Shopify Currency Issues: Challenges and Solutions for E-commerce Businesses
Are you struggling with limited currency options and poor conversion rates on your Shopify ecommerce business? Are currency challenges holding your business back from global success? Fear not!
We know global expansion is exciting, and that currency hurdles can hold you back. This is the reason for this article. According to Forbes’ Newsletter, about 76% of online shoppers prefer to shop and pay in their local currency.
To stop these stumbling blocks from hurting your customer experience and impacting your conversions. It's essential to address currency issues head-on, and navigating these obstacles is about to get a whole lot easier.
This article offers actionable solutions to help you overcome these challenges and maximize your sales potential. With this guidance, you'll be equipped to expand your global footprint and succeed in the dynamic world of e-commerce. Get ready to conquer the treacherous waters of Shopify currency issues.
Contents
Understanding Shopify currency and its significance
Challenges with Shopify currency and its impact on businesses
Managing Currency on Shopify
Shopify Multi-Currency Options
Selling in Multiple Currencies without Shopify Payments
Final Thoughts
FAQs
Understanding Shopify currency and its significance
Shopify has established itself as a go-to platform for entrepreneurs looking to set up and grow their online businesses. Central to the success of any e-commerce venture is the ability to transact in multiple currencies, catering to customers around the globe. This is where the concept of Shopify currency comes into play.
Shopify currency refers to the system provided by the platform to handle various currencies and facilitate seamless transactions in different parts of the world. The significance of Shopify currency cannot be overstated.
Firstly, it enables businesses to tap into international markets and attract customers from different countries. By offering prices in local currencies, merchants remove barriers to purchasing and provide a more personalized shopping experience.
Furthermore, utilizing Shopify currency enhances transparency and trust in the purchasing process. Customers appreciate seeing the exact amount they will be charged, without having to calculate exchange rates themselves. This clarity can lead to increased customer satisfaction and loyalty.
By utilizing features such as currency conversion apps or Shopify's native multi-currency functionality, merchants can offer customers competitive prices while protecting their profit margins. This flexibility allows businesses to adjust prices dynamically based on currency fluctuations, ensuring they remain competitive in global markets.
Challenges with Shopify currency and its impact on businesses
Challenges with Shopify currency can significantly affect the ability to expand internationally and cater to a global customer base. Let’s take a look at each of these challenges.
Limited currency options:
One of the primary challenges with Shopify currency is the limited number of supported currencies. Initially, the platform offered a limited set of currencies, which restricted merchants from catering to customers in specific regions.
Impact: This limitation can hinder businesses' ability to expand globally and tap into lucrative markets where local currencies are not supported. It may result in potential customers abandoning their shopping carts due to the lack of their preferred currency.
Suboptimal currency conversion rates:
Currency conversion rates play a crucial role in international transactions. However, Shopify's native currency conversion rates are often not competitive compared to external providers or financial institutions.
Impact: Merchants may face reduced profitability when converting currencies during transactions, resulting in lower margins. Customers may also perceive higher prices due to unfavorable conversion rates, leading to hesitations in making purchases.
Complexity in setting up multi-currency functionality:
While Shopify offers multi-currency functionality, setting it up and managing it can be complex for merchants, especially those without technical expertise.
Impact: Businesses may face challenges in configuring and maintaining multiple currency options, leading to delayed implementation or improper setup. This can result in inconsistent or inaccurate currency conversions, potentially frustrating customers and impacting sales.
Currency conversion fees:
Shopify charges a currency conversion fee for transactions made in currencies other than the store's default currency. This fee is in addition to the payment processing fees already incurred.
Impact: The additional currency conversion fees can add up and impact businesses' profitability, especially for merchants with a significant volume of international transactions. It may discourage merchants from selling in multiple currencies or push them towards other payment gateways to avoid these fees.
Customer confusion and cart abandonment:
Inconsistent or unclear currency presentation can confuse customers and lead to cart abandonment. If prices are not displayed in the customer's preferred currency throughout the shopping journey, it can create uncertainty and reduce trust.
