Expanding internationally is an obvious path to revenue growth. If you’ve already gained traction in your domestic market, finding similar markets where the same formula might work becomes very appealing.
There are many concerns when you expand into new countries, from international fulfilment quirks to foreign tax obligations.
The good news is that making your website international-friendly has become much easier in recent years. One example of this is Shopify’s multi-currency feature.
What is Shopify Multi-Currency?
Shopify multi-currency lets you choose the currencies you want to offer on your store, from the following list:
- Australian dollar (AUD)
- Canadian dollar (CAD)
- Denmark Krone (DKK)
- Euro (EUR)
- Hong Kong dollar (HKD)
- Japanese yen (JPY)
- New Zealand Dollar (NZD)
- Pound Sterling (British pound) (GBP)
- Singapore Dollar (SGD)
- United States Dollar (USD)
Throughout the customer’s purchase journey, from the homepage to checkout confirmation, customers in those countries can shop in their local currency. They can either choose their preferred currency or you can build in geo-IP detection to automatically choose the right currency based on the customer’s location.
Example of Shopify Multi-currency on Astrid & Miyu
The Shopify Multi-Currency back-end
When Shopify Payments and multi-currency are enabled, you will see a currency section once you go in to ‘Manage’ on Shopify Payments.
You'll then see each enabled currency:
You can’t set ‘floor’ or minimum prices for each currency, but you can set rounding rules in each currency, which keeps your prices looking consistent even if they fluctuate day to day. The rounding options below are what you can set for each currency.
Please note that this includes the Shopify Payments currency conversion fees. Shopify charges a small fee for every currency conversion. This is dynamically added on top of the converted price that the customer pays, so it doesn't affect your margin. It will make your foreign currency prices slightly higher than the spot rate though, so keep this in mind.
For example, if the store is in GBP £, you can set rounding rules for all other activated currencies. If you choose 0.95 for USD, the US dollar prices will always look like $5.95. Note that again, this is after the Shopify Payments conversion fee has been added.
Base price x currency exchange rate + conversion fee + rounding rule = front end price
$10 x 0.81 (USD/GBP exchange rate) + 0.15% (example Shopify conversion fee) + 0.87785 (example Shopify rounding rule to 0.99) = £8.99 front end price for customer
A typical set-up for rounding might be:
- EUR Round up to €0.95
- JPY Round up to the nearest ¥100
- USD, CAD, AUD, NZD, SGD, HKD Round up to the nearest dollar.
- GBP Round up to the nearest pound.
A final note on rounding is that the conversion fee is taken out before the rounding is done. A worked example:
- Product price in-store currency (for example, USD) $10.00
- Multiply by the currency conversion rate (for example, 0.867519) €8.68
- Add the currency conversion fee (for example, 1.5%) €8.81
- Apply the rounding rule (for example, round to €0.90) €8.90
This is how Shopify is charging you for currency conversion. You will need to factor this into your financial models and compare against alternatives for processing foreign currencies.
Getting paid out
Shopify will do the currency conversion for you before your payout, so you’ll receive your payout in the currency of the country where your store/business is located. Canadian businesses have the option for Canadian dollars (CAD) or United States dollars (USD). Danish businesses can be paid in either Euro (EUR) or Krone (DKK).
Shopify charge processing fees that vary depending on the card type and if it’s domestic or cross-border. You can ask for a breakdown of these from your Shopify Plus Sales Rep.
What's the Alternative? Multi-Store.
Here at We Make Websites, most of our international clients will opt for a ‘multi-store architecture’ which looks like this.
In this architecture, each currency is a separate Shopify Plus store catering to a geographical region. This gives you full control over how you set prices, payment options and basically everything you can think of to configure on a Shopify store. A typical setup as above might compromise of:
- UK store, GBP currency, at brandname.com
- US store, USD currency, at us.brandname.com
- EU store, EUR currency, at eu.brandname.com
An alternative might be to have a different EUR store for different languages you want to cater to.
As you’ve no doubt guessed, this also means maintaining several different stores. We add syncing apps and/or middleware to keep the stores inline so you aren’t having to duplicate effort on each store.
Some things do become more difficult when maintaining a multi-store architecture, such as installing apps on each store or keeping collections up to date. Product IDs are also out of sync between stores which could cause problems with apps that work across your stores.
It also provides the benefit of being able to merchandise for each region.
Should you use Shopify Multi-Currency?
We’ll help you decide with 7 simple tests.
1. Is Shopify Payments right for you?
To use Shopify multi-currency, you need to be using Shopify’s own payment gateway called Shopify Payments.
