The world of Multi-Currency accounts is booming, as the world becomes more internationalised and connected.
As years pass, there are fewer businesses and professional service providers who don’t have customers paying them from abroad.
The same is true for individuals, as fewer people will go through a lifetime without needing to exchange currency.
The best multi-currency accounts are offering a great deal of different functionalities.
Both companies are also offering a multi-currency debit card so that you could use the funds from the account on your daily spending, locally or abroad.
To navigate their interesting space we have created this multi currency virtual bank account guide.
Best Multi-Currency Account for Businesses
Business owner, did you consider a broker instead?
Upon signing up with a broker and booking a trade, you would get a joint account on your name and on the name of your provider that you could supply and receive payments into.
This is not a “long term solution” a-la a virtual bank account, but if you require a service provider for a one-off payment or even several payments, you could opt to that.
This is a diagram of how it works:
Additional Multi-Currency Solutions for Businesses
In addition to the above companies offering the best multi-currency solutions for businesses, the following companies also have a multi-currency solution:
- SpartanFX runs a multi-currency solution using their payment platform (provided by Currency Cloud).
- Payoneer has been a pioneer of multi-currency accounts for businesses and sole-traders. Specialising more in accounts receivable than payments.
- Revolut offers a form of a multi-currency account, combined with a debit card to spend multi-currency account balances around the world.
- Kantox offers foreign payment collection accounts.
- VFX Financial runs a multi-currency account for corporate FX cash (for business travel).
- MultiPass (previously DynaPay) provides local GBP, EUR & USD accounts for business + 30 other currency accounts held in London.
- TransferMate – a company geared mainly for SMEs and corporates, is soon to launch global currency accounts.
- Interpolitan (previously The Currency Account) – a company whose main selling point is virtual bank accounts and withholding funds in 55 currencies. Operating since 2011 but not particularly well-known in this space.
Best Multi-Currency Account for Individuals
Multi-Currency Accounts FAQ
Are Banks Offering Foreign Currency Accounts?
A research that we have conducted has shown that most major UK banks allow customers, private or business, to open a foreign currency account in Euro or USD.
1) exchanging foreign currency automatically at a set rate and crediting you in GBP
2)opening a dedicated USD/EUR account allowing you to keep the funds in FX.
Both solutions are quite convenient and straightforward, but they are also expensive.
Cost was the main driver leading to virtual multi-currency account solutions, and still is.
Virtual Foreign Currency Accounts are Still Relatively New
Non-bank multi-currency accounts have actually been around for about a decade now.
WorldFirst was the first fintech company to offer them but they were targeted specifically at ecommerce sellers.
Being an authorised payment institution with the FCA, as opposed to a fully fledged bank, the regulatory landscape at the time meant accounts were collection only and any payments received had to be from pre-vetted institutions.
Companies like WorldFirst could therefore complete the required due diligence for online marketplaces such as Amazon and then allow businesses to receive their international Amazon payouts. It was a great solution for online marketplace sellers but offering a full-scale business account which required KYC on every new company or individual paying into the account just wouldn’t have been workable for most importers/exporters.
Things changed when firms were able to apply for an e-money license.
Reflective of improved capabilities for fraud and anti-money laundering detection, the requirement to conduct due diligence on companies or individuals paying into digital accounts was reduced.
Then, multi-currency accounts, provided by fintech companies, kicked off.
As little as 5 years ago, it was extremely difficult for SMES, sole traders and particularly individuals (unless high-net worths) to access multi-currency accounts.
The application would be slow and arduous, and the bank solution would be costly.
It’s wonderful for everybody (except for banks) that multi-currency accounts have evolved to where they are today.
There are 12 different companies we have covered, to date, who offer such services and that means greater selection for customers, leading to lower fees.
The most recent company to enter the multi-currency account domain is TransferMate and we are certain there will be many more to follow.
Digital Currency Accounts Top List of Fintech/Bank Collaboration
As detailed in McKinsey’s 2021 guide as to how banks are reinventing treasury services, the most common area of bank and fintech collaboration was for the provision of digital bank accounts.
When customers access an online currency account through a fintech company like WorldFirst or Wise, they’ll find that the underlying account is actually held with a bank.
This ability to cooperate with a bank provides a stamp of trust for fintechs, who generally face less regulatory oversight and benefit from a more agile response to new market demands.
For banks, it allows them to be a part of the seamless digital customer experience that fintechs seek to create.
