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.

Currency conversion risks

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

You can lose or gain money in the following situations:

Automatic exchange rate conversions

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

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 if applicable. 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 x currency conversion rate) x (1 + currency conversion fee)
($10.00 USD x 0.867519) x (1 + .015) = €8.81

If you have rounding rules enabled, then the total is rounded up to €8.90.

Manual exchange rate conversions

On the Shopify, Shopify Advanced, and Shopify Plus plans, you can set the exchange rate manually. This allows you to lock in a set price for each currency you have enabled, and you won't have to worry about fluctuating exchange rates. Your prices won't change with the market rates.

When using manual conversion rates, you might gain or lose money depending on your variance against current market exchange rates.

A conversion fee applies to your currency conversion. If you want to include this fee in your manual rate, then multiply your rate by the conversion fee for your store’s country. For example, a USD to EUR exchange rate with a 1.5% conversion fee might look like this: 0.90867 x 1.015 = 0.9223.

You can enable manual rate conversions from your Shopify Payments settings.

Steps:

  1. In the Shopify Payments section, click Manage.
  2. In the Currencies section, click Edit next to the currency you want to edit.
  3. Select Use a manual rate.
  4. Click Save.

Rounding rules

During the currency conversion process, your prices can be rounded to avoid inconsistent price endings. Your converted prices change based on the currency exchange market, but the rounding rules help keep your prices stable.

Rounding rules don't apply to shipping rates or gift cards.

You can preview what your prices look like after conversion from your Shopify Payments settings.

Steps:

  1. In the Shopify Payments section, click Edit.
  2. In the Currencies section click the currency you want to preview.

At any time, you can turn rounding rules on by clicking Enable.

Custom rounding rules

Custom rounding rules give you more control over 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 can fluctuate based on the currency exchange market, but the rounding rules help keep your prices stable.

You can edit rounding rules from your Shopify Payments settings.

Steps:

  1. In the Shopify Payments section, click Manage.
  2. In the Currencies section, click Edit next to the currency you want to edit.
  3. Set the new rounding rule and price ending for your converted price.
  4. Click Save.

Manually captured payments

When you sell in multiple currencies, the amount that you receive is based on the currency rate at the time that you charge the customer's credit card. If you manually capture payments, then your customer's credit card is charged when you process their order, also referred to as when you capture the payment, and not when they submit the order. The currency exchange rate may change between the time of authorization and the time you capture your funds manually. This can result in a small discrepancy.

In your Shopify admin, orders in different currencies are converted to your store currency so that it's easier for you to report your sales. Until you charge the customer for their order, the converted values are estimates.

For example, your store's currency is USD and you sell in USD and in EUR. Gislaine creates an order for a €90 bookshelf. When she submits her order, $1 USD is equal to €0.90 EUR.

Example order
Store currency price Customer's currency price Estimated order amount
$100 USD €90 EUR $100 USD

A few days later the currency rate changes and $1 USD is now equal to €0.85 EUR. You charge Gislaine's credit card for €90 EUR. Because the currency conversion rate changed (and $1 USD = €85 EURO), the €90 converts to $98 USD. You receive $98 USD.

Example of capturing payment for an order after a currency fluctuation
Store currency price Customer's currency price Captured amount converted to store currency
$100 USD €90 EUR $98 USD

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 is 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.

Customer check outs using Shopify Payments:
(Product price x currency conversion rate) + currency conversion fee
($10.00 USD x 0.867519) + 1.5% = €8.81
If you have rounding rules enabled, then Shopify brings the total up to €8.90.

Customer check outs using a different payment provider:
EUR is converted to USD (for example, 0.132481): $10.08 USD

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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