Currency Optimization

Optimize FX rates, settlement currencies, and multi-currency payment flows

Overview

Currency optimization reduces the cost of cross-border payments by routing transactions through providers with the best exchange rates, settling in optimal currencies, and minimizing unnecessary currency conversions. For merchants operating across Latin America, effective currency management can reduce FX costs by 0.5-2.0% of transaction volume.

Currency Pair Routing

Different providers offer different exchange rates for the same currency pair. Route transactions to the provider with the most favorable rate for each pair.

How Currency Pair Routing Works

Configuring Currency-Based Routing

In Dashboard > Routing Rules, create rules that consider the settlement currency:

Rule: USD-to-BRL Best Rate
Conditions: currency = USD AND settlement_currency = BRL
Strategy: Cost (FX-optimized)
Providers:
  1. Provider C (best BRL rate historically)
  2. Provider A (fallback)

FX rates fluctuate throughout the day. Yuno’s cost-optimized routing evaluates rates at transaction time, not based on static configuration. Provider ranking may shift intraday.

FX Margin Optimization

FX margin is the markup a provider adds to the mid-market exchange rate. Reducing this margin directly increases your revenue on cross-border transactions.

Strategy	Description	Savings Potential
Negotiate rates	Use transaction volume as leverage to negotiate lower FX margins with providers	0.2-0.5%
Compare providers	Route to the provider with the lowest markup for each currency pair	0.1-0.3%
Lock rates	Use Yuno’s rate quote API to lock favorable rates within the validity window	Avoid adverse movement
Batch settlement	Consolidate settlements to reduce per-transaction FX conversion fees	0.1-0.2%
Local currency pricing	Price in local currency to avoid DCC and its associated markup	1.0-3.0%

Monitoring FX Margins

Track your effective FX costs in Dashboard > Analytics > Currency:

Metric	Description	Target
Effective rate vs. mid-market	Your actual rate compared to the interbank rate	<1.5% markup
FX cost per transaction	Total currency conversion cost per payment	Minimize
Rate lock utilization	Percentage of transactions using locked rates	>80% for cross-border

Multi-Currency Settlement

Choose whether to settle in the customer’s local currency or convert to your home currency.

Settlement Strategy Comparison

Strategy	Pros	Cons	Best For
Local currency settlement	No FX conversion, lower fees, faster settlement	Requires local bank accounts, currency exposure	Merchants with local entities
Home currency settlement	Simple treasury management, no currency exposure	FX conversion fees, potentially lower approval rates	Merchants without local entities
Hybrid	Optimize per market based on volume and cost	More complex treasury operations	Large multi-market merchants

Configuring Settlement Currency

Set your settlement currency per provider in Dashboard > Providers > [Provider Name] > Settlement:

Provider: PagSeguro (Brazil)
Settlement Currency: BRL
Settlement Account: [Brazilian bank account]
Settlement Frequency: Daily

Provider: Adyen (Global)
Settlement Currency: USD
Settlement Account: [US bank account]
Settlement Frequency: Weekly

If you process more than $100K monthly in a single market, consider opening a local bank account and settling in local currency. The FX savings typically exceed the cost of maintaining the account.

Dynamic Currency Conversion (DCC)

DCC allows international cardholders to pay in their home currency rather than the merchant’s currency. The customer sees the converted amount at checkout and chooses whether to pay in their currency or the merchant’s.

DCC Best Practices

Practice	Description
Transparency	Always display both the original and converted amounts, the exchange rate, and any markup
Customer choice	Let the customer choose their preferred currency; never force DCC
Rate disclosure	Show the margin over mid-market rate where required by regulation
Selective offering	Only offer DCC when the card currency differs from the transaction currency

EU regulations (PSD2) and card network rules require explicit customer consent for DCC and clear disclosure of the exchange rate markup. Non-compliance can result in chargebacks and fines.

