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How to monetize cross-border payments with FX

Increase your platform’s revenue with FX and cross-border payment strategies. Learn to tackle currency exchange fluctuations, improve global payment experiences, and seize the trillion-worthy cross-border market opportunity.

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In 2022, the value of cross-border payment transactions saw an impressive rise, reaching approximately USD 150 trillion, which illustrates the potential for growth in the international payments environment. 

While global expansion holds promise, there are two key aspects that marketplaces and platforms need to consider when handling cross-border payments. First, the sellers on your platform must keep earnings safe against FX fluctuations - equally important is to prevent financial losses that might occur due to funds sitting in a foreign currency longer than they need to sit. Second, the buyers’ and sellers' payment experience should not be disrupted - it must remain consistent and mirror the convenience of local transactions. 

 With  FX, platforms can address these aspects, and what’s more, they can:

  • Reduce FX risk by selling in local currencies and converting to minimize fluctuation losses
  • Monetize on FX flows with markups

Cross-border payments-related pain points for users

Cross-border payments are typically processed through correspondent banks, which apply additional fees, such as currency conversion charge rates. An intermediary party involved in the payment process can often lead to slow and costly settlements, with limited oversight and control for both the seller and the platforms engaged.

Buyers might also be caught off guard by currency conversion charges. As the most recent Baymard data indicates, extra costs, such as shipping, tax, and fees, cause 48% of users to abandon their online shopping carts during checkout. To uphold transparency, it’s important to display prices in the currency familiar to the customers to keep them from dropping out of the purchase process. At the same time, platforms need to ensure that sellers receive the exact amount in currencies of their choice. 

Driving revenue while adding value to your users 

FX can help you save on cross-border payments and conversion fees by having more control over when you convert, how, and at what rates. 

Convert funds and leverage our settlement network to send funds locally

Traditional payout methods require manual effort and often have lengthy settlement periods and hidden conversion fees. Perform currency conversions within the Mangopay environment or build FX into your flows to settle to sellers through local rails. This way, you’re able to send your funds faster, in the right currencies, in the exact amount expected by the seller. 

Moreover, sellers receiving the exact expected amount in their preferred currency eliminate the risk of losing money due to fluctuating exchange rates. This keeps their profits safe, helping their earnings grow. 

Scale through local pricing strategies while protecting your bottom line

Local pricing based on customers' location and currency selection allows businesses to avoid hidden currency conversions in the background. This ensures buyers transact in their preferred currency, and sellers get paid in the currencies of their choice. Allowing buyers to purchase in their local currency offers a seamless experience that encourages more conversions, directly impacting your bottom line. 

For platforms operating in different currencies, transactions often need to be changed into the platform’s main currency before any platform fees are worked out. This can lead to a process called double conversion, which might reduce profits and complicate financial management. Operating in local currencies, Mangopay allows users to choose when and how they want to convert funds. This flexibility reduces double conversions and gives users more control, helping them possibly save money on conversion fees.

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Seamlessly configure logic to automate monetization   

You can increase your revenue through markups on each transaction while driving value for your users.  Here’s how it works:

Prepare fee information: Gather information about the fees you want to charge. Think of this like deciding how much you want to charge someone for a service.

Decide on currency and amount: Determine which currency you want to charge the fees in and how much you want to charge. It's like choosing whether to use dollars, euros, or any other currency and then defining the exact charge, e.g., USD 1 or EUR 3.

Verify and proceed: Wait for confirmation that your fee has been registered. Once this is confirmed, proceed with the transaction, knowing your fee is accounted for. 

Get extra revenue: The addition to the conversion price means extra money to cover your costs and brings in profit, all while providing top-notch FX services.

More flexibility and control with fee parameters 

We have added an optional fees parameter, allowing platforms to charge users for FX services and customize their fees structure. You can now add your own fee, just like you do with other payment services charges, and collect the fees in the same currency you're converting.

With this, we’re in pursuit of ensuring you’re driving value to your end users while monetizing through FX. 

Build your strategy for monetization and market expansion with FX

The key is to make it easy for buyers and sellers to pay and get paid while also keeping an eye on currency changes and driving new revenue lines. To sum up, new revenue streams come from: 

  • Send fast and cost-effective payouts in local currencies 
  • Protect profit margins against currency fluctuations 
  • Build local payment experiences that encourage repeat business and sales
  • Automate monetization at scale while driving value to your users

Take the next steps to optimize FX and add more value to your cross-border payments. Get in touch with us.