The new multi-currency service allocates a virtual IBAN account to clients, allowing them to hold, manage, and pay with multiple currencies from a single account. This setup helps manage the flow of funds while providing clients with benefits such as fast settlement times and low foreign exchange costs.
Many established businesses today operate across borders and they want their payment processes to be as straightforward as possible. This is where multi-currency accounts come in as by using such cloud-based banking solutions, companies no longer need to maintain separate accounts for different currencies.
According to the officials, the company has already started rolling out the service to existing clients.
FinXP, founded in 2014, is an electronic money institution licensed by the Malta Financial Services Authority. The company’s mission is to enable its customers to make and receive payments in whatever form best suits them. The company provides dedicated IBAN accounts, multi-currency virtual IBAN accounts, card-issuing, omnichannel payment processing, unique pay-out solutions, SEPA Direct Debit services, and Clearing services.
One of the reasons to have a multi-currency account is to reduce foreign exchange fees. In a single currency account, all payments received in other currencies or payments made in another currency will result in a currency conversion fee. In the case of banks, this fee can be substantial. For businesses working across more than one currency, these fees add up and constitute a significant expense. With a multi-currency account, money can be held in the 'non-home' currency.
Moreover, when a business has a contract with clients in a currency different from its home currency, it can be difficult to predict the final amount that will be paid. With a single currency account, the business is subject to whichever foreign exchange rate the bank or fintech applies at the time of payment.
By combining a multi-currency account with a foreign exchange (FX) forward contract, however, a company can receive and hold the payments in a client's chosen currency, then lock in a future exchange rate to convert to the home currency at a set later date.
The Malta Financial Services Authority (MFSA) is committed to establishing the right conditions for fintech startups, tech firms, and traditional financial services firms to develop fintech products that have the power and potential to define the next generation of finance. The MFSA has established a FinTech Regulatory Sandbox which provides financial services providers with a controlled environment to test products and services.
The authority is also building up a FinTech Innovation Hub, which will offer firms guidance on regulatory matters while firms can also benefit from shared resources, including operational infrastructure. As fintech firms go cross-border, the MFSA is also working with its counterparts in other countries, in and outside the EU, to promote growth and foster cooperation.
Malta has also established a new regulatory authority – the Malta Digital Innovation Authority (MDIA), which certifies Distributed Ledger Technology (DLT) platforms and smart contracts while handling the voluntary registration of technology arrangements.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now