If the merchant decides to settle in US dollars, then the merchant's North American Bancard Agent bank converts the money at a mutually agreeable time (generally at time of deposit,) or the merchant's bank will directly settle in US dollars.
Merchants generally suffer a stiff premium for this kind of settlement as the bank tacks-on charges on top of fees it has to pay overseas banks for this service. These charges are significantly greater than using a commercially available FX (Foreign Exchange) solutions or settling natively in a foreign bank.
When merchants make a sale in one currency and settle in another, they are open to FX risks because the valuation of both currencies can change between the time of purchase and settlement.
Like Scenario Two, the merchant also invites ancillary costs associated with the management and reconciliation of converting currency.
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Merchant Account Fees to Business Owners
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Posted 26 November 2022 - 03:15 AM
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