What is a multi-currency account?Definition of a Multi-Currency Account

Definition of a Multi-Currency Account

A multi-currency account (also known as a bank account with multiple currencies) is a type of financial account that allows you to manage funds in several currencies within a single account without the need to open separate accounts for each currency.

Multi-currency accounts are commonly offered by electronic money institutions (EMIs). They significantly simplify business operations, as customers from all over the world can pay into a single unified account, regardless of the settlement currency. As a result, multi-currency accounts are really useful for operating international business.

How It Differs From a Traditional Bank Account

The main difference compared to traditional bank accounts is the ability to manage several currencies within a single account – in traditional banks, due to legal and technical restrictions, accounts are often opened in a single currency or require multiple separate currency accounts. In addition, multi-currency accounts allow international payments to be made faster and more efficiently, often with lower fees. This makes a business multi-currency account more flexible than traditional single currency bank accounts.

Who Commonly Uses Multi-Currency Banking

Given the ability to manage multiple currencies within a single account, multicurrency banking is generally most attractive to individuals and legal entities engaged in international activities or regularly dealing with multiple currencies. This type of account is often used in international trade or the services sector, especially when services are exported to different countries – this most commonly applies to start-ups and freelancers.

How a Multi-Currency Account Works

The principle of operation is based on the existence of a single account in which the user can store and manage funds in multiple currencies. Each currency has a separate balance, but all these balances are linked to the same account. In many cases, there are common details for all balances of a multi-currency account, which means that funds are credited to the account and then distributed independently across currency balances.

Receiving, Sending and Converting Funds

For transactions involving the sending or receiving of funds, the user must select the payment currency and the relevant balance they intend to use. If necessary, currency conversion is carried out within the account and does not require any third-party involvement or additional actions, which is one of the most important features of multi-currency accounts for business.

Linked Cards and Banking Tools

A payment card can be linked to a multi-currency account, just like a traditional bank account, allowing you to use all the benefits of card payments both online and offline. Funds are automatically debited from your balance in the transaction currency, which helps to avoid additional fees and unfavourable exchange rates.

Also, multi-currency accounts often provide access to other financial management tools, including mobile applications, transaction history, spending limits, and more, which is really important for corporate multi currency account holders.

Integration With Payment Gateways (for merchants)

An important feature is the ability to integrate multi-currency merchant accounts with payment gateways, which allows you to accept online payments from various platforms, websites, and applications, including card payments and bank transfers.

Benefits of Multi-Currency Accounts

The main advantage of any multi-currency account is the ability to efficiently work with international payments within a single account – this reduces the need to register and maintain separate accounts. Multi-currency accounts also reduce the frequency of currency conversions, as in most cases users hold multiple currencies and can pay directly in the required currency without any additional conversion fees.

Multi-Currency Accounts for Business

A multi-currency account for business is a practical solution for companies that operate internationally or work with clients and partners from different countries worldwide, as such accounts allow businesses to optimise cash flows by receiving funds without prior conversion into a single base currency, while multi-currency banking enables faster payments and often offers more favourable terms compared to traditional banks.

Furthermore, multi-currency accounts reduce the administrative burden, since companies do not need to maintain multiple separate currency accounts.

How to Open a Multi-Currency Account

Opening an account begins with choosing a provider, which usually depends on the business activity, required currencies, and intended account usage. The potential customer then needs to complete the registration and KYC procedures (for individuals) or KYB procedures (for businesses). To complete KYC or KYB, the client must provide the necessary documents and, in some cases, undergo facial or identity verification, which is standard practice for multi-currency accounts.

Fees and Limitations

Multicurrency accounts may involve certain fees and operational restrictions, which usually depend on the chosen provider, jurisdiction, and client profile. The main fees include:

• Currency withdrawals;

• Currency exchange;

• Transfers between different accounts.

  
  

Common restrictions on multi-currency accounts include:

• A limited number of supported currencies;

• Limits on monthly account turnover (or on individual transactions);

• Maximum balance limitations.

  
  

FAQ About Multi-Currency Accounts

Is a multi-currency account worth it for small businesses?

Yes, if a company often deals with international payments. If a small business regularly works with foreign clients and currencies, then a multi-currency account for business is well worth considering.

Can I hold unlimited currencies?

In most cases, no. Multi-currency accounts typically support a limited list of currencies (usually EUR, USD, GBP, and others). The list of supported currencies is determined by the provider.

Are there risks related to currency fluctuations?

Yes, even though multiple currency accounts allow you to pay for goods and services without conversion, exchange rate fluctuations may still occur.

Can a multi-currency account replace a traditional bank account?

A multi-currency account can complement, but not fully replace, a traditional bank account, because EMIs and PSPs do not provide certain regulated banking services such as lending, deposit protection schemes, or bank guarantees.