When you use Trust My Travel for one-time (full balance) payments, Multi-Currency Pricing can handle your FX risk for you. Regardless of what currency your traveller pays in, you will receive the money in full in your channel’s base currency.
However, what do you do if you are accepting a deposit and balance payment across a number of transactions for the same booking?
Firstly, our system is designed to handle more than one transaction against the same booking. For example, you can setup a booking for 10,000 USD and add as many transactions to this booking until it is paid. This allows you to track and manage partial payments over payment terms you agree with your customers.
You then have two options in managing your FX risk:
Use Multi-Currency Pricing – MCP is designed to manage your FX risk for you. Quote to your customer in your base currency and tell them that they can pay in any currency they would like based on the exchange rate that day. You can say to them, the deposit term is 1,000.00 USD today (in your local currency) and the 9,000.00 USD (in your local currency) is due in 20 days time. On both occasions, the traveller chooses to pay in GBP and you receive 10,000.00 USD as if it was a domestic sale, thereby covering your FX risk.
i. Transparency to Customer – the customer on the payment page will be quoted an actual local currency (GBP In this example) which will be the actual amount quoted on their statement. If they chose to pay in USD with a GBP based card, they will not know the cost for some days later.
ii. Customer Cost – by choosing to pay in GBP using MCP, the cost will be much cheaper than leaving it to their bank to convert for them. They will not know this cost until many days later
iii. Travel Provider FX risk – regardless of which currency your traveller pays in, you will receive your base currency amount in full and do not have to worry. You just need to setup the booking in your channel that is set to your desired based currency and let the traveller choose which currency to pay in. We advise you make the above benefits clear to them.
Hedge the FX yourself to provide the customer with a fixed local cost – you can choose to quote a fixed value to the customer in their local currency. In this scenario, you will need to ensure you have your FX hedged with a bank or Broker or are willing to take the risk if your base currency strengthens. To do this, setup your booking with a channel that has a base currency of the traveller. Whilst they could choose to use other currencies to pay (MCP is never restricted), they invariably will pay with their local currency and MCP is not required. In which case, you receive settlement in the local currency from TMT and must handle the FX Exposure
i. Traveller receives fixed price for booking
i. You need to decide what rate to use to convert and quote the customer
ii. You need to either hedge your exposure with a bank or FX broker via a Forward contract. We advise you opt for a traditional forward contract either with a fixed or varied maturity date. Do not opt for options, they are expensive and have lots of hidden terms and costs.
iii. You need to ensure you have a processing channel setup with us in the currency of your travellers
iv. You need to ensure you have a physical bank account in the processing channel currency (that of your customer you are pricing) otherwise you will also bear fees receiving money into your base currency account.