Implementing DCC with Yuno

1. Enable DCC in Dashboard > Settings > Currency > Dynamic Currency Conversion
2. Yuno detects international cards via BIN lookup
3. A DCC offer is presented to the customer in the checkout flow
4. If accepted, the payment processes in the cardholder’s home currency
5. Settlement occurs in your configured settlement currency

Country-Currency Compatibility Matrix

Use this matrix to determine the correct currency for each market:

Country	Local Currency	Common Alt. Currencies	Settlement Options	Notes
Brazil	BRL	USD	BRL (preferred), USD	PIX requires BRL; cards accept USD with conversion
Mexico	MXN	USD	MXN, USD	OXXO/SPEI require MXN
Colombia	COP	USD	COP, USD	PSE requires COP
Argentina	ARS	USD	ARS, USD	Currency controls may affect USD settlement
Chile	CLP	USD	CLP, USD	High-value transactions common due to CLP denomination
Peru	PEN	USD	PEN, USD	Both currencies widely accepted
Uruguay	UYU	USD	UYU, USD	Small market, USD settlement common

Local payment methods (PIX, OXXO, PSE, Boleto) almost always require the local currency. Card payments are more flexible with currency options.

Settlement Timing Considerations

Settlement timing affects your FX exposure and cash flow:

Factor	Impact	Recommendation
Settlement frequency	Daily settlement reduces FX exposure; weekly may offer better batch rates	Daily for volatile currencies (ARS), weekly for stable (USD-BRL)
Cut-off times	Transactions after cut-off settle in the next cycle	Align cut-off with your peak transaction hours
Weekend/holiday gaps	No settlement on non-business days increases exposure	Factor in 2-3 day gaps for weekend settlements
Provider settlement speed	Varies from T+1 to T+7 depending on provider and country	Prefer T+1 or T+2 providers for high-volume markets

Using Yuno’s Currency Conversion API

Yuno provides a currency conversion API that lets you quote, lock, and apply exchange rates within your payment flow.

Rate Quote Workflow

1. Request a rate quote

   Call the /v1/currency/convert endpoint with the source currency, target currency, and amount:

   curl --request GET \
     --url "https://api.y.uno/v1/currency/convert?from=USD&to=BRL&amount=100.00" \
     --header 'X-Api-Key: YOUR_API_KEY'
   
2. Present the converted amount

   Display both the original and converted amounts to the customer, along with the exchange rate. The response includes a rate_id and valid_until timestamp.

3. Submit payment with locked rate

   Include the rate_id in your payment request to lock the quoted rate:

   {
     "amount": {"value": 100.00, "currency": "USD"},
     "settlement_currency": "BRL",
     "currency_conversion": {"rate_id": "rate_abc123"}
   }
   
4. Handle rate expiration

   If the valid_until timestamp has passed, request a new quote before submitting the payment. Implement client-side countdown to prompt re-quoting.

The currency conversion endpoint may not be available in sandbox environments. Contact Yuno support to enable it for your account if you receive a 404 response.

Currency Hedging Strategies

Effective hedging reduces exposure to exchange rate volatility, particularly important in LatAm markets where currencies like ARS and BRL can swing 5-10% in a month.

Natural Hedging

The simplest hedging approach is matching your revenue and expense currencies. If you collect BRL in Brazil and also pay suppliers or staff in BRL, the exposure nets out.

• Match revenue to expenses: Open local accounts and pay local costs (hosting, salaries, marketing) in the same currency you collect
• Reinvest locally: Use local currency revenue for market expansion rather than converting to USD
• Time settlements strategically: Align settlement dates with known local currency obligations

Forward Contracts

For predictable cross-border flows, lock in exchange rates for future settlement periods:

1. Estimate your monthly settlement volume per currency (e.g., $200K BRL equivalent)
2. Contract a forward rate with your banking partner for 30, 60, or 90 days
3. Apply the locked rate at settlement via your treasury management system
4. Compare realized rate against spot to measure hedging effectiveness

Netting Across Markets

If you operate in multiple LatAm countries, net opposing currency flows before converting:

• Offset BRL collections against BRL payouts (e.g., seller payouts in a marketplace)
• Consolidate USD needs across MXN, COP, and CLP settlements into a single conversion
• Reduce the total volume subject to FX conversion fees

Hedging Cost-Benefit Analysis

Strategy	Setup Cost	Ongoing Cost	Risk Reduction	Best For
Natural hedging	Low (requires local entity)	Minimal	Medium	Merchants with local operations
Forward contracts	Medium (banking relationship)	0.1-0.5% premium	High	Predictable monthly volumes >$100K
Options contracts	High (premiums)	1-3% premium	Very high	Large merchants with volatile corridors
Netting	Low (operational process)	Minimal	Medium	Multi-market merchants with two-way flows
No hedging	None	None	None	Small volumes or stable currency pairs

For most LatAm merchants processing under $500K/month, natural hedging combined with rate locking via Yuno’s currency conversion API provides the best cost-to-protection ratio without the complexity of financial derivatives.

