What is a Multi-currency Account?

The world has become a much smaller and interconnected place. And one of the biggest advantages of globalization is that it has never been easier to do business internationally or purchase goods and services from overseas companies.

The only problem? Each country has its own currency.

Say you are a company that buys products from a Chinese supplier asking for payment in RMB. Then this company sells the products to a European client who pays in Euros.

The issue is that this company finds itself dealing with more than one currency.

As international trade of goods and services is a business routine for most companies, they need to optimize the way they receive and make payments in multiple currencies.

This is where a multicurrency account is an effective solution for these kinds of situations. 

If you need to make payments internationally for business purposes, you can use a multi-currency account that lets you send money or pay from one currency to another without losing money on exchange rates or fees associated with the transactions.

In this article, we'll tell you about multi-currency accounts, explaining what they are, how they work, and their benefits. Of course, multi-currency accounts can be useful for personal reasons as well. However, here we'll focus on their business uses. We'll also cover Statrys as a solution for multi-currency accounts for Hong Kong businesses.

What is a multi-currency account?

A multi-currency account is a type of bank account that allows you to receive money, make international payments, and hold several currencies.

The key feature is that the account details (beneficiary name, account number, SWIFT code) remain the same for all currencies. 

Think of it as having one single account with subaccounts in different currencies, so you don’t need to open multiple bank accounts in different countries.

Note: A multi-currency account is often called a foreign currency account. You can learn more about it in this article.

Foreign currency accounts are offered by most traditional banks and financial tech firms in Hong Kong and they usually include, at a minimum, the following currencies:

• Hong Kong Dollar (HKD)
• US Dollar (USD)
• Euro (EUR)
• British Sterling Pound (GBP)
• Singapore Dollar (SGD
• Japanese Yen (JPY)
• Australian Dollar (AUD)
• Chinese Yuan (CNH)

Things to consider when opening a multi-currency account

When opening a multi-currency account you should check if the bank allows for all currencies to not only make but also receive payments domestically and internationally.

You might also want to verify if the bank offers virtual or physical credit or debit cards in one or more of the currencies included with your multi-currency account.

This would allow you to further simplify the way you pay internationally by getting rid of not only conversion but also network (Mastercard, VISA, UnionPay) fees.

Now that we've covered the basics of multicurrency accounts, let’s talk about how businesses can benefit from it. 

Businesses often send and receive a high volume of payments. If you're looking to optimize your international payments, then a foreign currency account is definitely worth considering.

Which business can benefit from a multi-currency account?

Multi-currency accounts help save time, costs, and efforts when a business makes and receives payments in several foreign currencies.

Meaning that any cross-border business dealing with more than one currency will benefit from having a multi-currency account.

For example, Statrys’s multi-currency account allows companies to easily manage 11 currencies including US dollars, pounds, euros, and Hong Kong dollars through an online platform.

A multi-currency account is useful when:

• The business trades internationally; be it exporting, importing or both
• They operate an e-commerce store that sells goods or services in multiple currencies
• They employ staff abroad or work with freelancers overseas, which implies sending money abroad
• They’re an independent contractor or freelancer who receives payments and works with clients from all over the world regularly

What are the benefits of a multi-currency account for businesses?

Some benefits are obvious and easy to grasp. Others require an understanding of how foreign exchange (FX) markets work.

Set out below, based on the increasing level of FX complexity, are the 5 major benefits of dealing with a multi-currency account:

Benefit #1: Communicate a single bank account number to your clients

Gone is the time when you had to communicate different account details for each foreign currency.

You can spare the hassle to your customers: use the same account details for all the currencies held in your account.

Benefit #2: Save time on reconciliation & Accounting

With a multi-currency account, your end-of-month accounting becomes a whole lot easier.

You (or your accountant) will spend less time reconciling as you have the ability to issue invoices in one currency and get paid in the same one:

✔️ No more headaches trying to match invoiced and paid amounts in different tenders

✔️ Less accounting adjustments are required for the exchange rate difference

Benefit #3: Save money on foreign exchange commission

Let’s assume your company only has a single currency account, i.e. the account accommodates your home currency and no other.

Now a client makes a payment in another currency (let’s say USD), your bank will convert this currency into your home currency (let’s say HKD) to deposit the funds into your account.

And of course, your bank will charge a substantial FX commission to convert these funds.

For a business that receives a lot of payments in foreign currencies, these commissions can add up pretty quickly.

One of the biggest advantages of a multi-currency account is to avoid the payment of currency exchange commissions.

Funds paid to your business in one currency are credited to your account without the need for any conversion (assuming of course that this currency is one of those accommodated by your multi-currency account).

Benefit #4: Trade currencies at the right time

With a multi-currency account, you can easily move money between different currencies.

Even if your objective is not to become an FX trader, it gives you the opportunity to buy/sell currencies when the exchange rate offered is favorable.

The good news is that banks usually do not apply any charges on these intra-account transfers.

Should you choose to open a savings account, be it either a call or time deposit account, in a foreign currency, you would also be able to earn interest on the amount credited, accordingly to the interest rate offered by your bank.

An important notice, in this case, is to remember that with higher interest rates come higher risks. You should access this service only if you feel comfortable with the risks associated.

Benefit #5: Get familiar with FX forward contracts to keep your business partners happy

Are you familiar with international business partners (suppliers, consultants, etc.) insisting to pay you in their local currency?

Obviously, that won’t be your preferred choice: you would rather have them pay you in your local currency and not theirs.

No surprise here as neither you nor your business partners want to have their business exposed to foreign exchange risk.

Having one account able to hold multiple currencies may be the first step toward a solution.

Let your business partner pay you in their local currency, assuming these are supported by your multi-currency account.

At this point, you haven’t ruled out the foreign exchange risk as you are holding funds in your clients’ currency on your account.

However, your risk is not immediate.

It will only materialize if you convert your business partners’ currency into another currency at a time at which the foreign exchange rate is not favorable.

To prevent this potential foreign exchange risk, you should consider the use of FX forward contracts.

For a small cost, these contracts give you the possibility to lock the foreign exchange rate, as well as the markup applied by the financial institution, at which you will convert your business partners' currency in the future.

In summary, coupling the advantages of a multi-currency account to FX forward contracts may help you keep you and your clients happy.

How to open a multi-currency account for your Hong Kong business?

As one of the world's leading financial hubs, Hong Kong offers plenty of options for opening a multi-currency account.

If you’re looking for opening a multi-currency account, or generally a new bank account, for your business in Hong Kong with a bank, then be ready to run a marathon between your office and the bank's branch.

Otherwise, if you’re more of a sprinter, look at alternatives such as Statrys.

The Statrys multi-currency account lets you hold 11 currencies at once, switching and converting between them whenever you need to. You can even get a Mastercard® payment card for your team members,

Plus signing up for an account with Statrys is quick and easy, and you may even find that it is cheaper than using a traditional bank.