First of all, your business must be in one of the following countries: Australia, Canada, Denmark, Germany, Hong Kong SAR China, Ireland, Japan, The Netherlands, New Zealand, Singapore, Spain, the United Kingdom or the United States (excluding US territories except for Puerto Rico.)
Advantages of Shopify Payments over a ‘normal’ gateway:
- In-built fraud detection
- You can use Shopify Pay which is an accelerated checkout similar to Apple Pay
- Hassle-free automatic set up
- Relatively expensive compared to getting your own merchant account. Shopify Payments does offer a lot of features, so this needs to be offset against that.
- 3D secure not yet supported - though it will be soon due to the Strong Customer Authentication (SCA), which is part of the PSD2 directive in the EU.
2. Can you live without price control?
Shopify lets you set rounding rules as described above, but it doesn’t let you set the price floor. Many brands can’t risk accidentally undercutting local retailers, which could happen with Shopify multi-currency due to currency fluctuations.
You could consider using shipping rules to hedge against this but that would rely on you watching currency changes and updating your rates to different countries accordingly.
Additionally, some businesses won’t like the fact that product prices change day to day. Even with the price rounding, this might be an odd experience for customers.
One more thing to note is that the currency conversion fee is included in any foreign currencies, which might serve to make them less competitive than other outlets where your products are sold.
3. Are you wanting to learn more about your international customer base and their shopping habits?
Multi-currency is a great way to experiment with international selling without the commitment of a dedicated regional store. Perhaps your Japanese customers are comfortable checking out in USD but your Australian customers will always choose their local currency? Now you know you’re best placed to invest in an AUS store as well as a Japan-serving ROW store in USD.
Multi-currency can help you decide which direction your international strategy should go in with minimal commitment and development work. Once you know you have traction in overseas markets you can look at using a more robust and flexible multi-store architecture.
4. Is currency/abandoned checkouts really the problem?
Turning on multi-currency payments is not the be-all and end-all of successful international selling. It’s just one piece of the puzzle to help you understand what your global reach is, and use that information to expand.
Some other areas to consider in an international strategy include:
- Do you have localised marketing strategies?
- Do you accept local non-credit card payment methods?
- Is your site multilingual?
- Do you have competitive shipping rates?
5. You need multi-currency POS (Point of Sale) or draft orders
Shopify POS only uses your store currency. You cannot sell in multiple currencies in any Shopify channels, including the Wholesale channel, with Shopify multi-currency.
6. You don’t want Shopify to control when currencies are converted
Shopify will convert your foreign currency order revenue into your store currency at a spot rate. There are four risk areas as a result:
- Manually captured payments - during the gap between authorizing and capturing the payment, during which the FX rate may have changed
- Refunds - during the gap between charging a customer and refunding them.
- Chargebacks - during the gap between charging a customer and having to pay the chargeback.
- Chargeback resolution wins - if you get a chargeback and you win the dispute resolution, you’ll have the payment captured again at the current FX rate.
In all cases above, the risk can go either way. If the foreign currency gets stronger between authorizing and capturing the payment, for example, you will receive less in your base currency when you get your payout.
There are always currency risks no matter how to deal with multi-currency. The difference with Shopify multi-currency is that you don’t control when currencies are converted, compared with if you held all foreign currency payments in different currency bank accounts. Then you can control how and when you do your currency conversions. Of course, in this case, you could open yourself up to even more risk if you don’t manage your currencies properly.
7. You need to accept SOFORT payments outside Germany
SOFORT is a payment method widely accepted online in Europe, specifically in Austria, Belgium, the Netherlands, Germany, Poland, Italy, Spain, Slovakia, Switzerland, France, United Kingdom, Hungary and the Czech Republic.
It works on Shopify but only in Germany. You can learn more about Sofort from Shopify here
Shopify now also supports iDEAL, a Dutch payment method. It’s only available to businesses based in the Netherlands
How to set it up
Are you sold on Shopify multi-currency? Here are the basic steps:
- Sign up for Shopify Payments, if you haven’t already
- Enable multiple currencies in Shopify Payments
- View and set up your converted prices
- Add a currency selector to your storefront.
- Optionally, add geo-detection to locate your visitor and pick out the best currency for them
- Don’t forget to consider gift cards and discounts in multiple currencies.
- Test and launch
You can read Shopify’s official multi-currency instructions here.
Multi-currency or Multi-store?
As we’ve discussed above, there are 7 reasons you might not want to use Shopify Payment’s multi-currency feature. It’s a great step towards an international strategy and it will work for a large section of the Shopify user base.
For bigger businesses that want full control over their international presence, we can help develop an international multi-store architecture that will give you global reach with local optimization.