Impact: Confused customers may abandon their carts, resulting in lost sales and revenue. It emphasizes the need for a seamless and user-friendly currency conversion process to provide a positive customer experience.
Compliance with legal and tax requirements:
Selling in multiple currencies involves adhering to various legal, tax and bookkeeping regulations specific to each country or region. Managing compliance requirements can be challenging for businesses operating in different jurisdictions.
Impact: Non-compliance can lead to legal consequences, fines, or reputational damage. Businesses need to ensure they understand and fulfill their obligations regarding currency conversion, tax calculations, and reporting to avoid legal issues.
Managing Currency on Shopify
In our previous section, we explored the challenges faced by businesses using Shopify currency and the impact they can have on e-commerce operations. Now, let's delve into the practical aspects of managing currency on the Shopify platform.
Changing the Currency on Shopify
Changing the currency in your Shopify store is a straightforward process. Follow these steps to ensure a smooth transition:
Login to your Shopify admin dashboard and navigate to "Settings."
From the settings menu, select "General."
Scroll down to the "Standards and Formats" section, where you'll find the "Currency" option.
Click on the dropdown menu to choose the desired currency for your store.
Save your changes, and your store will now display prices in the selected currency.
You should consider your target markets and customer preferences when selecting the currency for your store. Research the currencies commonly used in the regions you're targeting and understand the implications of currency fluctuations on pricing and profitability.
Adjusting the position of the currency switcher in the Shopify store
By default, the currency switcher in Shopify is usually positioned in the header or footer of the store. However, you can adjust its position using different methods:
Theme customization: Depending on your active theme, you can explore the theme settings or options to adjust the position of the currency switcher.
Third-party apps: Shopify's App Store offers various apps that provide currency switcher functionalities with customizable positions. Explore these apps and select one that suits your needs.
Checking and Modifying Currency Settings
To ensure that your currency settings are accurately configured, it's important to regularly check and modify them as needed. Here are some steps to help you with this process:
Access your Shopify admin dashboard and navigate to "Settings."
Select "General" from the settings menu.
In the "Standards and Formats" section, review the currency settings to verify the default currency and any additional currencies you have enabled.
Make any necessary modifications to the currency settings, such as adding or removing supported currencies or adjusting the exchange rate source.
Regularly reviewing and modifying your currency settings allows you to stay up-to-date with changing market conditions, customer preferences, and business requirements.
Verifying the current currency of a Shopify store in different locations
With the global nature of e-commerce, it's crucial to ensure that your Shopify store accurately reflects the local currency for customers in different locations. To verify the current currency displayed in your store:
Use a VPN service or proxy to simulate browsing from different locations.
Visit your Shopify store and navigate through various pages, including the homepage, product pages, and the shopping cart.
Observe the currency displayed and ensure it matches the local currency of the simulated location.
Verifying the displayed currency in different locations helps you confirm that your currency settings are functioning correctly and that customers are seeing the appropriate currency based on their geographical location.
Changing the currency in Shopify based on customer location
To provide a personalized shopping experience, you can set up your Shopify store to automatically display the currency based on the customer's location. Follow these steps to enable automatic currency switching:
Access your Shopify admin dashboard and go to "Settings."
Select "General" from the settings menu.
Scroll down to the "Standards and Formats" section and locate the "Change Formatting Automatically" option.
Enable this option to allow Shopify to detect the customer's location and display the corresponding currency.
By enabling automatic currency switching, you ensure that customers see prices in their local currency without the need for manual selection, enhancing convenience and reducing barriers to purchase.
Formatting the currency display in the Shopify store
The way currency is displayed can impact the perception of prices and the overall shopping experience. To format the currency display in your Shopify store:
Access your Shopify admin dashboard and navigate to "Settings."
Select "General" from the settings menu.
In the "Standards and Formats" section, find the "Currency Format" option.
Choose the desired format for displaying the currency, such as symbol placement, decimal places, and thousands separator.
