The Merits of Local Currency Accounts

Corpay's FX in Focus: The Merits of Local Currency Accounts

As we heard in our podcast episode, local currency accounts can offer businesses greater control, improved efficiency, and stronger global relationships—but there are also operational and regulatory considerations.

Whatever your global business, an import/export business, a multinational managing regional payroll, or a SaaS company looking to simplify client payments, choosing the right partner is essential.

At Corpay, we help businesses navigate these complexities, offering tailored solutions that support growth, streamline international payments, and reduce FX risk.

Click here to listen to the companion podcast.

As global commerce becomes increasingly complex, businesses are reevaluating how they manage international transactions to improve efficiency and reduce costs. One approach that’s gaining traction in the marketplace is the use of foreign currency and local currency accounts. In this conversation, Corpay Cross-Border’s North American Sales leads, John Allen, Senior Vice President of Sales, and Philippe Savoy, Vice President and Head of Corporate Sales, Canada, discuss the strategic benefits of maintaining foreign currency accounts. Their conversation centers on practical considerations, including the challenges businesses may face when opening these accounts, and the role of trusted providers in supporting scalable, cross-border payment solutions.

John: Philippe, let’s start here. Why would a business consider opening a foreign currency account?

Philippe:

Let’s dive in. There are four main reasons, and I think the [most important] is giving the client more control over their conversion costs. It's all about control and having the client make the decision. It's [about] reducing double conversions. It also provides companies with more visibility over their currency balances and transaction costs. It’s faster, simpler to scale globally, and when you think about it, it can attract customers, and/or help expand supplier, contractor or service provider bases, outside the company’s jurisdiction.

And lastly, [foreign currency accounts can provide] greater flexibility when [companies are] entering new markets and/or streamlining the process of paying in local currencies. So, when you put all those together, the value proposition is quite strong.

Philippe: Over to you, John. What type of businesses do you think might benefit most from having local currency accounts?

John:

I think the bottom line is any business making regular payments to international suppliers, employees or customers, or [businesses] receiving revenue from multiple countries, might benefit from a multi-currency account or a local currency account, however you want to think about it. It can help them improve cashflow, and as you said, Philippe, reduce conversion costs.

The first examples that come to mind are multinationals with regional offices and subsidiaries. By maintaining local currency balances, they can manage payroll, expenses, and supplier payments more efficiently. It can provide them with some degree of autonomy, which might help.

Other things that come to mind would be tech and SaaS companies with international clients. Having foreign currency accounts can help improve their collection efforts. Often customers prefer to pay in their local currency rather than having to do a conversion themselves.

Manufacturers with global supply chains would also benefit, and then traditional importers/exporters who[DC1] have regular currency needs. These are the first that come to mind.

Philippe: Let’s expand on the key advantages of paying vendors and supplies in their local currencies.

John:

[First,] it can help improve your business relationship with your partners globally. Whether you're making a payment to a vendor in their local currency or receiving in a customer’s local currency, it's oftentimes easier for people to transact in their domestic currency.

You're going to find that the pricing is better, and you have some negotiation power when you're willing to deal in a local currency. Whether [you’re working with] a customer or supplier, you can usually get faster processing and fewer payment delays when you're dealing in that local currency.

Imagine you're a U.S. company and you're sourcing raw materials from a European supplier. If they pay in U.S. dollars, the supplier will convert the payment into Euro, often at an unfavourable rate of exchange. By paying in Euro directly, the US company likely gains cost savings and faster transaction processing. That's just one example of how this might play out in the real world.

John: Philippe, can you talk about some of the benefits of allowing customers to pay in their own currency?

Philippe:

That's a good question, John. Picking up on what you've just talked about, if you think about it, it’s because you want to be in control, and you want to have visibility [into] the currency.

For me, more control means: more trust, lower cost, lower barriers for payments, and a reduced need to convert on someone else's terms.

John: Let’s continue on that. Do you see a difference in the needs for large enterprises versus SMEs when it comes to these foreign currency accounts?

Philippe:

I don't, John. There are a few minimum requirements [needed] for a company to be eligible, if you will, to have a foreign currency account. But when you look at it, it enables large and small companies to expand markets and to deal locally.

So, for me, it's good for companies in the manufacturing sector, the entertainment industry, multinationals—especially the ones that have global offices or foreign subsidiaries abroad—and, institutional and alternative asset managers that might have fund management offices around the world.

