The recent years have marked a turning point for the global e-commerce industry. Cross-border e-commerce, or online sales abroad, represents a significant opportunity for revenue growth and increased profits for many Bulgarian entrepreneurs. To develop international business and protect profits, it is essential to approach settlements seriously and manage currency risk appropriately. One of the more interesting solutions is local currency accounts in the countries where we sell online. Such a solution, with the service from fintech Ebury, is already available in 10 markets.
The inability to receive funds in the currency of the country where we sell, either in our own online store or on a marketplace, is a real problem that leads to considerable losses. This is well known to entrepreneurs selling goods over the internet to counterparties in other countries, i.e., in the cross-border e-commerce channel. This results from the rules and automated processes used by payment operators and marketplace platforms, which create additional, unnecessary costs for companies.
Having, for example, your own account in Polish Zloti in Poland, Romanian Leu in Romania, British pounds in the UK, Euros in France, or dollars in the United States significantly improves convenience, speed, and eliminates the risk of exchange rate losses.
“The seller must specify a currency account for settlements and agree on the currency in which they will receive proceeds from the marketplace. When the account is not located in the country that uses the given currency, the funds will still be converted by the payment operator, which is always unfavorable for the entrepreneur and reduces their profits,” explains Svetoslav Georgiev, Head of Sales at Ebury Bulgaria. “Therefore, we came up with a solution previously difficult to access, which is intended to simplify settlements and protect the seller’s profits. Our local currency accounts are already operating in 10 markets, including the UK, Eurozone countries, Hungary, and the USA, and the accounts are available on one common platform.”
Where Does the Additional Currency Conversion by Payment Operators Come From?
For intermediaries in banking operations, key is, for example, the IBAN, or the bank account number expressed in the international standard and linked to the country where the account is opened. In the case of banks based in Bulgaria, it is preceded by the abbreviation “BG,” even if the account is held in a foreign currency. Settlement systems often recognize this number as a Bulgarian Lev account in Bulgaria, and instead of the chosen currency that was transferred to the company’s account (e.g., euros), we receive BGN converted at an unfavorable rate.
“Some e-commerce traders are reluctant to convert all their revenues into one single currency – BGN. If they were given a choice, they would appreciate the opportunity to exchange currencies at more favorable rates and at the most convenient time for themselves, as the example of our clients shows,” emphasizes the Ebury expert.
The second factor is the high currency spread (i.e., the difference between the buying and selling prices of a currency) of the amounts that are credited to the Bulgarian Lev account after automatic conversion by the e-commerce platform or payment system operator. In this case, proceeds can be even a few percent lower than those exchanged at the best market rate.
Virtual IBAN and Support Solve the Problems of Cross-Border E-commerce
To avoid currency conversion, you can try to open an account directly in the country of sale, e.g., in Canada, Poland or Hungary, and thus receive funds in the local currency. However, this is a time-consuming and costly process, usually unavailable to many small and medium-sized Bulgarian enterprises.
A virtual IBAN account number comes to the rescue, a solution combined with local currency accounts, provided by Ebury as a regulated payment institution. Such an account has all the functionalities of a bank account and is a beneficial settlement tool for electronic sellers.
The virtual IBAN ensures that companies selling or buying online abroad receive payment securely in the currency of the given country. This is made possible by IBAN numbers preceded by abbreviations assigned in the banking market to specific countries, and thus, to national currencies.
Global fintech Ebury currently enables account opening and online transactions without costly currency conversion in 11 markets and in currencies such as:
- United Kingdom (British pounds, GBP),
- Hungary (Hungarian forints, HUF),
- Eurozone (euros, EUR) – Belgian, Dutch, French, and Spanish IBANs (each of them authorizes transactions throughout the EU without currency conversion),
- Bulgaria (Bulgarian leva, BGN),
- Australia (Australian dollars, AUD),
- New Zealand (New Zealand dollars, NZD),
- Canada (Canadian dollars, CAD),
- United States (US dollars, USD),
- Hong Kong (Hong Kong dollars, HKD),
- Poland (Polish zlotys, PLN)
- Romania (Romanian Leu, RON)
The opened currency accounts are collected on one common platform.
“Bulgarian entrepreneurs will look for opportunities to increase exports and diversify revenues,” emphasizes Maciej Michalski, e-commerce team leader at Ebury. “We provide them with an essential element of know-how, i.e., solutions that enable efficient settlements, meeting all legal requirements in the given export market. We will develop services in this area, because the cross-border e-commerce market has enormous growth potential.