The world of finance can be complex, especially when it comes to international transactions. When you make a payout to someone's card, there are several factors that can affect the currency used and any associated fees. This article will break down the different scenarios that can occur and help you understand how currency management works in payouts to cards.
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What are Payouts to Card?
Verestro's Payout to Card solution empowers you to send funds from your account to Mastercard and VISA cards globally in real time. You can also send payouts directly to bank accounts issued by various banks. Verestro supports an impressive number of 155 currencies, ensuring flexibility for your international transactions. We guarantee full security thanks to the partnership with a certified payment institution and PCI DSS certificate. Payouts can be seamlessly integrated with multiple acquirers, banks, money transfer operators and other institutions.
Factors Affecting Currency Management
There are several key players involved in a card payout, each with their own currency settings:
Sender's card account currency: This is the currency your payment account is denominated in.
Transaction currency: The currency you choose to send the payout in.
Acquirer settlement currency: The currency the company processing your payment settles transactions with (like Visa or Mastercard).
Receiver's card issuer settlement currency: The currency the receiver's bank settles transactions with.
Receiving card settlement currency: The currency the receiver's card is actually denominated in.
The interplay between these currencies can lead to situations where a conversion is necessary. This conversion often incurs additional fees.
Different Scenarios for Currency Management
There are three main scenarios for how currency management can be handled in payouts to card:
Scenario 1: User Chooses Their Send Currency
In this scenario, you choose how much money to send in your own currency (e.g., USD). The outcome depends on the currencies used by other parties involved:
Scenario 1A (Ideal): If everyone involved uses the same currency, the payout is processed without conversion. This is most common for major currencies like USD and EUR.
Scenario 1B: If there's a mismatch, the conversion might happen on the receiver's side. Their bank will convert the incoming funds to their card currency and may charge conversion fees.
Scenario 1C: If your currency isn't compatible with the processing system, the conversion happens on your side. You'll pay any conversion fees.
Scenario 2: User Chooses Receiver's Currency
Here, you specify the currency the receiver should receive (e.g., EUR). The system identifies the receiver's card currency and allows only that currency for the transaction. Conversion always happens on your side, potentially with additional fees depending on your account currency.
Scenario 3: No User Choice
Some providers only allow payouts in a single currency, typically your account currency. Conversion might occur on your side or the receiver's depending on the system.
Recommendations for Streamlined Payouts
To simplify your experience, we recommend focusing on Scenario 1 and enabling popular currencies for your payment corridors. This minimizes conversion fees and surprises. Dynamic commission and spread calculations ensure you know the cost upfront.
We hope this article has shed light on the complexities of currency management in card payouts. By understanding these factors, you can choose the payout method that best suits your needs.
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