I don't see a difference between multinational or larger SMEs that have operations in a foreign jurisdiction.

Philippe: Back to you, John. What are the biggest challenges you feel businesses face when they're trying to open a foreign bank account?

John:

Wow, there are quite a few. Let's start with regulatory and compliance barriers. Different countries are going to treat anti-money laundering and know-your-customer regulations differently, right? They're going to have their own local requirements. Some may require that you physically have a presence in the country if you want to open a local bank account.

The next, and oftentimes one of the bigger hurdles, is that time is a component. Unlike opening a domestic account in most of the jurisdictions that we operate in, foreign bank accounts can take a lot longer to open. It's not uncommon to see that process take three to nine months, and in some cases, more.

If there are going to be background checks, documentation is extensive. Sometimes you're required to appear in-person. It can be incredibly time consuming.

There's also the cost aspect of it. There’s often a requirement for an initial deposit or some sort of maintenance charge for those accounts.

There can be the language issue. Think about a CFO, maybe here in the U.S., who doesn't speak French and who wants to open an account in France: it can be very difficult to deal with that language barrier.

You may have to hire an interpreter or rely on somebody else to communicate on your behalf. That can also be a sensitive process, right? You want to make sure that you're in charge of the message.

And then there are also transaction fees that are involved with those accounts.

I'm sure I'm missing some, but those are the ones that come to mind and that I've personally noticed customers struggling with.

Philippe: Thanks, John, If I'm a North American business, either in your jurisdiction or mine, that wants to trade internationally, what other options do I have for opening a foreign or a foreign-denominated account?

John:

I would be remiss if I didn't mention companies like Corpay. There are non-bank providers, Corpay being one, that provide multi-currency accounts to customers to make doing business in local jurisdictions easier and more seamless.

It's also often a product that banks will offer. Many banks will allow you to open multi-currency accounts whereby you can have a very similar service offering to what you would otherwise have.

There are partnerships. Sometimes a U.S. bank will partner with another U.S. or a Canadian bank, for example, that offer the same services in-country.

There are a few ways [to do it].

We're also starting to see the emergence of fintechs across the board, [with] different types of offerings. [They may] be more limited in nature, but you'll see virtual accounts, or what appear to be ledger-based accounts, where customers can see foreign balances.

John: What considerations would you say go into choosing a provider, Philippe?

Philippe:

All providers are not created equal. Our North American customers should be choosing a provider that has scale, size, reputation, experience, compatibility with their systems, such as their ERP. Then there is the cost of the facility, the breadth of the product, and the support network around that institution: similar to how you'd be choosing your financial institution. A non-bank provider can provide you with those facilities.

It is quite personal, but it's also broad in that you need to be comfortable clicking all those boxes.

John: Thanks, Philippe. We’ve talked a lot about the benefits of maintaining local currency accounts, multi-currency accounts, however you want to think about them. Let’s turn it around now: are there businesses that don't really need to have separate foreign currency accounts?

Philippe:

Yes, there are some use cases, John. So, think local, be local. Local businesses that have occasional payments or low volume of payments in and out, using the same currency, is an example of not needing a foreign currency account.

Local plants or local subsidiaries that send and receive payments, again in their local currencies, probably would not require a foreign currency account.

Sometimes there is the willingness of some vendors to take on the currency conversion. We've discussed this before: wanting to be in control of the currency conversion. That might be a reason not to expand [to a multi-currency] facility.

And lastly, a client's customers may have the ability to pay in the client's local currency, so the business doesn’t have a requirement to be more global.

And I think those are a few examples of [when] the foreign currency account might not be for you.

The way I see global payments, facilitating payments, expanding to a new market: there is no one-size-fits-all.

So, businesses need to evaluate their options. They need to ask providers the right questions.

Certainly, Corpay can help. And what Corpay does is [help] our clients make these decisions: foreign exchange, global payments, and risk management.

We understand the business's challenges. We are global. We can help tailor solutions for them; that help them grow wherever they are.

This piece is based on our FX in Focus episode #60, The Merits of Local Currency Accounts. The podcast features John Allen and Philippe Savoy, who lead Corpay Cross-Border’s North American corporate sales.

It has been edited from for length and clarity.

Opinions expressed in this article are those of the participants. This article is for informational purposes only and does not constitute advice. Before making any decisions, consult an independent advisor, not affiliated with Corpay, to ensure that the solutions discussed are suitable for your business needs.