Local currency vs. hard currency: how the right choice impacts your business growth

Companies operating globally face complex challenges when it comes to cross-border payments. The choice between pricing in local currency or a hard currency has a direct impact on conversion rates, financial predictability, and customer experience.

Offering prices in local currency is not just a convenience for end consumers, it’s a strategy that can significantly boost conversion rates and reduce barriers in the payment process. Transparent pricing eliminates hidden costs and currency uncertainties, building customer trust and improving financial predictability for businesses.

In this article, we explore the benefits of strategic pricing, the impact of different currency approaches, and how global companies are leveraging automatic conversion APIs to optimize operations and expand more efficiently.

Why does pricing in local currency increase conversions?

When consumers make an online purchase, they seek predictability and convenience. The checkout experience plays a crucial role in the purchase decision, and if users encounter prices in a foreign currency, psychological and financial barriers may prevent them from completing the transaction.

Here are the key reasons why pricing in local currency directly impacts conversion rates:

Familiarity and trust:

• According to a Shopify study, companies that implement local pricing experience up to a 40% increase in conversion rates, as customers feel more secure and confident when prices are displayed in their familiar currency. Research from Payments Journal shows that 92% of consumers prefer to pay in their local currency whenever possible.

Reduced cart abandonment:

• When prices are shown in foreign currencies, consumers often have to calculate conversions manually, creating uncertainty about the final payment amount. This process can lead them to use external tools, disrupting the purchase flow. According to the Baymard Institute, 56% of consumers abandon their carts due to difficulties at checkout.

Lower costs and fees:

• If a payment is processed in a currency different from that of the consumer's card, they may face additional costs such as bank fees and unfavorable exchange rates. A Worldpay report indicates that 13% of consumers abandon their purchase when unexpected fees appear at checkout. Pricing in local currency eliminates this issue, ensuring cost predictability.

Credibility and transparency:

• A survey by Accenture revealed that 45% of consumers consider pricing transparency crucial for trusting a brand when making international purchases. Businesses that display clear prices without hidden costs gain higher customer trust and loyalty.

These factors directly contribute to increased customer satisfaction, which leads to higher checkout completion rates. According to PYMNTS, businesses offering local currency pricing can increase their conversion rate by up to 12%, simply by removing psychological and financial barriers from the international shopping experience.

What’s the best strategy for your business?

In this context, the choice between hard currency and local currency becomes a crucial strategic decision for globally operating companies. While local currency pricing offers clear benefits for conversion and customer experience, some businesses still opt for hard currency due to factors such as currency volatility and unified financial management, aiming for financial stability and predictability.

Carefully evaluating the advantages and drawbacks of each model is essential for defining the best strategy for your business. Depending on the market and customer profile, relying solely on hard currency may limit growth opportunities.

In light of these challenges, many companies are adopting hybrid pricing models, combining local currency display with real-time conversion technology. This is exactly what FacilitaPay offers. Through a customizable single API, we help businesses expand their operations by integrating various local payment methods. This allows consumers to see the final price in their local currency, while companies maintain centralized financial management in hard currency.

With the growth of digital commerce and increasing global connectivity, providing an optimized and transparent payment experience has become a crucial competitive advantage for international businesses.

Conclusion

Strategic pricing is not just a convenience, it’s a critical success factor for global business growth. Companies that prioritize customer experience and remove barriers at checkout tend to achieve higher conversion rates and build lasting trust with their customers.

An example can be found in the online education and digital courses sector, where businesses that adopted local currency pricing saw a 20% increase in subscription adoption, according to a study by McKinsey & Company. Similarly, cross-border e-commerce platforms that began displaying local prices recorded a 30% reduction in cart abandonment, according to Worldpay.

The global payments market is evolving, and companies that adopt flexible, adaptive strategies gain a significant competitive edge. With FacilitaPay, businesses can integrate local payment methods, reduce checkout friction, and scale their operations efficiently without compromising financial predictability.

Connect with our specialists to know how FacilitaPay can help you succeed.