Formatting the currency display ensures consistency and familiarity for customers, aligning with their expectations and making the shopping experience more intuitive.
Shopify Multi-Currency Options
Exploring Shopify's Multi-Currency Feature
Shopify's multi-currency feature enables merchants to display prices and accept payments in multiple currencies, enhancing the customer experience and facilitating international transactions. Consider the following when exploring this feature:
Activating the Multi-Currency Feature:
Access your Shopify admin dashboard and go to "Settings."
Select "Payment providers" and scroll down to the "Accept payments" section.
Enable the multi-currency feature by checking the box next to "Enable multiple currencies."
Currency Conversion Rates:
Shopify utilizes a default exchange rate that is supplied by their payment providers. However, merchants have the option to select an alternative exchange rate or employ a dedicated application to manage currency conversion.
Currency Selector:
Also, it offers a built-in currency selector that enables customers to select their desired currency. Merchants have the flexibility to customize the design and placement of the currency selector to align with their store's branding. This allows for a seamless and consistent customer experience throughout the purchasing process.
Let us now explore Shopify's multi-currency options, including understanding the store currency, and configuring the payout currency.
Understanding Store Currency on Shopify
The store currency is the primary currency used to manage your Shopify store's financial transactions, including product pricing, reporting, and order processing. Key points to consider when understanding store currency include:
Store Currency Settings:
Access your Shopify admin dashboard and go to "Settings."
Select "General" and scroll down to the "Standards and formats" section.
Set your store's default currency, which is used for pricing and financial calculations.
Implications of Store Currency:
The store currency affects how prices are displayed, tax calculations, and financial reporting. Changing the store currency may impact previous orders, accounting records, and app compatibility.
Configuring Payout Currency on Shopify
The payout currency refers to the currency in which Shopify pays merchants for their sales. Consider the following when configuring the payout currency:
1. Payment Gateway Compatibility:
Different payment gateways have varying capabilities when it comes to supporting specific payout currencies. It is crucial for merchants to carefully consider this aspect and select a payment gateway that aligns with their preferred payout currency.
By choosing a payment gateway that supports their desired payout currency, merchants can ensure smoother and more efficient financial transactions.
This strategic decision allows for seamless integration between the payment gateway and the merchant's preferred currency, eliminating the need for additional currency conversion processes and reducing potential fees or complexities associated with multiple currency exchanges.
2. Supported Payout Currencies:
Shopify offers support for a wide range of payout currencies, including major international currencies. This flexibility allows merchants to receive their payouts in the currency that best suits their needs.
It is important for merchants to check the list of supported payout currencies in their specific region to ensure that their desired currency is available.
By verifying the supported payout currencies, merchants can make informed decisions and choose the currency that aligns with their financial goals and requirements.
This ensures a seamless and convenient payout process, enabling merchants to efficiently manage their funds using accounting principles and operate their businesses on a global scale.
3. Configuring Payout Currency:
Follow these steps to configure the Payout Currency:
Access your Shopify admin dashboard and go to "Settings."
Select "Payment providers" and choose the payment gateway you're using.
Configure the payout currency settings within the selected payment gateway.
4. Currency Conversion and Fees:
When converting the payout currency, Shopify may impose a currency conversion fee. It is important for merchants to be aware of this potential fee as well as the currency conversion rates associated with their chosen payment gateway.
By familiarizing themselves with these details, merchants can accurately assess the financial implications of currency conversions and make informed decisions about their payment processing.
Understanding the currency conversion rates and potential fees enables merchants to plan and budget effectively, ensuring they have a clear understanding of the costs involved in receiving payouts in different currencies.
This knowledge empowers merchants to optimize their financial operations and make informed choices to maximize their profitability.
Managing Currency Conversion
When using Shopify's multi-currency feature, it's important to have a clear understanding of the currency conversion rate and the associated fees. In this section, we will explore how Shopify handles currency conversion, how to calculate the currency conversion fees, and how to assess their impact on your business.
