Avoid Stripe currency conversion fees using TransferWise

Like most SaaS-providers we charge in USD even though we are not based in USA. MakePlans is based in Norway and NOK is the currency of choice here (along with Brent crude oil of course). While we do have some expenses in USD most of our revenue would eventually end up in our Norwegian bank account in NOK. When using Stripe for card payments they will handle currency conversion when they pay out in your local currency. While doing this they charge a 2% currency conversion fee. That is on top of their already high fees (2,9% for foreign cards here in Norway!).

Unavailable options

Turns out avoiding Stripe currency conversion fees wasn’t that easy. Here are the options we investigated:

Use a local USD account

From the start we assumed this could easily be solved by having a local USD account. Most bigger banks offer USD accounts and we could easily open one. There would be some incoming transfer fees payable to the bank but a lot less than the 2% Stripe charges.

But Stripe only supports USD payouts to bank accounts in USA and Canada. So while we did some research here it was pointless as such an account could not be used for payouts from Stripe.

Open a bank account in the USA with a local bank

Our next research mission was to open a bank account in the USA. The easiest would be using a local bank but going into the process we were informed that it was not allowed to open what they call a personal account. Even though this would be a business account this rule comes into action when the business is majority owned by one person. As is the case with MakePlans. And that person would not sell of half of the company just to get a bank account in USA.

Open a bank account in the USA with an American bank

So as a European company this leaves us one option: open a bank account in USA. While starting a US company is a lot more complicated than starting a company here in Norway (can be done in less than 30 minutes including getting a bank account) there are options for opening up a company fairly smoothly. And no reason to follow all the Google search results - Stripe actually offers a way to this. It is called Stripe Atlas. If you need a US company for other reason this seems like a good way to go. But it will mean that have all the obligations that comes with having another company and it being in USA. It will also complicate tax reporting in your company structure. So while some research was conducted here we quickly dismissed this idea and I don’t recommend it unless you need a US company for other reasons.

Enter TransferWise

I have used TransferWise a few times and it seems like a good option for money transfer and while I knew about their card offering I never really looked into too much as I was using Revolut when travelling to save on currency conversion fees for private usage. I guess it was around the time when Revolut launched their business offering I started looking into TransferWise Business. It got me excited but Revolut Business only offers a USD account in the UK, and as you already know now Stripe only supports payout in USD to accounts located in USA and Canada. TransferWise however do offer a USD account in USA. You will get a fully functional business bank account with routing and account number. Yay!

How to set it up

Getting instant 2% profit is quick and easy:

  1. Register for a TransferWise business account.

  2. Open a USD balance in TransferWise.

  3. Enter the TransferWise USD bank account details in the Stripe dashboard ‘Payout settings’ section.

From now on all your USD charges will be paid out in USD and you will no longer pay any currency conversion fees to Stripe.

As a bonus you can use your shiny new TransferWise card and pay your expenses such as Heroku or Amazon directly in USD. Saving you even more in currency conversion fees as your local card usually will charge 2% as well. Double win!

How much does it cost?

  • Free to open account.
  • Free debit Mastercard.

Transfer of $1000 USD to Norwegian bank account by converting to NOK:

Method Variable fee Fixed Fees Total Fees
Stripe 2.00% Free $20 USD
TransferWise 0.44% $0.80 USD $5.18 USD

If you do not need to transfer to your local bank account you can spend using your TransferWise card. Fees for $1000 USD spending:

Currency Variable fee Total Fees
USD Free Free
NOK 0.44% $4.38 USD

For other currencies and amounts see the pricing calculator and full price list for TransferWise multi-currency account.

To get started with TransferWise you can register here - this link will also give you fee-free transfer of up to 500 GBP.

Published 19 Jan 2021

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