Setting up currencies for markets

You can set a specific currency for each market so that your customers can browse, pay, and receive refunds in a currency that's familiar to them. Displaying prices in local currencies improves the customer experience and can help to increase conversion rates in international markets.

Each market can have a currency customization that determines what currency is displayed to customers in that market. When a customer visits your store, their market is identified and prices are displayed in the currency configured for that market.

If a market's currency is different from the currency your product prices are set in, then prices are converted using either automatic or manual exchange rates. A currency conversion fee is applied when using automatic rates.

Currency inheritance

Submarkets inherit the currency customization of their parent market by default. If you add a currency customization to a submarket, then it overrides the parent's currency.

If a submarket has multiple parent markets with different currency customizations, then the currency that best matches the customer's local currency is used. If no currency matches, then the most recently updated customization is prioritized.

Add a currency customization to a market

1. From your Shopify admin, go to Markets.

2. Click the market that you want to customize.

3. Click next to Currency.

4. Select the currency you want to use for this market.

5. Select your exchange rate settings:

   • Select Dynamic to automatically convert prices. Prices are converted using the current market exchange rate, updated regularly. The currency conversion fee is included in the price that's displayed to your customer.
   • Select Manual to set a fixed exchange rate. The conversion fee isn't added to prices displayed to your customer. Instead, the fee is reflected in your payouts.

6. Optional: Activate Rounding to adjust converted prices to standard price points (for example, $10.00 USD instead of $10.27 USD).

7. Click Done.

8. Click Save.

Currency for single-country markets

When you create a market for a single country, the market's currency is automatically set to that country's local currency. For example, creating a Japan market automatically sets the currency to JPY. You can change this to any supported currency.

Currency for multi-country markets

When you create a market with multiple countries, the default currency is set to your store's base currency, and local currencies are activated. This means each country in the market displays prices in its own local currency, automatically converted from the market's base currency.

If you deactivate local currencies for a multi-country market, then prices in the market's base currency are displayed for all customers in that market, regardless of their location.

Deactivate local currencies

1. From your Shopify admin, go to Markets.

2. Click the multi-country market.

3. In the currency settings, deactivate Local currencies.

4. Click Save.

Exchange rates with markets

When you sell in local currencies, product prices are converted from your base currency using exchange rates. You can choose between automatic and manual exchange rates, depending on how much control you need over your international pricing.

Automatic exchange rates

With automatic exchange rates, prices are converted using the current market exchange rate. Rates are sourced from financial markets and updated regularly throughout the day.

When you use automatic exchange rates, a currency conversion fee is included in the price displayed to your customer. The fee is either 1.5% or 2%, depending on your store's location. This fee covers the cost of processing the payment in a different currency than your payout currency.

The price displayed to your customer is calculated using the following formula:

Customer price = Base price x Exchange rate x (1 + Conversion fee)

For example, base price for a product in your store is $100.00 USD. The exchange rate to EUR is 0.92, and your store's conversion fee is 1.5%. The following is how your currency conversion is calculated:

• $100.00 USD x 0.92 = €92.00 EUR
• €92.00 EUR x 1.015 = €93.38 EUR
• With rounding activated, this amount is rounded according to your rounding settings.

Automatic exchange rates are a good choice when the following is true:

• You want pricing that stays current with market conditions without manual updates.
• You're comfortable with exchange rate fluctuations affecting your margins.
• You want the conversion fee built into the prices displayed to your customers.

Manual exchange rates

With manual exchange rates, you set a fixed exchange rate for each currency. This gives you full control over the converted price displayed to your customers.

When you use manual exchange rates, the currency conversion fee isn't added to the customer-facing price. Instead, the fee is deducted from your payout. This means the price the customer pays is exactly what you've set, but your payout is slightly less than the converted amount.

Steps:

1. From your Shopify admin, go to Markets.

2. Click the market that you want to update.

3. In the currency settings, select Manual.

4. Enter the exchange rate that you want to use.

5. Click Save.

Manual exchange rates are a good choice when the following is true:

• You want full control over the prices displayed to your customers in each currency.
• You have specific margin targets for international markets.
• You prefer to absorb exchange rate fluctuations rather than passing them to customers.
• You want predictable pricing that doesn't change with daily market movements.

Rounding

When prices are converted between currencies, they often result in amounts such as $14.27 USD or €9.73 EUR. Rounding adjusts converted prices to prices that are easier for customers to process.

For example:

• $14.27 USD becomes $14.00 USD
• €9.73 EUR becomes €10.00 EUR
• ¥1,423 JPY becomes ¥1,400 JPY

Rounding is configured as part of the currency customization for each market. When rounding is activated, it's applied after currency conversion and any price adjustments.

Activate rounding

1. From your Shopify admin, go to Markets.

2. Click the market that you want to update.

3. In the currency customization, activate Rounding.

4. Click Save.

Conversion fees

The currency conversion fee is charged when a customer pays in a currency that's different from your Shopify Payments payout currency. The fee is either 1.5% or 2%, depending on your store's location.

