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Understanding Currency Conversion in Your Payment and Settlement Process

The transaction currency set on the merchant's website directly affects the customer's payment experience and is integral to the funds settlement process. This guide explains how the chosen transaction currency affects currency conversion and exchange throughout the payment and settlement flow.

I. Currency Type Definitions​

Currency TypeDescription
Customer Payment CurrencyThe currency of the customer's credit or debit card, and the currency that appears on their billing statement.
Website Transaction CurrencyThe currency shown on the merchant's website checkout page, sent to Oceanpayment when the transaction is initiated.
Bank Channel CurrencyThe currency supported by the payment channel. Each channel typically supports multiple currencies (depending on the payment method), enabling the merchant to accept payments from key markets worldwide.
Merchant Settlement CurrencyThe currency agreed between the merchant and Oceanpayment for settlement, as specified in the contract.

II. Three Common Currency Conversion Scenarios​

Currency conversion occurs when different stages of the payment and settlement flow involve different currencies. Below are three typical scenarios:

  1. Website Transaction Currency = Customer Payment Currency = Bank Channel Currency = Merchant Settlement Currency

No currency conversion is required at any stage in this scenario, delivering the optimal experience for both the customer and the merchant. However, the merchant must manage multiple currency accounts, which complicates fund consolidation. This option is suitable for merchants with multi-currency treasury needs.

  1. Website Transaction Currency = Customer Payment Currency = Bank Channel Currency ≠ Merchant Settlement Currency

Merchants typically unify their settlement currency to streamline fund consolidation. This approach balances operational efficiency for the merchant with a seamless payment experience for the customer. It is the recommended option and the most widely adopted by merchants.

  1. Website Transaction Currency ≠ Customer Payment Currency ≠ Bank Channel Currency = Merchant Settlement Currency

While this option meets the merchant's fund consolidation needs, it compromises the customer payment experience. Customers are subject to currency conversion during checkout, which increases the risk of complaints and disputes. Consequently, merchants generally avoid this option.

III. Application Scenario Examples​

  1. Website Transaction Currency = Customer Payment Currency = Bank Channel Currency = Merchant Settlement Currency​

Merchants targeting multiple countries or regions with multi-currency treasury needs may adopt the Multi-Currency Transaction + Multi-Currency Settlement model.

Example: A merchant serving the US, Sweden and Norway displays US Dollar (USD), Swedish Krona (SEK), Norwegian Krone (NOK) on its website based on the customer's location:

  • Customers pay in local currency with no conversion, for a smooth experience;

  • Oceanpayment processes orders in the respective currency (USD/SEK/NOK);

  • Oceanpayment settles with merchants in the same currency as transactions.

This model enables each market to operate entirely in its local currency, delivering the optimal payment experience with no foreign exchange involved; however, the merchant must maintain separate currency accounts for each market, resulting in fragmented funds and higher administrative overhead. It is therefore best suited for merchants with multi-currency treasury requirements.

  1. Website Transaction Currency = Customer Payment Currency = Bank Channel Currency ≠ Merchant Settlement Currency​

Merchants targeting multiple countries or regions who need to balance customer payment experience with fund consolidation efficiency may adopt the Multi-Currency Transaction + Single-Currency Settlement model.

Example: A merchant serving the US, Sweden and Norway displays US Dollar (USD), Swedish Krona (SEK), Norwegian Krone (NOK) on its website based on the customer's location:

  • Customers pay in local currency without conversion for a smooth experience;

  • Oceanpayment processes orders in the respective currency (USD/SEK/NOK);

  • All transactions are converted to the merchant’s contracted settlement currency (e.g. USD) for fund consolidation.

Under this model, the currency displayed and charged is fully aligned with the customer's local currency, delivering the optimal payment experience; meanwhile, the merchant is relieved from managing multiple foreign currency accounts, as all transactions are ultimately consolidated into a single settlement currency, significantly streamlining treasury operations. This balance between customer experience and operational efficiency makes it the preferred option for most merchants.

  1. Website Transaction Currency ≠ Customer Payment Currency ≠ Bank Channel Currency = Merchant Settlement Currency​

Merchants that target multiple countries or regions and prioritize fund consolidation may adopt the Single-Currency Transaction + Single-Currency Settlement model.

Example: A merchant with only a USD settlement account operates across the US, Sweden and Norway. Its website displays US Dollar (USD) as the only transaction currency in all markets:

  • Customers pay in local currency (USD/SEK/NOK). For Sweden and Norway, the issuing bank converts transactions to USD. Exchange spreads and conversion fees are borne by customers.

  • All orders are processed via banking channels in USD, regardless of the payment currency.

  • Oceanpayment settles in the contracted currency (e.g. USD) with no extra conversion, facilitating fund consolidation.

Under this model, the currency shown at checkout may differ from the currency appearing on the customer's billing statement. Customers bear both foreign exchange costs and exchange rate fluctuation risks, resulting in a suboptimal payment experience and increased potential for complaints. Consequently, merchants typically do not adopt this approach.