Why my startup doesn’t accept payments in our native currency anymore

I run a business that is registered in Australia (Schedugram – we let people schedule stuff to Instagram). We do a few other things under the same business registration (some consulting, events and other general services), but the bulk of our revenue and costs these days are for Schedugram.

For a while, we accepted payments for Schedugram in Australian dollars, US dollars, Pounds and Euros. We had a setup where all of our customer payments were immediately converted into Australian dollars – at a not-fantastic rate and plus an extra foreign exchange fee, plus the normal credit card fees we pay on local cards.

At the start, everything was local.

In the very early days, we had a lot of Australian customers, because I used our contacts in the social media space. But much to my surprise, we had an Italian customer (who I’d never heard of) register mysteriously about 2 weeks in, and since then most of our business has been with overseas customers pretty much anywhere you can imagine.

But now that the business is at scale, most of our expenses are in US dollars. A lot of my team is based overseas, because (1) we don’t need to all be in one place, and (2) we need to cover 24/7, because our customers expect decent service in their timezone, not just ours.

My experience working with a global team is a blog post for another day, but I’m delighted to be able to work with a group of fantastic professionals every day, and we all have the flexibility that comes with remote working.

After a while though, I worked out that most of our expenses are in US dollars. My team are (mostly) paid in US Dollars or Euros, our server and storage costs are US dollars, our database is US dollars, and many of the services that we use like our helpdesk charge us in US dollars. Given that the bulk of our revenue was coming in as US dollars, that meant that this happened pretty often:

Customer pays in US dollars –(bank & card fees)–> Our bank account in Australian dollars –(bank fees)–> we pay for stuff in US dollars

The banks make enough profit as it is.

Those (bank fees) add up pretty quickly, not to mention that you often end up with a rubbish exchange rate just to top it off. The only plus is the number of rewards points you can accumulate on a credit card (funded by those bank fees).

If the exchange rate shifted, suddenly that conversion to and from Australian dollars got more and more complex by the day, not to mention our base expense rate (compared to our money held in Aussie dollars) shifting rapidly. So what were we to do? One option was to start hedging our revenue and expenses, and hedge against changes in our core currencies. But to be honest, I’m not a forex trader and have zero intent of becoming one.

So instead, we decided that we would transact in US dollars (and Euros, as we do have some expenses there to pay as well). I reconfigured our bank accounts and worked with our credit card processing company to let us collect then store in those native currencies, and we can then pay for things in the same currency and avoid all of the exchange fees.

But our business does pay Australian taxes (GST, company tax etc). As a side note – some people have wondered why I didn’t just register a subsidiary in Hong Kong (or similar) for Schedugram and enjoy 0% tax – that’s a lovely thing to think about 3 years on, but wasn’t my concern at the time!

We have enough in Australian dollars to pay our local expenses anyway, and that’s helped by the other services we offer locally (which we’re paid in Australian dollars for). If or when we do need to move things from US dollars back into Aussie dollars, we can use one of the many peer-transfer services to get a much better rate than we would get with the banks.

We haven’t forced anyone to change currency, so our existing customers who pay in Australian dollars can continue to do so. But for new customers, we’re no longer offering Australian dollars.

I know that’ll potentially annoy some local businesses, who will think the same thing I do when signing up for a service that runs in US dollars – why do I have to pay in US dollars? And unfortunately unless I start charging meaningfully more for people to pay in Australian dollars (to hedge the currency volatility) that’s just how it needs to be.

If we kept offering new currencies, it quickly becomes a slippery slope – we’ve had customer requests to pay in Canadian dollars, Yen, you name it, people have asked. But for us as a business, it was becoming so costly to deal with the accounting costs and bank fees that it was losing way more money (and sleep) than I was willing to tolerate.

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