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About Exchange rates and Currencies?


jeya

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Just be careful about setting prices in one currency and quoting an equivalent rate in another. If the customer pays in the "other" currency, and the exchange rate moves between the time they press the "pay" button and the time their payment clears, you'll eat the difference (or profit by it, if the rate moves in your favor). Banks and other financial institutions will also take a fee (for exchanging) on top of whatever rate is quoted, so you want to be careful to quote the rate/fees actually used by whoever is doing the conversion. On the other hand, if you quote a fixed price in, say, Canadian dollars, and a U.S. purchaser decides it's a good price in U.S. dollars, and the purchaser authorizes the purchase in Canadian dollars and the rate changes against them, they'll end up being billed for more U.S. dollars than they expected, and could be very unhappy.

 

I guess the moral of the story would be that if you want to set prices in one currency, and quote an equivalent in another, be sure that your customer doesn't unexpectedly end up paying more (in their currency) than they intended. If you accept payment only in one currency, but post the "equivalent" in another, be sure to use a realistic rate that reflects exchange fees and the rate that your bank or service (e.g., PayPal) will actually use. Protect yourself by warning your customer that the posted rates are approximate and subject to change minute-by-minute. Talk with your credit card or other payment service to see what they recommend as far as posting "approximate equivalent prices" or "actual prices" in other currencies. Do you post prices and accept payment in only one currency, or will you be posting prices and accepting payment in multiple currencies? In the first case, I would give an "approximate" or "estimated" equivalent in the purchaser's currency, but make no guarantees that is exactly what they will pay. In the second case, the risk of currency exchange rate fluctuations in on you, as the purchaser agreed to a fixed amount in their currency.

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