Can you deposit foreign currency into a UK bank account?
The short and simple answer is – yes, you can, but there's a catch. In this article, we'll explore how to do it, what the process entails, and why you may not want to do it, especially if you are running a business. We'll also provide advice on all the available options. After all, in the rapidly evolving worlds of tech and finance, more choices are now available. Whether you're an individual expecting an overseas payment or a company with foreign clients, we'll help you make an informed decision.
The 3 ways to receive euros, dollars and other currencies in the UK
There are three main ways to receive funds sent in a different currency through bank transfers:
- A GBP account with the bank
- A foreign currency account with the bank
- A non-bank multicurrency account
Let's delve into each of these options in more detail.
Receiving to your existing account
To do that, simply share your bank account details in the IBAN format (e.g. GB11DYPY00989547773591 is an IBAN example at MultiPass) with the sender, which is a standard used by banks for most international transfers. In this case, the money will likely be converted to GBP by the sender bank and then sent through the SWIFT network to your bank.
- Simplicity: Receiving foreign currency deposits to your existing account is the easiest and most straightforward option available.
- High costs: This option can prove costly, both for you and the sender. It often involves substantial fees, including outgoing fees (deducted from the sender's account), currency exchange charges, and payment processing fees imposed by intermediary banks (taken from the payment amount, ultimately reducing the amount you receive). These costs can easily add up to £40 or more for a payment.
- Long delivery: Foreign currency payments sent through traditional banks usually take from 1 to 7 days which is not ideal for time-sensitive scenarios.
When to go for it
Opt for receiving to your existing account when dealing with one-time individual payments that require minimal effort and you are willing to accept higher costs.
Opening a special foreign currency account with a bank
Many high street banks offer separate accounts in major currencies, mostly EUR and USD, although other foreign currencies may be available too. With these accounts, you often receive a debit card that allows you to make purchases or withdraw cash in the account's currency, which can be useful for those who travel frequently or conduct business in multiple countries. However, this service is typically reserved for large businesses and high-net-worth individuals.
- Currency Control: Specialised foreign currency accounts allow you to have better control over foreign currencies, receive money faster and in the same currency it was sent, avoiding unnecessary exchange.
- Potentially Lower Fees: Banks may offer lower fees and better exchange rates for foreign currency transactions compared to standard accounts.
- Faster delivery: Foreign currency accounts usually support local payment channels such as ACH in the US or SEPA and Target2 for the European Union, which are much faster than SWIFT.
- Eligibility criteria: Banks usually don't offer these accounts to everyone, often favouring larger business clients. For example, at Lloyds Bank, your company needs to have a minimum business turnover between £3-25 million to be eligible.
- Limited Currency Options: The range of supported currencies might be limited, often compared to multicurrency accounts offered by e-money institutions.
- Maintenance Fees: The banks will charge your account maintenance fees, which are typically applicable for each separate account. It is not rare to pay £60/month or more for each business account.
- Limited support: Getting assistance from traditional banks can be challenging, making something as simple as a phone call nearly impossible. You might easily find yourself spending a month resolving a payment issue.
When to go for foreign currency accounts
Consider opening a special foreign currency account with a bank when dealing with one foreign currency, e.g. regular or recurring foreign currency transactions to take advantage of potentially lower fees and better control over currencies.
Opening a multi-currency account
Multi-currency accounts are growing in popularity, and are primarily offered by non-bank payment providers – fintech companies and e-money institutions (EMI). By collaborating with various banks and payment service providers worldwide, these entities integrate functionality to gain access to local accounts and payment options in foreign markets. This integration enables users to make local payments, avoid traditional currency conversion processes, and receive and hold funds in multiple currencies. The online nature of these services, coupled with simpler regulatory requirements, allows these providers to offer these services at lower fees.
- Diverse Currency Support: E-money institutions often offer a wide range of supported currencies, allowing you to hold multiple currencies in a single account. For example, MultiPass supports payments in 30+ currencies.
- Competitive Exchange Rate: These institutions may provide more competitive exchange rates, saving you money on currency conversion.
- Lower Fees: E-money institutions tend to have lower transaction fees compared to traditional banks.
- Account Setup: Opening an account with a new financial institution involves a standard "Know Your Customer" (KYC) check. For companies with foreign business partners or clients, this process, although straightforward, can extend from a few days to weeks. This is due to the higher risks and complexities associated with cross-border activities, varying business types, and the specific information and documents needed.
- Regulatory Considerations: Ensure that the institution is regulated and compliant with the necessary financial regulations to protect your funds. In the UK, EMIs and payment institutions have to be registered with the Financial Conduct Authority.
- Limited Banking Services: E-money institutions may not offer the full range of banking services provided by traditional banks such as loans or cash services.
When to go for multi-currency accounts
Opt for a multicurrency account in an e-money institution when dealing with frequent foreign currency transactions and diverse currencies. This is a good option for both individuals (expats, frequent travellers, freelancers) and businesses that require handling incoming payments from international clients or need to make outgoing payments in multiple currencies to suppliers, vendors, or contractors worldwide.
How MultiPass can help your business with foreign currency deposits?
Local account balances
MultiPass is a bank challenger specialising in cross-border payments. MultiPass business accounts come with a set of dedicated local account details:
- a UK account & sort code,
- an IBAN for EU and global transactions,
- a US account & routing number.
These account details are identical to those of local companies, allowing your international customers to pay you in euros and US dollars as if they were paying a company in their own country. The money arrives instantly to within one business day.
Low-cost foreign currency payments
You can then choose to keep multi-currency balances or convert money into GBP at exchange rates that are at least 30% better than those offered by traditional banks. Moreover, use your MultiPass account to pay in 30+ currencies globally, and 18 of them (GBP, EUR, USD, AUD, CAD, CZK, DKK, HKD, HUF, IDR, INR, MYR, NOK, PHP, PLN, RON, SEK, SGD) – via local payment channels, from £0.50 per payment.
MultiPass provides a level of customer support that sets us apart from traditional high-street banks – with personal managers, always at reach via phone, email or messengers to assist with payment-related inquiries or any other questions you might have.
Will I incur currency conversion fees when depositing foreign currency?
Most banks will charge currency conversion fees when you deposit foreign currency, both for cash deposits and wire transfers. The fee can come in the form of a markup on the exchange rate or a separate charge. Check with your bank for their specific policies and fees regarding foreign currency deposits and international wire transfers.
Can I pay foreign currency into my NatWest bank account?
Yes, you can send an international payment to your NatWest bank account, the money will be converted to pounds sterling by the sender bank. For regular foreign currency deposits, NatWest offers two foreign currency accounts: the International Select Account and the Cash Management Account as well as foreign bank accounts for businesses, however, eligibility criteria apply.
Can I pay foreign currency into my Barclays bank account?
Yes, Barclays allows payments in foreign currency into its accounts, however, be wary of charges associated with international payments and currency conversion. For frequent foreign currency deposits, they offer foreign currency accounts that can be opened in euros, US dollars, and other major currencies, however, eligibility criteria apply.
Can I pay foreign currency into my Lloyds bank account?
Yes, you can receive foreign currency into your Lloyds bank account by providing the sender with your IBAN and BIC codes. However, be aware of the potential conversion costs and incoming payment charges, reducing the amount you receive.
A single business account to get paid and pay globally quicker and cheaper