Startups are increasingly global, either for remote working, suppliers or serving customers in multiple geographies. Could or should you hold money in different currencies? Probably yes. If so, this article will help you find the provider who will deliver what you need.
A currency account is an account with a bank or similar which lets you hold different currencies to your local one. For example, if you have set up your startup in Silicon Valley in the USA, then you will have a bank account to hold your Dollars. A currency account can be opened to receive, hold and pay out in Euros, without having to exchange currencies back to dollars each time you do something (because the exchange would probably incur lots of fees, charges, and commissions). Banks are experts at disguising their fees as poor rates and pointless charges, so you could be losing out significantly if you operate globally.
Having different currency accounts for your startup doesn't need overseas offices, local banks, or other complications. They can be opened with online providers or, sometimes, your bank. You might have heard them called a multi currency account, or a foreign currency account.
You might want accounts to accept funds in different currencies. Lots of startups want to be as accommodating as possible and take customers from all over the world. This may mean local billing (charging customers in their local currency) and so you might want to have your own IBAN or local account details for the customers (or third party payment solution) to deposit into. This will save on international payment fees and poor FX rates forced on you by a bank if you only have one currency.
Often you will have suppliers who want to be paid in their local currency, which might be in another country. For example:
You could decide to hold funds in each currency, exchanging bigger chunks when there are favourable exchange rates. It's then easier to pay each bill when it's due, in the correct currency, without worrying about the exchange rate movements.
It can help if you are worried about implications like Brexit, Covid or other political/international events and the impact on your expenses if the exchange rate moves significantly.
Local banking details - where possible you will want to have both an IBAN for international payments and local banking details. So if you are seeking a USD account for your European based startup, you will want an account which also comes with its own account number and routing number (both Wire and ACH, the local details in USA), as well as an IBAN, all in the name of your startup. This will enable faster payments in and out, and less risk of being charged additional fees.
Payment ability - check what the account can do in payment times. Some accounts will still put all payments onto international payment routes such as SWIFT, which are slower and more expensive.
Costs - many banks still make understanding their fees deliberately difficult. Dont worry, there are some great options out there, but to save you the pain of picking the wrong one, here is the things to look out for. Try to compare all of the below when considering costs:
You have a lot of options.
You could try your bank, where you currently hold your cash, however, these tend to be the most expensive and worst experience. On the positive side, they can be easier to keep an eye on as everything is in one place (assuming your bank doesn't have a horrible interface).
You could try other banks or international banks like HSBC. You will probably still face the same issues of expensive and poor experience. It also adds one more log-in for you to manage.
There are specialist options like Revolut, Rebank and Wise (formerly Transferwise) which focus on this service and tend to be more cost-effective than traditional banks as well as having a simplified way of showing their charges.
Best if spending approx 10k or 50k per month, maxing out those allowances on the paid plans.
Best if occasional or very infrequent usage and otherwise simple banking needs
Best if you do business internationally. It also connects to your existing accounts so you don’t have to spend time keeping track of your spending across different banks. You can get started in minutes for free here
We have found from talking to hundreds of founders and their teams, that comparing these kind of costs falls down the to-do list pretty fast. Switching banks is usually met with a look of pain and horror. If you are switching, because it makes financial sense to do so, remember to consider the time and effort to do so, the 3 we compared have much faster onboarding than a bank, and both rebank and Wise have relatively pain free processes. The key here is not to just optimise for cost, but also for time saved in your day, and the freedom to get back to doing what you do best, running your business!
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