Understanding Shopify's currency conversion rate
Shopify's currency conversion rate determines the exchange rate used to convert prices from the store's default currency to the customer's selected currency. It's important to note the following key aspects of Shopify's currency conversion rate:
1. Real-Time Exchange Rates:
Shopify relies on real-time exchange rates that are sourced from their payment providers. These rates are continuously updated to ensure precise and up-to-date currency conversions. By using real-time exchange rates, Shopify can provide accurate and reliable currency conversion services to its merchants and their customers.
The regular updates of these rates enable the platform to reflect the most current market values and fluctuations in currency exchange rates. This ensures that transactions involving different currencies are conducted at fair and competitive rates.
Merchants can have confidence in the accuracy and reliability of Shopify's currency conversion system, allowing them to conduct business seamlessly across international markets.
2. Default Exchange Rate Provider:
By default, Shopify employs its own exchange rate provider to calculate currency conversions. This ensures that merchants have a reliable and consistent baseline for converting prices and handling transactions involving different currencies.
However, Shopify also recognizes the diverse needs of its merchants and offers them the flexibility to choose alternative options. Merchants have the option to integrate third-party apps or connect with other exchange rate providers of their preference.
This allows them to customize their currency conversion processes based on their specific requirements, such as accessing more favorable rates or utilizing additional features offered by these external providers.
The ability to integrate with third-party apps or exchange rate providers empowers merchants to optimize their currency conversion strategies and tailor them to their unique business needs.
3. Exchange Rate Variations:
Exchange rates are susceptible to continuous fluctuations in the foreign exchange market. As a result, the actual amount charged to customers may slightly differ from the displayed converted price.
It's important for both merchants and customers to understand that exchange rates can vary in real-time, and these variations can impact the final converted price at the time of payment.
The displayed converted price serves as an estimate based on the prevailing exchange rate at the time of viewing, but the actual amount charged may be slightly different due to the dynamic nature of currency markets.
Merchants should communicate this possibility to customers to manage expectations and ensure transparency regarding potential variations in the final price resulting from exchange rate fluctuations.
Calculating and assessing Shopify's currency conversion fees
When customers make a purchase in a currency different from your store's default currency, Shopify applies a currency conversion fee. Here's how you can calculate and assess these fees:
1. Understanding the Currency Conversion Fee:
When it comes to currency conversion, Shopify applies a fee to cover the expenses associated with processing transactions in foreign currencies. This fee takes the form of a percentage-based markup, which is added on top of the exchange rate used for converting currencies.
The purpose of this fee is to account for the costs incurred by Shopify in facilitating the currency conversion process and providing a seamless payment experience to merchants and their customers.
2. Calculating the Currency Conversion Fee:
The actual currency conversion fee can vary depending on several factors, including the payment provider utilized and the specific currency being converted.
To calculate the fee, merchants need to multiply the converted price by the applicable currency conversion fee percentage. This calculation ensures that the fee accurately reflects the proportionate amount being charged for converting the currency.
3. Assessing the Impact on Your Business:
Assessing the impact of currency conversion fees on your business is essential to maintain profitability and establish effective pricing strategies. Factors to consider include the average order value within your business, customer preferences regarding currency options, and the level of competitiveness in your target market.
By thoroughly evaluating these aspects, you can gain insights into how currency conversion fees may influence your bottom line and make informed decisions to optimize your pricing and profitability.
4. Mitigating Currency Conversion Fees:
Merchants have options to mitigate currency conversion fees within their Shopify setup. Exploring alternative payment gateways can be beneficial, as some may offer lower currency conversion fees compared to others.
Conducting research and selecting a payment gateway that aligns with your business needs can help reduce costs associated with currency conversion. Additionally, integrating third-party apps and tools can provide further flexibility in managing currency conversion fees, enabling you to explore additional cost-saving measures and optimize your financial operations.
Selling in Multiple Currencies without Shopify Payments
Expanding your e-commerce business to cater to a global audience involves selling in multiple currencies. While Shopify offers its own payment solution called Shopify Payments, there are instances where merchants may prefer to explore alternative payment gateways.
