What is double currency conversion and how to avoid it? A guide for businesses

In this article we explain in 3 easy steps how businesses can avoid double currency conversion, reduce unnecessary business expenses and improve their cash flow as a direct result.

What is double currency conversion?

Double currency conversion, also referred to as “conversion trap”, occurs when a transaction is processed in one currency, converted into another, and then converted back, resulting in unnecessary fees and losses for both buyer and seller.

This can happen when a customer’s payment method is denominated in a different currency than the seller’s pricing currency on the ecommerce platform. Each conversion typically incurs fees, leading to additional costs for both parties.

To avoid this, businesses can implement strategies such as offering multi-currency pricing, using local currency accounts, or utilising payment processors that support direct currency settlements, thereby minimising unnecessary conversions and associated fees.

Examples of double currency conversion

In this section, we list a few examples of how ecommerce businesses and customers fall into the conversion trap.

International customers: Assume you are located in the European Union (EU) and find a beautiful pair of shoes in a British ecommerce store. Your credit card is set in Euros (EUR). As you make the purchase, your EUR are automatically converted to British Pounds (GBP).

As a result, your bank charges foreign currency exchange rates. If the payment processor of the merchant only operates in USD, a double currency conversion occurs, as the GBP is converted back to USD.

Buying from international suppliers: Suppose an ecommerce merchant based in the United States sells products online and accepts payments in US dollars (USD). The merchant sources their products from a supplier located in Japan, who prices their goods in Japanese yen (JPY).

When an international customer from the EU purchases an item from the merchant’s website, they pay in EUR. The payment processor used by the merchant converts the EUR payment into USD for deposit into the merchant’s US bank account. This constitutes the first currency conversion.

Now, when the merchant places an order with the Japanese supplier to restock inventory, they must pay for the goods in JPY. To do so, the merchant’s US bank converts their USD into JPY to complete the transaction with the supplier. This constitutes the second currency conversion.

Other occasions: In addition to transactions involving buyers and suppliers, double currency conversion can also occur in other situations, such as accounting practices. For instance, if a company operates in one currency but needs to report financial results in another currency for regulatory or operational reasons, it may involve converting funds twice, once for the original transaction and again for reporting purposes.

Furthermore, double currency conversion can also arise when dealing with exotic currencies where no intermediary currency is available.

Why should you avoid currency conversions?

Avoiding currency conversions in ecommerce is crucial for several reasons:

Find out more about currency conversion in our article: What is a spot trade.

How to avoid the conversion trap in 3 easy steps

With the following 3 steps, ecommerce businesses can easily avoid the double currency trap.

1. Offer multi-currency pricing

Provide customers with the option to view product prices and complete transactions in their preferred currency. By implementing a multi-currency pricing system, customers can see prices in familiar currencies, reducing confusion and uncertainty during the checkout process.

Additionally, businesses can consider integrating currency conversion tools directly into their ecommerce platforms. These tools can provide customers with up-to-date exchange rates and transparently display converted prices alongside the base currency, promoting clarity and trust throughout the shopping experience.

2. Choose a payment processor with multi-currency support

Selecting a payment processor² that offers robust multi-currency support is essential for ecommerce businesses operating in global markets. Therefore, look for payment processors that allow customers to make transactions in their preferred currency, thereby reducing the need for currency conversions and associated fees.

Additionally, opt for processors that provide transparent exchange rates and seamless integration with your ecommerce platform. By choosing a payment processor with multi-currency support, you can streamline the checkout process, enhance customer satisfaction, and minimise costs associated with currency conversions.

amnis, for example, lets you connect your IBAN directly to Stripe so payouts arrive in the original currency, with an official PayPal integration rolling out to do the same – removing the forced conversion that triggers the trap.

Find out more about how to choose the right payment processor in our Stripe currency conversion and PayPal currency conversion fee articles.

3. Use multi-currency accounts

Ensure you can maintain multiple currencies when transferring funds from the payment processor to your business account. Many banks don’t allow this and may impose additional charges for foreign currency accounts.

Therefore, look out for banking solutions or financial institutions that offer multi-currency accounts, enabling you to hold and manage funds in various currencies without incurring excessive fees. By utilising multi-currency accounts, you can optimise currency management, minimise conversion costs, reduce exchange rate risk and facilitate international transactions.

See our guide to the 5 best business accounts for ecommerce for a side-by-side comparison.

Avoid the conversion trap with amnis

When it comes to choosing multi-currency accounts, amnis is a strong option to avoid double currency conversion. It allows businesses to receive, hold and send 20+ currencies from 80+ countries, while keeping FX costs far below the market – with transparent flat margins of just 0.2% to 0.4%, independent of your FX volume.

Crucially for online sellers, amnis connects directly to your payment processors. Link your amnis IBAN to Stripe – and soon PayPal – to receive payouts straight into your eCommerce multi-currency account in the original currency. This removes the forced conversion that creates the trap in the first place and can cut processor FX fees by 50% or more.

Further, amnis offers an entire ecosystem, including virtual and physical multi-currency debit cards as well as international transaction costs at local rates – saving up to 90% versus traditional bank transfers, with 0% FX on card payments. Create your free demo account with amnis and never worry about double currency conversion again.

Sources

Elena Tankovski · Content Marketing Manager

As Senior Content Writer at amnis, Elena transforms complex financial and banking topics into clear, insightful content for SMEs. She focuses on areas such as the FX market, international payments, cross-border business operations, and regulatory updates - ensuring companies have access to reliable and easy-to-understand guidance.

With a strong background in research and communication, Elena plays a key role in helping businesses stay informed, make smarter decisions, and navigate the evolving world of international finance.