When you sell across borders, there’s a split behind every international transaction: the currency in which your customer pays and the currency you receive. That gap shapes how customers experience your brand, how cleanly you can reconcile payments, and how much of the sale you keep after fees. With the global cross-border payment market valued at $194.6 trillion in 2024, businesses often underestimate how much presentment and settlement currencies shape their operations until the costs and challenges start stacking up.

Below, we’ll explain how presentment and settlement currencies work, why they diverge, and what businesses can do to manage them better.

What’s in this article?

• What is the difference between presentment and settlement currencies?
  
• Why do presentment and settlement currencies often differ in global transactions?
  
• How do currency mismatches affect reconciliation and reporting?
  
• What are the financial implications of currency conversion fees?
  

What is the difference between presentment and settlement currencies?

When you process a global payment, two different currencies are usually involved: the one your customer pays with and the one you receive. They serve distinct purposes:

• Presentment currency is the currency the customer sees. This is what’s charged at checkout.

• Settlement currency is the currency you, as the business, receive in your bank account.

These two currencies aren’t always the same—and for a global business, that’s often a good thing. Charging customers in their local currencies (their presentment currencies) removes obstacles at checkout and can help build confidence and reduce cart abandonment. Settling funds in your preferred currency (settlement currency) makes it easier to manage finances and accounting. The gap between presentment and settlement is an important tool for delivering a better experience on both sides of the transaction.

Why do presentment and settlement currencies often differ in global transactions?

When businesses sell internationally, it’s common—and smart—for the currency a customer pays in to differ from the currency the business ultimately settles in. Here’s why this makes sense.

Customer expectations

Presenting in a local currency is a conversion tool:

• Customers typically appreciate seeing prices in a currency they recognize, especially a local one, without having to do mental math to convert them.

• Shoppers might hesitate to buy if they see a foreign currency. It signals extra bank fees and exchange rate uncertainty.

• Card issuers often add on foreign transaction fees when purchases aren’t in the cardholder’s currency.

• Offering local currency pricing can improve authorization rates by making purchases easier for the issuer to verify.

Internal considerations

On the business side, this simplifies your workflow. Managing dozens of incoming currencies separately would introduce serious complexity across finance, reporting, and tax compliance. Businesses generally want to settle payouts into one or a few base currencies, often the ones they already use for payroll, expenses, and accounting. Receiving funds in a familiar currency eliminates the need for multiple bank accounts, foreign exchange tracking, and intricate cash flow planning.

By consolidating funds into a settlement currency you already work with, you simplify your operations behind the scenes, even as your frontend sales become more global.

Practical constraints

Sometimes, working with two different currencies is not a choice; it’s a necessity. Bank account availability, regulatory restrictions, or platform limitations might require currency conversion at some stage.

For instance, if you charge a customer in Singapore dollars (SGD) but don’t have an SGD bank account, you’ll need to convert that payment into a currency your bank can accept. Payment providers such as Stripe can automatically handle these conversions, which gives you flexibility but also introduces foreign exchange considerations to manage.

How do currency mismatches affect reconciliation and reporting?

Currency conversion means the original transaction amount and the payout amount won’t match on paper. Left unchecked, those mismatches can complicate reconciliation, distort reporting, and even affect your tax calculations. For example, imagine that a customer pays 970 Danish kroner at checkout, and you receive about €130 in your account after conversion. If you don’t track both sides carefully, your books will show mismatched numbers.

To stay accurate, businesses typically record:

• The original transaction amount in the presentment currency

• The converted amount received in the settlement currency

• The exchange rate used at the time of conversion

Accounting teams then track any difference caused by fluctuating rates as foreign exchange gains or losses. That way, when you reconcile sales to payouts, the numbers add up and the impact of foreign exchange rates is clearly documented instead of hidden inside general revenue numbers.

If there’s a gap between the transaction date and the settlement date, exchange rates can shift. Even small fluctuations create foreign exchange gains or losses you’ll need to track separately for clean financial reporting. Without a system for this, businesses risk:

• Misstating revenue

• Misreporting profits

• Struggling with tax compliance when they report across multiple currencies

Working with a payment provider makes this easier. For example, Stripe provides payout reconciliation reports that group payouts by currency and link each deposit directly back to the original transactions and conversion rates used. Instead of manually cross-referencing charges and bank statements, you get transparent, consolidated reporting that shows:

• Which transactions are included in each payout

• What the original currencies were

• How much was converted and at what rate

What are the financial implications of currency conversion fees?

Currency conversion typically happens either at the payment processor level or later at your bank, when it receives funds in a currency your account can’t hold. Either way, the process usually involves two costs:

• The exchange rate spread: This is a small markup added to the market exchange rate.

• The conversion fee: This is an explicit charge, usually a small percentage of the transaction amount.

The fees on a single transaction can be small. But across thousands or even millions of cross-border payments, they can become a significant operating expense.

For example, imagine you sell €1 million worth of products to European customers but settle those payments in US dollars. A 1% conversion fee would cost you €10,000 just to move your earnings into your operating currency. If you could avoid that conversion (e.g., by setting up a euro-denominated bank account), you’d keep that €10,000.

Over time, saving that 1% means stronger margins, especially for businesses with high volumes in foreign markets. Some companies even adjust international pricing slightly higher to cover the hidden cost of currency conversion.

If you can accept payouts in the same currency the customer paid in, you avoid conversion fees altogether. But that’s possible only if your payment provider supports settlement in that currency or if you have a local bank account capable of receiving it. Stripe Payments, for instance, offers local acquiring coverage in 46 markets.

Otherwise, conversion takes place automatically and the associated fees are unavoidable. This means a smart banking setup—choosing where and how you open foreign currency accounts—is an important long-term lever for businesses that are growing internationally.