Let’s take a look at the possibility of selling in multiple currencies without using Shopify Payments.
Selling without Shopify Payments
While Shopify Payments provides a convenient and integrated payment solution for Shopify merchants, there are instances where businesses may prefer to explore alternative payment gateways to sell in multiple currencies. Here is an overview of selling options without using Shopify Payments:
1. Third-Party Payment Gateways:
There is a wide selection of third-party payment gateways available that support multi-currency transactions and can seamlessly integrate with Shopify. Popular options include PayPal, Stripe, Authorize.Net, 2Checkout, and Braintree, among others.
Merchants have the flexibility to choose a payment gateway that aligns with their specific business requirements, geographical reach, and preferred currencies.
Considering factors such as transaction fees, supported countries, currency options, and security features can help merchants make an informed decision about the payment gateway that best suits their needs.
2. Payment Gateway Integration:
Once a suitable payment gateway is selected, integrating it with the Shopify store is a straightforward process. Merchants can find the respective payment gateway app in the Shopify App Store and install it on their store.
Following the provided instructions from the payment gateway provider, merchants can configure the app to establish the necessary connection between their store and the chosen payment gateway. This integration enables the smooth processing of multi-currency transactions, providing customers with a seamless checkout experience.
3. Currency Conversion and Exchange Rates:
When using alternative payment gateways, currency conversion remains a crucial aspect. Depending on the selected payment gateway, currency conversion may be handled internally by the gateway itself or through an external exchange rate provider.
Store owners should familiarize themselves with the currency conversion process employed by their chosen payment gateway, including any associated fees or exchange rate markups.
Understanding these details allows merchants to accurately assess the costs involved in currency conversions and make informed decisions regarding their pricing strategies and profitability.
4. Customer Experience:
A key consideration when selecting a payment gateway is ensuring a positive customer experience during the checkout process. The chosen payment gateway should provide a seamless and user-friendly checkout flow.
This includes clear currency selection options that allow customers to choose their preferred currency and transparent pricing displayed in the selected currency. A smooth and intuitive checkout experience in customers' preferred currencies enhances their satisfaction and confidence in making purchases from the Shopify store.
5. Considerations and Limitations:
When opting for third-party payment gateways, merchants should take into account any additional transaction fees imposed by the payment gateway provider.
They should also consider the setup requirements for establishing an account with the chosen payment gateway and check compatibility with other Shopify features and apps that they may be utilizing.
Some payment gateways may have restrictions or limitations based on the countries they support or the currencies they accept.
Thorough research and evaluation of each payment gateway's features, costs, and limitations are essential for merchants to make an informed decision and select the most suitable payment gateway for their business.
Leveraging the Shopify Currency API for Custom Solutions
Shopify offers a powerful Currency API that empowers developers to build custom solutions for effectively managing currencies within their Shopify stores.
The Currency API provides a range of functionalities, allowing merchants to retrieve currency exchange rates, perform currency conversions, and carry out other currency-related operations programmatically.
This robust API opens up opportunities for developers to create tailored currency conversion solutions that align precisely with their clients' unique business requirements.
Other things to note about the Shopify Currency API are:
Custom Currency Conversion Solutions:
With the flexibility provided by the Currency API, developers can design and develop custom currency conversion apps or integrations that offer distinctive features and functionalities.
These solutions can incorporate real-time exchange rates, advanced rounding options, or integration with external data sources to ensure accurate and up-to-date currency conversions.
By leveraging the capabilities of the Currency API, developers can craft bespoke currency conversion solutions that address specific business needs, such as integrating with a preferred exchange rate provider or accommodating complex pricing strategies.
Developer Resources and Support:
To facilitate the utilization of the Currency API, Shopify provides extensive documentation, developer guides, and resources.
Developers can access the comprehensive Shopify API documentation, which outlines the available endpoints, parameters, and authentication methods necessary for interacting with the Currency API.
