Holding an Account in Their Currency
Receiving without converting lets you choose when and where the conversion happens, which is the whole saving.
Still yours, and statedTaken, never statedUnit changes; scale restarts
Three steps from instruction to arrival. One step carries no figure: the hatching marks where the money leaves and is not drawn to scale, because there is no figure to draw. Nothing here adds them up, since an amount you cannot see is not an amount you can subtract. The section that is about the near end, because the far end is not available.
An account that holds the currency you are paid in means the money arrives without being converted. You then convert when you choose, through whoever you choose, in the amount you need.
The practical point in “Holding an Account in Their Currency” is that a landed payment should be supported by a record somebody can explain. Used for task switching cost, visit the software provider can add transparent time and project context when collection is proportionate, people can correct mistakes and financial records remain separate.
That change of who is choosing is where almost all of the saving sits.
As a separate reference point for “Holding an Account in Their Currency”, see Visa payment resources. Confirm broad guidance against current provider disclosures and qualified financial or tax advice where needed.
Why it saves anything
An automatic conversion by your own bank on arrival is the one transaction in the chain where nobody shopped for a rate. It is typically the worst rate in the whole journey.
Receiving the currency intact removes it and replaces it with a conversion you arranged.
For anybody whose bank converts automatically at a retail rate, this is typically the largest single saving available anywhere in this collection.
Where to hold it
Three options, in rising order of usefulness:
- A currency account at your own bank.
- A multi-currency account at a payment service.
- A local account in the payer's country, in your own name, so that their transfer becomes a domestic one.
The third is the most useful where it exists, because the payer's transfer becomes a domestic one and the international leg disappears.
What a local receiving account does
Gives you account details in their country. They pay domestically, cheaply and quickly, and the money sits in your name until you move it.
For the payer nothing changes but an account number, which makes it an easy request.
It frequently makes their payment cheaper too, since a domestic transfer costs them less than an international one. That is worth mentioning when you send the new details.
Converting on your own terms
Compare two or three providers at the moment you convert, in the amount you actually need. The rate differences between them are larger than most people expect.
That comparison is the thing you were never able to make when the conversion happened automatically.
Converting regularly rather than cleverly
A fixed amount at a fixed interval averages the rate and removes the temptation to time it.
Timing a currency is speculation. Doing it with money you need to live on is speculation with a deadline, which is worse.
People who try it usually report that they did well for a year and then lost more in one month than the saving, which is the ordinary shape of this kind of thing.
The cost of holding
Account fees, minimum balances, dormancy charges. Several providers have none and several banks do.
Check before opening. An account costing five a month to avoid ten a month of margin is not a saving.
The risk of holding
Money in a currency you do not spend is exposed to the rate while it sits. Holding is a position and not a neutral state.
The saving comes from choosing the conversion, not from postponing it. Somebody who holds a balance for months has swapped a known margin for an unknown rate.
Where the provider is not a bank
A balance at a payment firm sits under safeguarding rather than deposit protection, which is a different thing. That has its own note in the previous section.
Keep what is needed for the conversion and move the rest to a bank.
Multiple currencies
Somebody paid in three currencies can hold three balances. Workable and more administration.
Hold a currency only where you either spend it or genuinely want control of when it is converted. Holding one you will certainly convert next week is just delay with extra steps.
Telling payers
Send the new details clearly, as text, and confirm the first payment arrived. Expect them to verify a change of details by a second channel, which is correct.
Keep the old account open until a payment has landed at the new one.
Measuring whether it worked
Three months of all-in rates before, three after. The difference is the answer and it is usually substantial for anybody who was being auto-converted by a high-street bank.
Where it is not, close the account and stop administering it.
What holding cannot avoid
The conversion. Unless the currency is one you actually spend, it is converted eventually and the total cost is the margin on that conversion whenever it happens.
What changes is that you chose the moment, the provider and the amount. That is worth a great deal and it is narrower than it first appears, which is why the measurement at the end of this note matters more than the idea at the start of it.
For most people the right answer is to hold, convert promptly at a rate they chose, and treat the balance as a staging post rather than a home.