Global Spend Management ‘Gotchas’ Part 2

Operating a business with multiple currencies presents unique challenges — and although many spend management solutions promise “global solutions”, it’s crucial to read between the lines. Not all multi-currency support is created equal, and the devil is in the details.

Issuing cards, making payments and settling in local currencies each have benefits. But combining all three is a force multiplier for finance teams: The holy trinity of global corporate card solutions, if you will. To reach true corporate card transcendence in multiple currencies, you’ve got to have all three.

But not all spend management vendors are quite as “global” as they seem. Let’s look at how you can ensure you’re getting the multi-currency support you need.

What They’ll Claim

Many solutions on the market say that they issue local cards. But if you dig a little deeper, you may find that actually means they issue cards that let employees pay in local currencies. 

But any card backed by a major payment network (like Visa or Mastercard) can pay for goods and services anywhere that network is accepted. Visa, for example, is accepted in 150+ currencies in over 200 countries around the world. That’s not special. And that’s not “local currency card issuing”.  

“Gotcha!”

So, by now you’ve been issuing those “local cards” to employees, and they’ve been making purchases in local currencies. Most of their purchases went through, but some are being rejected – despite vendor promises. Hmmmm.

Then you look at your account (or statement) and notice something you didn’t expect. FX fees. ~3% markup on top of every international purchase. And believe me, it adds up.  

Skeptical? Here’s what one customer had to say about how some spend management products handle foreign transactions: 

What’s Happening & Why It Matters

Being able to pay for goods and services around the world is table stakes. But true multi-currency for corporate cards means more than just paying. You must issue local currency cards and fund them in the same currency, so you can settle transactions in that same currency (there’s that holy trinity of global card spending again).

Without funding and settling in local currencies, you’re paying in the currency you bank with (e.g. USD) and the network is converting it to the local currency – and charging you that ~3% FX fee. 

Currency conversions are also subject to exchange rate fluctuations. What costs $10 today, might cost $11 tomorrow and $9.50 the day after. Regardless, forecasting FX markets shouldn’t be a factor in your next budgeting exercise. 

And what about those declined transactions? Why aren’t the authorization rates what you were promised? The answer is local BINS. No, we’re not talking about trash cans. 

BINS, or Bank Identification Numbers, are the unsung heroes of payment authorization.

A BIN is the first 6 to 8 numbers on a card. Each number has meaning, and indicates specific information that helps payment processors decide whether to approve or decline a transaction. 

The BIN identifies the issuing bank and country, the card brand (Visa, Amex, etc.) and other card characteristics, including how the card is funded (debit, credit or prepaid). This information is then used to route transactions to boost authorization rates, reduce fraud, and comply with payment regulations.

One of the most common reasons for international declines is transactions are often sent to a processor that isn’t authorized to process transactions from the country where the card is issued. BIN data identifies the country where the card was issued and sends those transactions to the appropriate payment processor(s) for that issuing country. 

Questions to Ask to Avoid the Dreaded “Gotcha!”

No one likes extra fees (especially when you thought you eliminated them!), or when their card is declined at an important international sales dinner. To avoid those nasty “gotchas”, make sure you ask the right questions when you’re evaluating global card vendors.

1. Can I fund my account in local currencies? If so, which ones?
2. Can you issue cards and settle transactions in different currencies for different entities?
3. If you issue cards in local currencies, do they have local BIN numbers? 

Multi-currency Needs Don’t Stop at the Cash Register

Payment and expenses are really the beginning of multi-currency support. To truly support local currencies, your solution also needs to support what comes next: reconciliation and reimbursement. 

But that’s the subject of our next installment. Make sure to come back to get all the dirty details.

Learn more about how Mesh offers truly global support for enterprise businesses.

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