With a multi-currency account you can:
✔ Accept payments from abroad into your own local currency bank account in your name
✔ Transfer back the funds into your domestic currency and your bank account with ease and for cheap
✔ Make payments abroad in a multitude of currencies for a great rate with no fees
✔ Avoid Amazon’s and PayPal’s currency exchange system which is extremely expensive
✔ NEW! Accumulate interest with Wise and Revolut (with Revolut you can also invest in various financial instruments)
With a multi-currency account you cannot
❌ Use it for personal purposes (with the exception of Wise and Revolut)
❌ Receive cheques or cash payments into your named back account abroad
❌ Process local card payments
Specific Advantages for Businesses
Multi-currency accounts offer several benefits for businesses operating across different currencies. They help reduce cross-border transfer fees and transaction times, streamline reconciliation and accounting, and manage currency fluctuations. They also enable faster payments and easier international payroll management
To read more about specific currencies, use our navigation below:
- Best USD account in UK
- Best EUR account in UK
- Best JPY account in UK
- Best AUD account in UK
- Transferring Euros to a UK bank account
Virtual IBAN vs Local Currency Accounts vs Digital Wallets
Multi-currency accounts are often referred to by a number of different terms. And whilst they might all sound the same, each has subtle differences
. The most popular terms you’ll hear are; foreign currency accounts, local currency accounts, virtual iban accounts and digital wallets. Let’s explore each of them in more detail here.
Local Currency Accounts
Local currency accounts are arguably the most advantageous multi-currency account of all.
This is particularly true if you’re a business or individual that operates internationally and want the ability to make and receive domestic transfers in the countries/currencies you are opening a bank account. Local currency accounts are the closest thing you can get to a fully fledged bank account through a bank, without having to go through the strenuous rigmarole that can come with opening an actual bank account in a new country (like needing a local business/local address in order to do so).
Each currency account is held locally to the country it represents, i.e. USD accounts are held in the US, HKD accounts are held in Hong Kong, AUD are held in Australia and so on. This means that if you have a requirement to send or receive money in a new country, it removes the need for transfers to have to go via SWIFT, which, in turn, significantly reduces payment fees and the length of time a payment takes to process. For example, if you were selling goods in the US, having a local account in which customers could make a local transfer, via ACH or fedwire, would be a competitive advantage vs a business holding a USD account in the UK.
OFX, WorldFirst and Wise provide local currency accounts in most major currencies.
It’s one of the primary reasons why we recommend OFX and WorldFirst for business multi currency accounts and Wise for personal multi-currency accounts.
Personal users in the US can even connect their Wise USD account to Plaid and synchronise with a number of other financial services.
Virtual IBAN accounts
Virtual IBAN accounts are generally run out of just one location, which, more often than not, is the UK.
This means that whatever currency a multi-currency account is opened, it will be physically held in the UK. A virtual IBAN (Virtual International Bank Account Number) has exactly the same format as a regular IBAN.
Virtual IBAN accounts will operate in one of two ways. Firstly, some providers will give customers just one IBAN which they can quote to any customer, no matter what currency they’re sending to you.
The operator will then see what currency is hitting the account and then automatically allocate the funds to the correct multi-currency account.
Secondly, some operators will let you set up multiple virtual IBANs to one account. Meaning you could create a different IBAN per currency, or you could even generate different virtual IBANs for different customers in order to improve reconciliation.
The most obvious downside to a virtual IBAN is that the accounts are held in just one location.
Whether it’s a USD, HKD or AUD account, these ‘virtual accounts’ would most likely be held in London. Let’s say you had a B2B business with sales in Australia, your customers would still need to submit an international payment to your AUD account in London, all-be-it same currency.
Same-currency international transfers usually attract higher payment fees as the provider cannot make any money from the currency exchange (banks will often charge $50 for same currency transfers).
One of the major benefits of virtual IBAN accounts is the ability to open foreign currency accounts in a much wider range of currencies compared to local currency accounts.
With moneycorp, you can receive money in 33 currencies in your multi-currency account and hold balances in a mammoth 120+ different currencies.
A multi currency digital wallet lets you hold, convert and manage funds in a number of different currencies but will not let you receive payments from external accounts.
All money into the accounts will have to be transferred through one of your own personal accounts or by your debit card.
They are helpful tools for cash management but you can’t ‘do business’ with them so to speak. This is the major drawback of digital wallets and thus nullifies them from our multi-currency account selection.
You could say that Wise and Revolut actually provide a hybrid multi-currency account / digital wallet solution. In addition to the 10 local currency accounts that Wise provides, they allow users to hold and convert balances in an additional 40 currencies.
Interpolitan provides ‘multi-jurisdictional domiciled account details’ for some currencies.
Reporting a multi-currency account to HMRC?
Our recent guide about reporting a foreign bank account to HMRC has concluded that multi-currency accounts, which aren’t foreign bank accounts per se, do not require specific reporting. Just make sure that you periodically repatriate the funds from this account to your UK account.
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