Currency conversions and risk

Currency conversion occurs at the time of the transaction, such as when you capture a payment, you issue a refund, or there is a chargeback. The currency rate that is used is always the rate at the time of the transaction.

You can see the breakdown of a transaction in an order's timeline:

order's timeline

Currency definitions and conversions

Your store has three types of currencies:

  • Store currency - The currency of your Shopify admin. This is the currency that you use to set prices for your products and product variants, and it's the currency that appears in your reports.
  • Presentment currency (also referred to as the customer or local currency) - The currency that the customer sees in your store and the currency that they use when they pay for their orders at checkout.
  • Payout currency - The currency that Shopify uses when it deposits money in your bank account.

Automatic conversions and rounding rules

When you sell in multiple currencies, your online store prices are automatically converted to your customer's currency. You can't set prices for your products manually in different currencies.

A rounding rule sets the price endings for your converted prices. For example, you could choose to have all your USD prices end in $0.99 and all your EUR prices end in €0.90. Your converted prices will fluctuate based on the currency exchange market, but the rounding rules help keep your prices stable.

You can edit these rounding rules from your Shopify Payments settings:

Click Edit to view the rounding rules for a currency.

Your prices are converted by multiplying the store price by the currency conversion rate, adding the conversion fee, and then applying the rounding rules for that currency. Your converted prices include your currency conversion costs. For example, when a $10.00 USD product is converted to Euros, the converted price of €8.90 includes the currency conversion rate and conversion fee:

Product price in store currency (for example, USD) $10.00
Multiply by the currency conversion rate (for example, 0.867519) €8.68
Add the currency conversion fee (for example, 1.5%) €8.81
Apply the rounding rule (for example, €0.90) €8.90

Rounding rules are not applied to gift cards.

Currency conversion risks

Currency rates are always fluctuating. Whenever there is a time delay in processing payments or refunds, there is a risk that you will lose or gain money because of currency conversions.

You can lose (or gain) money in the following situations:

Manually captured payments

If you manually capture credit card payments, then there is a time gap between when you authorize the credit card and when you capture the payment.

The amount that you authorize from a customer is the maximum amount that you can capture. When you authorize a credit card, it is authorized at the currency conversion rate at the time of the authorization. When you capture the payment, the amount that you capture is converted using the current conversion rate (and not the currency conversion rate at the time of the authorization). You can lose or gain money depending upon currency fluctuations.

For example, you run a store that sells in USD and in EUR. Your customer Harry creates an order for a €90 bookshelf for his wife Meaghan. When his credit card is authorized, $1 USD is equivalent to €0.90 EUR.

Store currency price Customer's currency price Authorized amount
$100 USD €90 EUR €90 EUR

When you capture the payment for the order, the currency rate has changed and now $1 USD is equivalent to €0.85 EUR. Because Harry's credit card was authorized for €90, you can (and do) capture €90. But because the currency conversion rate fluctuated, the €90 is converted to $98 USD. If you had captured the payment at the time of authorization, then the €90 would have been converted to $100 USD.

Store currency price Authorized amount Captured amount Captured amount converted to store currency
$100 USD €90 EUR €90 EUR $98 US

Refunds

There is often a time gap between when a customer creates an order and when they make a return. As a result, the converted amount that you receive for the order usually doesn't equal the converted amount that you give back in the refund. You might lose or gain money because of currency conversions. Learn about refunding orders when selling in multiple currencies.

Chargebacks

When a cardholder initiates a chargeback:

  1. The cardholder's bank requests that the disputed amount be returned to the cardholder, and it issues a chargeback fee.

  2. Shopify credits the disputed amount to the cardholder and pays the fee to the cardholder's bank on your behalf. Then, it subtracts these amounts from your payout. When the original order's currency is different from the currency of your payout, Shopify converts the amount that it pays on your behalf from your payout. It uses the current conversion rate (and not the currency conversion rate at the time of your order) to convert this amount. You are not charged a conversion fee for this currency conversion.

  3. If you dispute the chargeback and you win (it is resolved in your favor), then the disputed amount is returned to you and you are refunded the chargeback fee. The returned amounts are in the currency of the original order. Shopify converts these amounts to your payout using the current conversion rates (and not the rate at the time of the order or the rate at the time of the dispute).

Shopify Payments and other payment providers

Only Shopify Payments can process payments in a customer's local (presentment) currency. If your customer chooses a payment option from a different payment provider, then their payment is made in the currency of your store.

When your customer chooses a payment provider other than Shopify Payments, the prices (in your customer's local currency) are converted to your store currency. As a result, the price that your customer pays will be more than the product price in your store currency.

For example, your store's currency is in USD, and you sell a t-shirt for $10 USD. A customer chooses to view your store using EUR (€8.90 EUR), but at checkout they choose to pay using a payment provider other than Shopify Payments. The price of the t-shirt is converted from EUR to USD, so the customer pays $10.08 USD for the t-shirt.

Product price in store currency (for example, USD) $10.00 USD
Multiply by the currency conversion rate (for example, 0.867519) €8.68 EUR
Add the currency conversion fee (for example, 1.5%) €8.81 EUR
Apply the rounding rule (for example, €0.90) €8.90 EUR
Customer check outs using a different payment provider.

EUR is converted to USD (for example, 0.132481)

$10.08 USD

If you want to encourage your customers to use Shopify Payments, then use Shopify Scripts to hide other payment providers for customers who choose a foreign currency at checkout.

Selling and settling in different currencies and selling in multiple currencies

Most currency conversions occur between your customer's local (presentment) currency and the currency of your store. The exception is when your store currency is different from your payout currency. In that case, currency conversions occur between the customer's local currency and your payout currency. In this case, your money is converted only once (not twice).

Learn more

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