These days, financial service providers offer an array of international business account options, each with its strengths and weaknesses. This allows businesses to find the type of account that suits their future needs. We take a look at the difference between Foreign Currency Accounts and Global Business Accounts.
What are Foreign Currency Accounts (FCA)?
A Foreign Currency Account, also known as a borderless account or multi-currency account, allows businesses to send and receive money in different currencies quickly. A lot of consumers and companies view having a Foreign Currency Account with a bank as a luxury because it is quite expensive to get, and only a few qualify for it. A Foreign Currency Account enables customers to access and receive local payments from international clients all around the world.
Why do Businesses Need a Foreign Currency Account
Unlike conventional international money transfers, businesses with a Foreign Currency Account do not have to convert their currency every time to send or receive a payment from their international partners. An international transfer alone can cost 3% to 6% on fees plus a receiving fee charged by the recipient’s bank. With a Foreign Currency Account, businesses can charge their customers in their local currency which is also favourable to the customers. A Foreign Currency Account also bypasses the struggle of opening local bank accounts in different countries as the available currencies can be managed all in one local bank account.
Foreign Currency Accounts also help manage and mitigate the risks associated with currency conversions and forex fluctuations, as you can easily convert between currencies whenever you want to protect your money.
Foreign Currency Accounts do not have a minimum balance, which provides its customers with the flexibility needed to manage the account that suits their business needs.
Global Business Accounts (GBA): What they are and what they do
Global Business Accounts are quite similar to Foreign Currency Accounts. They can be thought of as an upgrade from Foreign Currency Accounts that helps lower the cost of global business.
Global Business Accounts are accounts that have globally standardized or compatible products or services at various locations internationally. These accounts are typically run through partner networks. A Global Business Account works when a business’s local bank might be part of a network covering other international countries. This enables customers in one country to connect globally and use the local payment networks. You’re able to use your new local account details in that particular country, to send and receive payments in their currency like a local and avoid international transfer fees altogether. With a Global Business Account, businesses and corporations can set up an account in a foreign country with that country’s local bank details.
Global Business Accounts are ideal for eCommerce stores, Exporters, and SaaS companies frequently making or receiving payments abroad.
Benefits of Owning a Global Business Account
Commercial stores and businesses can route payment directly from online sales to their Global Business Account. These funds can then be withdrawn to a bank account at conversion costs up to 2% lower than bank rates.
With a Global Business Account, businesses can hold different currencies and control when to convert currencies without fearing unstable exchange rates. No more forced conversions!
Global Business Accounts also saves up on currency conversion costs and wire transfer receiving fees. Global Business Accounts enables businesses to accept local currency without having to convert to another currency. This bypasses a conversion fee and allows the business to pay out in that currency to their local partners when needed.
Conclusions: FCA or GBA, which is better?
Technology and digitalisation have improved most sectors of civilization, including the financial sector. Both foreign currency accounts and global business accounts represent today’s economic choices and benefits. These accounts are considered by most to pave the way to the future for financial transactions.
Both Foreign Currency Accounts and Global Business Accounts are tremendously helpful tools that avoid the black hole of charges that comes with opening bank accounts in different countries or fluctuating currency rates. Businesses and or corporations that want to start sending money overseas or receive money in other currencies and are looking to expand and establish themselves globally should consider getting these accounts.