Corridor-Specific FX Patterns

Understanding the characteristics of each currency corridor helps you choose the right strategy and set realistic FX cost expectations.

Corridor	Typical Spread	Volatility	Liquidity	Recommended Strategy
USD to BRL	1.0-2.5%	High	High	Rate locking for large transactions; daily settlement to limit exposure
USD to MXN	0.8-2.0%	Medium	High	Cost-optimized routing; weekly settlement acceptable
USD to COP	1.5-3.0%	Medium-High	Medium	Local acquirer preferred; forward contracts for >$200K/month
USD to ARS	3.0-8.0%	Very High	Low	Settle daily; minimize ARS holdings; consider parallel rate implications
EUR to BRL	1.2-3.0%	High	Medium	Avoid double conversion (EUR to USD to BRL); use direct EUR/BRL providers
USD to CLP	1.0-2.5%	Medium	Medium	Standard routing; batch settlements effective
USD to PEN	1.0-2.0%	Low-Medium	Medium	Stable corridor; weekly settlement acceptable

The ARS corridor is subject to government-imposed capital controls that change frequently. Official and parallel exchange rates can diverge significantly. Always verify current regulations before configuring ARS settlement flows.

Seasonal and Event-Driven Volatility

Plan for known volatility windows in LatAm FX markets:

• Central bank rate decisions: BRL and MXN often move 1-3% on rate announcement days (typically monthly)
• Election cycles: ARS and BRL show elevated volatility during presidential campaigns
• Commodity price shifts: CLP (copper) and COP (oil) correlate with commodity markets
• US Federal Reserve meetings: All LatAm currencies react to USD policy changes

FX Rate Monitoring Dashboard

Track these metrics daily in Dashboard > Analytics > Currency to identify optimization opportunities and detect anomalies.

Key Metrics to Track

Metric	Description	Frequency	Alert Threshold
Mid-market rate deviation	Difference between your effective rate and the interbank mid-market rate	Real-time	>2.0% deviation
Provider markup comparison	Side-by-side FX markup across your active providers for each currency pair	Daily	>0.5% variance between providers
Locked rate utilization	Percentage of eligible cross-border transactions using a pre-quoted locked rate	Daily	<70% utilization
Settlement FX impact	FX cost incurred between authorization time and settlement time	Per settlement	>0.3% slippage
Conversion volume by pair	Total amount converted per currency pair per day	Daily	Monitor for concentration risk
Failed rate quotes	Rate quote API calls that failed or expired before use	Daily	>15% failure rate

Setting Up FX Alerts

Configure automated alerts in Dashboard > Analytics > Currency > Alerts:

1. Rate spike alert: Notify when a currency pair moves more than 2% from the daily open
2. Provider markup alert: Notify when any provider’s markup exceeds your configured threshold
3. Settlement slippage alert: Notify when settlement FX differs from authorization FX by more than 0.3%
4. Volume concentration alert: Notify when more than 80% of FX volume routes to a single provider

FX monitoring data is available with a 15-minute delay in the Dashboard. For real-time rate data, use the currency conversion API’s rate quote endpoint and compare against a third-party mid-market feed.

Best Practices for Cross-Border Payments

• Price in local currency whenever possible to avoid DCC markup and improve conversion rates
• Use rate locking for large transactions to protect against adverse FX movements
• Monitor FX margins daily across providers and renegotiate when volume justifies it
• Settle locally in markets where you process >$100K/month
• Match settlement currency to expense currency to create natural hedges
• Route by currency pair to the provider with the best rate for each pair
• Avoid double conversion (e.g., USD to EUR to BRL) by routing to providers that support direct pairs
• Track effective rate vs. mid-market as your primary FX cost metric
• Consider currency volatility when choosing settlement frequency; daily for volatile pairs
• Comply with local regulations on DCC disclosure and customer consent