What is a multi-currency wallet?

In today's global economy, managing finances in multiple currencies has become a necessity for many. Whether you're a frequent traveller, an international business owner, or an avid online shopper, the ability to easily access and transact in various foreign currencies can significantly streamline your financial operations. Enter the multi-currency wallet – a revolutionary tool designed to meet these modern financial needs. But what exactly is a multi-currency wallet? Let's dive in.

What is a multi-currency wallet?

A multi-currency wallet is a digital wallet that allows users to store, manage, and transact in multiple currencies from a single platform. Unlike traditional wallets or bank accounts that typically support a single currency, multi-currency wallets offer the flexibility to handle various currencies without the need for keeping multiple bank accounts or using separate conversion services.

How does a multi-currency wallet work?

At their core, multi-currency wallets can either operate through a single account, e.g. multi-currency IBAN that holds virtual balances in different currencies, or they can aggregate several separate accounts, from different banks, each in a different currency, accessible via a single unified platform.

These services are typically offered by fintech firms registered as e-money institutions or similar non-bank entities. They partner with traditional banks and financial institutions, integrating their payment capabilities via APIs into a single platform. This collaboration enables them to offer a wide range of financial services, including foreign exchange, diverse payment methods, instant settlement and more while ensuring customer funds are securely held in traditional banking institutions.

There are platforms like MultiPass that aim to replace the need for a traditional bank account (or rather, multiple bank accounts) by providing an IBAN and a set of local account details in UK, US and EU to deal with clients, employees, or suppliers worldwide via international transfers or local bank transfers.

Others, like PayPal, focus on instantaneous money transfers between users on the same platform. When sending money in a foreign currency that is different from your wallet balance, the platform automatically converts the funds at their internal exchange rates, and simply updates the account balances of the sender and the receiver within its system, without the need to move money externally. However, it's worth noting that withdrawing these funds or sending them to external bank accounts can incur significant fees.

Key benefits of multi-currency wallets

Support for multiple currencies: Multi-currency wallets support a broad spectrum of fiat currencies, and, in some cases, also cryptocurrencies. This feature allows users to maintain balances in their chosen currencies, avoiding unnecessary conversions and facilitating currency hedging.

Better exchange rates: The wallets typically include built-in exchange features that offer currency conversion rates more favourable than traditional banks, leading to savings.

Reduced transaction costs: These wallets often support a variety of payment methods, including local payouts, which are usually less expensive than SWIFT transfers, reducing overall transaction costs.

Ease of working with international customers: Services like MultiPass provide local account details in foreign markets, enabling businesses to include these details on invoices. This makes it easier for customers to pay as if they were paying a local company, simplifying international transactions.

Enhanced security measures: Multi-currency wallets employ top-tier encryption, two-factor authentication, and backup options to ensure the security of user funds.

User-friendly interface: Designed with the user in mind, these wallets offer intuitive navigation, making it easy to manage multiple currency holdings.

Simplified reconciliation: Using a single platform for multi-currency transactions eliminates the complexity of managing multiple bank accounts across different countries. This consolidation simplifies the reconciliation process, enabling businesses to match their bookkeeping records with bank statements more efficiently.

How to assess the need for a multi-currency wallet for your business?

Here are some key indicators that suggest a multi-currency wallet might be a valuable asset for your business:

• If you frequently make or receive foreign transactions.
• If you have suppliers overseas.
• If you employ a workforce scattered globally.
• If you plan to expand into new international markets.
• If you're impacted by currency conversion fees and exchange rate fluctuations.
• If managing multiple bank accounts in different currencies is cumbersome and costly.
• If you face delays in processing international payments.
• If you seek to improve relationships with international customers and suppliers by offering flexible payment options.
• If you want to hold funds in multiple currencies to hedge against exchange rate volatility.

How to choose the best multi-currency wallet for your business

Step 1. Evaluate currency support

Ensure the wallet supports all the currencies your business regularly transacts in, including any you plan to use in the future. Make sure to also check that the regions where your customers and payment recipients reside are supported.

Step 2. Check available payment methods

Verify if the service supports domestic payments in addition to standard SWIFT payments. For areas you frequently trade with, using local payment methods (e.g., ACH or Fedwire in the US) can make payments faster and cheaper.

Do they also offer account details in the local format? This would enable you to invoice your overseas customers in the manner they are used to, fostering better relationships.

Step 3. Compare fees and exchange rates

Check for transparent and competitive maintenance, conversion and transaction fees. Ensure exchange rates offered are better than what your bank charges you.

Step 4. Check regulatory compliance

Choose a multi-currency digital wallet provider that is fully licensed and compliant with the regulatory requirements in the jurisdictions where your business operates.

Step 5. Consider user experience

Select a wallet with an intuitive interface that makes it easy for you and your team to manage transactions. For example, some UX features highly valued by our customers at MultiPass include multi-user access with different role permissions and the ability to make batch payments.

Step 6. Research customer support

Opt for providers with a reputation for responsive and helpful customer support, available through multiple channels. Some digital wallets are known for being difficult to reach by means other than email when seeking to speak with a real human and not a chatbot.

Step 7. Review integration capabilities

If that is something your business requires, check for available business integrations such as accounting software and payment gateways.

Grow your business globally with MultiPass

MultiPass is an FCA-registered EMI that offers multi-currency business accounts, local account details in the US, EU and UK, global and domestic payments in 70+ currencies, bank-beating FX rates and corporate cards for daily operations. At MultiPass our goal is to help businesses, whether large or small, simplify their cross-border payments.

We understand that no two businesses are the same. That's why we're here, ready to listen to your story and tailor solutions that make reaching out to your foreign suppliers, employees, and partners a breeze, wherever they are in the world. With us, you'll get more than just an account; you'll get a personal manager dedicated to supporting your cross-border growth.

So, why wait? Let's take your business global with MultiPass.

FAQs

Are multi-currency wallets safe?

While no digital platform is entirely risk-free, reputable multi-currency wallets employ stringent security measures to protect your funds. Always check regulated with FCA or alternatives in other countries before picking a provider.

What charges are linked to a multi-currency wallet?

Charges linked to a multi-currency digital wallet can vary depending on the provider, but typically, the main charges are for account opening, monthly maintenance, foreign exchange (sometimes included in an FX rate), incoming and outgoing payment fees.

What is the best multi-currency wallet?

While the "best" wallet often depends on your specific requirements, such as the currencies and region you operate in, fee structures, and additional services like investment options or debit cards, some of the most renowned brands include Revolut, Wise, and PayPal. However, there are numerous other niche services for individuals and businesses, each with its unique strengths.