In addition, Shopify offers developer support to assist with any questions or technical challenges related to the API, ensuring that developers have the necessary resources and assistance to leverage the Currency API effectively.
Adjusting Currency Settings for Non-Shopify Payments
There are three key things to look at when adjusting currency settings for non-Shopify payments:
Handling Currency Conversion for Non-Shopify Payments:
When utilizing external payment gateways that do not inherently support multi-currency transactions, merchants must consider additional steps to handle currency conversion effectively.
To manage currency conversion for non-Shopify payments, merchants can manually adjust the prices in their store's default currency to account for exchange rates. Regular monitoring of exchange rates is crucial, as it allows merchants to update prices accordingly, ensuring accurate and up-to-date currency conversions.
Displaying Prices in Customer's Preferred Currency:
Even if non-Shopify payment gateways do not automate currency conversion, merchants can still provide a seamless shopping experience by displaying prices in the customer's preferred currency.
This can be achieved by leveraging currency conversion apps or implementing custom code snippets that fetch exchange rates in real-time and dynamically display prices converted into the desired currency.
By offering this functionality, merchants can enhance the user experience and cater to customers' currency preferences.
Communicating Currency Conversion to Customers:
To avoid any confusion or discrepancies, it is important to clearly communicate to customers that currency conversions are approximate and may slightly differ from the displayed prices due to exchange rate fluctuations.
Transparency is key in ensuring customer trust, so merchants should provide information about any potential fees or additional charges associated with currency conversion for non-Shopify payments.
By setting clear expectations and providing transparent information, merchants can build trust with their customers and minimize any potential misunderstandings related to currency conversion.
Final Thoughts
Managing currencies on Shopify presents both challenges and opportunities for e-commerce businesses. Whether it's addressing currency issues, exploring multi-currency options, or customizing currency settings, merchants need to navigate these complexities to provide a seamless experience to their global customer base.
By utilizing Shopify's built-in features such as the multi-currency feature, store currency configuration, and payout currency settings, businesses can easily adapt to different customer preferences and expand their reach in international markets.
Additionally, integrating third-party applications like PayTraQer and SaasAnt Transactions offer easy integration with automated accounting software for various multi-currency options. By effectively managing currency on Shopify, businesses can overcome challenges, provide a personalized shopping experience, and drive global growth in the competitive e-commerce landscape.
FAQs
Does Shopify automatically change currency?
Yes, Shopify has a built-in multi-currency feature that allows merchants to display prices and accept payments in different currencies. However, it's important to note that this feature is not enabled by default.
Merchants need to manually configure and activate the multi-currency feature in their Shopify settings. Once enabled, Shopify will automatically detect the customer's location and display prices in their local currency, if available.
This enhances the customer experience by providing localized pricing, but it's crucial for merchants to regularly update currency exchange rates to ensure accurate conversions.
How do I change the currency on Shopify?
To change the currency on Shopify, merchants can follow these steps:
Log in to their Shopify admin panel.
Go to "Settings" and select "General."
Under "Standards and formats," locate the "Currency" section.
Choose the desired currency from the dropdown menu.
Save the changes to update the currency settings in the store.
Does Shopify show currency based on location?
Yes, Shopify can show currency based on the customer's location. When the multi-currency feature is enabled, Shopify utilizes IP geolocation to determine the customer's location and display prices in their local currency, if available.
This helps create a personalized shopping experience for customers and eliminates the need for them to manually convert prices. However, merchants should keep in mind that customers have the option to manually change the currency selection if they prefer to shop in a different currency.
Why is Shopify charging in USD?
Shopify charges in USD as it is the default currency for Shopify Payments. When merchants use Shopify Payments as their payment gateway, all transactions processed through Shopify Payments are settled in USD. This default currency simplifies the payment processing and ensures consistency in reporting and financial tracking.
However, it's important to note that merchants can still sell in multiple currencies and accept payments in different currencies using external payment gateways. In such cases, currency conversion and settlement may vary depending on the chosen payment gateway and its supported currencies.