As the globalization through the Internet rapidly develops, it is time for e-commerce to take the spotlight as a solid way of income. Shopify is here to help your brand to shine in the world of e-commerce.
As of 2022, Shopify has become the most preferred e-commerce platform. Its users range from newly-established brands to already-successful trademarks.
But what makes Shopify stand out among its competitors? The answer is the simple way it brings to the prospect of going international as a brand. One may see Shopify as a helper to thread the webs around the world, which are fully connected thanks to the Internet.
The opportunities a brand may catch by going international are numerous. Yet, without an e-commerce platform, it may be exhausting to tackle some complex issues. Shopify is here to help you find the right path to success for your brand.
Shopify’s Multi-Currency System
This system includes maintaining a single brand hub while Shopify takes care of different currencies which you will get from different countries for selling your product.
While browsing your store, your customers will have the option to change languages and currencies. You would still receive your payment in the currency of your choosing, since Shopify does the conversion during the transaction.
-You are to maintain a single store.
-All apps may not be compatible.
-Price rounding is being used by Shopify. We will address to it in detail below.
-Shopify deals with the currency conversion rates.
-For different currencies, prices will be in a constant change. This may cause a confusion for customers.
Delving Deeper into Selling Internationally
Making your sales in a local currency is a great way to rise your popularity in the selected region. People tend to take easier methods when it comes to purchasing, and using another currency is not one of them. Shopify makes sure to provide such conveniences.
For both paths we have mentioned before, you would find a currency changer like this on your site (which can be stylized later on):
If your site uses the Multi-Currency System, only the currency would change. Using geo-IP detection is recommended, so you can help the users by routing them to the nearest store region.
A warning for preferences can also be put as well, such as this one:
While setting minimum prices for each currency is not available, you can set rounding rules for them. There are two different options when it comes to settling your price in a different currency. Let’s take a look at each of them.
Option I: Price Estimation
Moreover, as the user gets to the checkout, the store would change back to the original currency. This would cause lots of customers to back down from the transaction, as it would feel complicated with all the fees to pay for shopping in a different currency.
The Multi-Currency System has decreased the usage of this option by a great margin.
Option II: Shopify Payments Multi-Currency
Shopify Payments has a list of over 130 different currencies, which can choose from to have your store to be available in. This offers a great convenience to your customers.
Since September 2020, Shopify Payments users also have a choice to add different ‘international domains’. These domains take customers to a pre-configured site which uses the currency and language of the selected region. Learn more about using international domains when selling internationally with Shopify Payments multi-currency.
Keep in mind that the conversion rates of the currencies would be different through the usages of automatic or manual currency conversions. Find out more about setting currency conversions with Shopify multi-currency.
Price Rounding manages your prices to look ordinary in each currency. However, this includes the Shopify Payments currency conversion fees. For every currency conversion, Shopify charges a small fee. This would be added on top of the converted price, so it doesn't affect your margin. Nonetheless, it makes the converted prices slightly higher than the original price.
Shopify uses a simple equation to manage your prices: Base price x currency FX rate + conversion fee rounding rule = local price
For example, if a customer who uses GBP wants to buy a product with USD, Shopify’s equation for a $10 product would be like this:
$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 local price
Here are Shopify's official multi-currency for Shopify payments instructions.
If you are to sell wholesale into different markets and have MSRP and RRPs, you may not be able to keep to your own agreements with Shopify's rounding rules.
Currency Risks with the Multi-Currency System
While selling products through different currencies, there is always a chance of dealing with many currency risks. Shopify Payments drops the number of these risks to four:
- Manually captured payments: During the gap between authorizing and capturing the payment, in 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 win the dispute resolution, you’ll have the payment captured again at the current FX rate.
Since the exchange rates between currencies are overflowing, the risk can go either way. For example, if the foreign currency gets stronger between authorizing and capturing the payment, you will receive less in your base currency when you get your payout.
Getting Your Margin
Shopify will do the conversion between currencies for you before your payout, so you will receive your payout in the currency of the country where your brand is located.
Shopify charge processing fees that change in price depending on the card type and if it is domestic or cross-border.
Multi-Currency on Shopify POS (Point of Sale)
Shopify POS only uses your base store currency. You cannot sell in multiple currencies in any Shopify channels with Shopify’s Multi-Currency System.
3D Secure & Secure
Users from the United Kingdom would be familiar with 3D Secure. It enables a two-factor authentication to be used by banks to reduce fraud. It's an extra step in the checkout which would benefit your store’s security.
SOFORT, iDEAL & other international payment methods
SOFORT and iDEAL are widely accepted online payment methods in Europe. Shopify supports SOFORT except in Germany. To learn more about using SOFORT with Shopify, click here.
Shopify also supports iDEAL, another payment method which is based on the Netherlands. You can click here to learn more about using iDEAL with Shopify.
It is important to look for popular payment methods in your target market region, and if they are compatible with Shopify Payments.
These are just a part of Shopify’s features, which were added to ensure its users’ convenience. For more information to expand your brand internationally, stay tuned to our blog. Safe transactions until next time!