This fee applies per transaction and covers the cost of converting the payment from the customer's currency to your payout currency.

With automatic exchange rates, the fee is included in the price displayed to the customer. The price displayed to the customer already accounts for the conversion fee. With manual exchange rates, the fee isn't added to the customer-facing price. Instead, the fee is deducted from your payout.

When the fee doesn't apply

The currency conversion fee isn't charged in the following cases:

• The customer pays in the same currency as your Shopify Payments payout currency. For example, if your payout currency is USD and the customer pays in USD, then there's no conversion and no fee.
• You use a third-party payment provider instead of Shopify Payments. Third-party providers have their own fee structures for currency conversion.

Fees and multi-entity stores

If your store uses multiple business entities with Shopify Payments accounts in different countries, then the conversion fee depends on which entity processes the payment. If the customer's payment currency matches the entity's payout currency, then no conversion fee is charged.

For example, you have a US entity (payout in USD) and a UK entity (payout in GBP). A customer in the UK pays in GBP, and the order is processed by your UK entity. Because the payment currency matches the payout currency, no conversion fee is charged.

Accounting for fees in your pricing

When setting prices for international markets, consider the following approaches:

• Automatic exchange rates: The fee is already built into the customer-facing price. No additional adjustment is needed, but be aware that your effective margin is slightly lower than your base price suggests.
• Manual exchange rates: Factor the conversion fee into the rate you set. For example, if the market exchange rate is 0.92, you might set your manual rate to 0.906 (0.92 x 0.985) to absorb the 1.5% fee and maintain your target margin.
• Catalog price adjustments: You can use percentage-based price adjustments in your catalogs to increase prices for international markets. This can offset conversion fees and other costs of international selling, such as higher shipping rates.

Supported currencies

Shopify Payments supports several currencies for international selling. The currencies available to you depend on your store's location and your payment processor.

If a country's local currency isn't supported by Shopify Payments, then prices in the market's base currency are displayed to customers in that country instead.

Refunds in foreign currencies

When you issue a refund for an order placed in a foreign currency, the refund amount in your payout currency depends on the exchange rate at the time of the refund, not the time of the original order. This means you might refund a slightly different amount than what you originally received.

When a customer pays in a currency different from your payout currency, the following happens:

• At the time of purchase: The customer pays in their local currency. The payment is converted to your payout currency using the exchange rate at that time.
• At the time of refund: You issue a refund in the customer's original currency. The refund amount is converted back to your payout currency using the exchange rate at that time.

Because exchange rates fluctuate, the amount deducted from your payout for the refund might be more or less than what you originally received.

Exchange rate moves in your favor

A customer pays €92.00 EUR for a product. At the time of purchase, the exchange rate is 0.92, so you receive $100.00 USD.

Later, the exchange rate changes to 0.95 (EUR has strengthened). You refund the customer €92.00 EUR. The USD equivalent is now $96.84 USD.

Result: You received $100.00 USD but refunded only $96.84 USD. You have a gain of $3.16 USD.

Exchange rate moves against you

A customer pays €92.00 EUR. At the time of purchase, the exchange rate is 0.92, so you receive $100.00 USD.

Later, the exchange rate changes to 0.88 (EUR has weakened). You refund €92.00 EUR. The USD equivalent is now $104.55 USD.

Result: You received $100.00 USD but refunded $104.55 USD. You have a loss of $4.55 USD.

Partial refunds

Partial refunds follow the same logic. The partial amount is refunded in the customer's original currency and converted to your payout currency at the current exchange rate.

For example, a customer paid €92.00 EUR and you issue a partial refund of €46.00 EUR. The amount deducted from your payout is the USD equivalent of €46.00 EUR at the current exchange rate.

Refunds and conversion fees

When you refund an order that was processed in a foreign currency, the currency conversion fee that was charged on the original transaction is not refunded. The conversion fee covers the cost of processing the currency exchange and is applied at the time of the original transaction.

Refunds with manual exchange rates

If you use manual exchange rates, then refunds are still processed at the current market exchange rate at the time of the refund, not at the manual rate you set. This is because the actual currency conversion happens at market rates regardless of the rate you use for customer-facing pricing.

Managing foreign currency refunds

Review the following tips to minimize losses due to refunds and exchange rates:

• Process refunds promptly. The longer you wait, the more the exchange rate might change, which increases the chance of a loss.
• Track exchange rate exposure. If you sell a high volume of orders in foreign currencies, then exchange rate movements can have a meaningful impact on your refund costs. Review your refund patterns and consider whether your pricing accounts for this risk.
• Use manual exchange rates for more control. If exchange rate fluctuations on refunds are a concern, then manual exchange rates let you build a buffer into your pricing. Set your manual rate slightly more favorably (for you) to absorb potential refund losses.

Chargebacks

Chargebacks follow the same logic as refunds. The amount debited from your account in your payout currency is based on the exchange rate at the time of the chargeback, not the time of the original transaction.