Voice of the Industry

Fixing foreign exchange for online marketplaces

Tuesday 25 June 2024 08:14 CET | Editor: Raluca Ochiana | Voice of the industry

Maximilian Lehmann, SVP and Head of Partnerships at Nium, examines the importance of foreign exchange management for marketplaces.


Global online marketplaces are powering transactions between buyers and sellers around the world. Yet, amid the exchange of goods and services, navigating the intricacies of foreign exchange (FX) management throws up a barrage of obstacles for marketplaces, sapping their ability to unlock their true growth potential. It’s now predicted that 33% of global ecommerce will be cross-border by 2028. If online marketplaces are to reap the rewards of this globalising trend, FX management is a knot of problems best unravelled fast. 

Complexity costs 

So, what exactly is the problem with FX management? The answer is simple – complexity. Handling transactions in multiple currencies is loaded with it. Currency conversion, understanding and managing exchange rate fluctuations, and addressing the ins and outs of cross-border taxation and tariffs – all add layers of complexity to the process. And when it comes to smaller international markets, marketplaces often find themselves resorting to manual processes to distribute funds, introducing more inefficiencies. The upshot of incomplete FX management for platforms is stark: revenue volatility driven by currency price swings, margins drained by unfavourable exchange rates, competitiveness blunted by pricing issues, and overheads bloated by operational inefficiency. Sadly, the end-users of marketplace platforms don’t fare much better either. 

Consider this: on top of all their already-full to-do lists, sellers operating in multiple currencies must grapple with FX fluctuations and transfer fees, all of which are intricately tied to a marketplace platform’s backend payment system. Add to this getting hit by unreasonable FX markups or withdrawal fees and the taxes levied on foreign currency exchanges (1% to a staggering 35%), and the tangled mess of FX management starts carving chunks out of their profit margins. In this way, FX-related issues sour the user experience – creating frustration, chipping away at trust and, ultimately, hurting retention and loyalty. In short, complexity costs. Revenues, profits, and growth potential all take a hit off the back of inefficient and incomplete FX management. It is little surprise, then, that marketplaces are driven to action, but the solutions on offer too often fall short of the challenge. 

Current solutions don’t cut it 

Many global marketplaces have turned to payment services providers (PSPs) or dedicated local payout companies to handle FX management and facilitate global payouts. While these solutions may seem straightforward at first, they come with their fair share of drawbacks. For one, engaging with PSPs or local payout companies strips marketplaces of control over critical elements like onboarding procedures, FX rates, and payout costs. Sellers are typically redirected to a local payout provider, severing the marketplace’s influence over crucial steps in the journey. The user experience often suffers, leading to dissatisfaction and undermining the marketplace’s reputation. On top of this, adopting multiple payout providers adds significant overhead for marketplaces. To cover their global operations and cater to a diverse seller base, marketplaces find themselves caught up in a web of integrations and partnerships with various payout providers. Managing these relationships alone requires substantial resources, redirecting valuable time and attention away from the true objective of growth. 

The fragmented nature of current solutions makes things harder for marketplaces, as they struggle to maintain consistency and efficiency across their global operations. Instead of streamlining FX management and payout processes, marketplaces wind up burdened with disjointed systems and workflows, hampering scalability and hobbling growth. 

Underlying it all is the failure to tackle the complexity of FX management effectively. That’s why current approaches introduce more problems than they solve, leaving marketplaces trapped in a cycle of inefficiency and frustration. It’s clear that a more comprehensive and integrated approach to FX is needed, one that places simplicity and control at its core. 

Control unlocks growth 

At Nium, we’re driven to make the complex simple, and we believe that empowering marketplaces with greater control over the payment experience is key to unlocking the sector’s next wave of global growth. 

With our white-labelled infrastructure, platforms can integrate FX management within their existing ecosystem, exerting full control over the customer experience on a global scale. By eliminating the need for sellers to sign up separately, marketplaces retain autonomy over FX, payout speed, and user data, without the risk of sharing their seller user base with competitors. No more passing sellers off to multiple third-party providers, no more relinquishing control – just a cohesive, global experience that keeps everyone happy. 

We’re convinced that equipping platforms with the ability to conduct transactions in multiple currencies opens a world of possibilities. Platforms can tap into new markets with ease, free of the hassle associated with cross-border transactions and buoyed by optimised processes and reduced transaction costs. Nium’s coverage spans over 100 currencies and 190 markets, 100 of which are in real time, meaning extended reach and diversified revenue streams, so marketplace platforms can focus on what they do best: connecting buyers and sellers to shape the future of digital commerce.


This editorial piece was first published in The Paypers' Fintech for Marketplaces and Platforms Report 2024 which taps into the fast, ever-expanding ecommerce industry, being the ultimate source of information for businesses looking to expand and grow their consumer base. 

About Maximilian Lehmann

Maximilian has over 15 years of experience in banking and payments, scaling some of Europe’s leading payments businesses – from Boku to Adyen, and now Nium. Experienced in managing and growing international commercial teams, Max is responsible for driving new business development and channel partnerships for Nium in Europe. In his spare time, as an A16z scout, Max enjoys sharing his expertise and investing in pre-seed and seed-stage companies.


About Nium

Nium, a real-time cross-border payments company, was founded on the mission to deliver the global payments infrastructure of tomorrow, today. With the onset of the global economy, its payments infrastructure is shaping how banks, fintechs, and businesses everywhere collect, convert, and disburse funds instantly across borders. Funds can be disbursed to accounts, wallets, and cards in 100 currencies and 190+ countries, 100 of which are in real time.

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Keywords: fintech, marketplace, ecommerce, growth markets, FX , PSP, digital payments
Categories: Payments & Commerce
Companies: Nium
Countries: World
This article is part of category

Payments & Commerce


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