save on foreign exchange costs: When your company only has a single currency account, you might have additional commission fees coming your way whenever you make transactions overseas. If a client was to make a payment in another currency, your bank will change it into your home currency to deposit funds into your account. Another great advantage of having a multi-currency account is that there are no foreign exchange commissions. Funds paid to your business shall be credited to your multi-currency account with no need to make any conversions. Hence, there shall be no more funds lost in currency conversion.
- Flexible trading with different partners: Multi-currency bank account gives users flexibility when in regard to payments. There is no need to rely on a debit card to withdraw money every time it is needed for a global deal. With a multi-currency account, you can pay and get paid like a local in a foreign country.
- Oversee your accounts with ease: Instead of opening multiple bank accounts in several jurisdictions, having a multi-currency account with a unified business banking platform saves an individual from a ton of hassle and financial disadvantages. Overseeing everything from a single account is much easier than having to manage every account separately. Monitoring all income sources and expenses becomes much easier too.
- Visibility: Overlaying a foreign bank account with a multi-currency bank to gain visibility into your global cash picture.
- Speed: Cross-border payments are usually sluggisher than domestic payments, but if you can deal in local currencies, transactions will not only be more productive, but they’ll also be quicker because you’re accessing local payment networks. And with a multi-currency account that’s operated online or via an app, you have immediate access to your account wherever you are.
- Mergers and acquisitions: When an international acquisition is payable in the currency of the acquired company, lock in the exchange rate by buying the currency in advance and holding it in a multi-currency account until closing. Its Bottomline will be most beneficial to you.
Sometimes a separate share purchase or asset purchase agreement is involved and settles months after the change-in-control date. In this case, you may open an MCA, allow payments made to the acquired company to flow into it, then use those funds to settle the purchase agreements at a later date.
Once all paperwork is completed, it takes only one to five days to open a multicurrency account.
Many business people acknowledge that having a multi-currency bank account is a valuable business asset nowadays. As people grow closer and closer and business networks develop extensively, the need for international transactions becomes higher too. And with potential changes in exchange rates, opting for a multi-currency account is normal and crucial.
Finally, easy and convenient management of money in different currencies from a single account is vital.
If you want to open a multi-currency account and the benefits of having one, please contact your Damalion expert now.
