Selling in Other Currencies on Shopify Payments: The Month-End View

Turning on local currencies in Shopify Markets is a few clicks. A New Zealand shopper sees prices in NZD, a US shopper sees USD, and conversion improves. The accounting consequences are less visible. Every foreign-currency order now carries a conversion rate, a conversion fee, and, if it is ever refunded, a second rate that will not match the first.

None of this is hard to book once you know where each piece comes from. This guide covers the two set-ups Australian stores run, with worked numbers and a checklist.

Two set-ups, two different problems

Which problem you have depends on your payout currency.

AUD payouts only. On plans below Advanced, an Australian store sells in multiple currencies but is paid out only in AUD. Shopify's Australian payouts page says a store can receive payouts in multiple currencies if it is on the Advanced Shopify or Shopify Plus plan. Here the conversion happens inside Shopify, and your clearing account stays in AUD.

Multi-Currency Payouts. On Advanced or Plus, you can hold bank accounts in currencies such as USD, NZD, GBP or EUR, and orders in those currencies are paid out there without conversion. Now you hold foreign currency yourself, and the month-end has a translation step.

What Shopify charges

Two different fees are involved, and they are easy to confuse.

The conversion fee rate comes from Shopify's currency conversion fees page, which lists 2% for Shopify Payments regions outside the United States. It is charged in your payout currency when the payment is captured, and Shopify records the rate and fee for each order in the order's Timeline.

The payout fee rates come from the global regions row of Shopify's Multi-Currency Payouts page, which does not list Australia separately. The page is explicit that the fee "is based on the payout currency, not whether a currency conversion occurs". A USD order paid out to a USD account still attracts it.

Automatic rates build the fee into the price

How the conversion fee reaches the customer depends on your rate setting. Shopify's local currencies guide gives the formula for automatic rates:

Customer price = Base price x Exchange rate x (1 + Conversion fee)

With manual rates, the fee is not added to the customer-facing price and is deducted from your payout instead. Either way, Shopify's fees page says the fee is charged.

For the books, the setting changes the price, not the treatment. The customer paid the full converted amount, so that is your sale. The fee is a cost of taking the payment. Book them separately, so revenue reflects what customers paid and fees reflect what Shopify kept.

Worked example: AUD payouts

The rates here are illustrative. Card processing fees and GST are left out to isolate the currency effect.

A product's base price is A$100.00. On the order date the automatic rate is A$1 = NZ$1.10, so a New Zealand customer pays NZ$112.20 (100 x 1.10 x 1.02). Shopify converts the payment to A$102.00. Suppose the order Timeline shows a conversion fee of A$2.04. Shopify's fees page does not publish the exact base the 2% is applied to, so take the figure from the Timeline or the payout transactions rather than recomputing it.

This matches the rule for recording a foreign-currency transaction. AASB 121, paragraph 21, requires it to be recorded in the functional currency at the spot rate on the date of the transaction. Shopify's conversion at capture gives you that AUD amount, already fixed. In this set-up there is nothing to retranslate at month-end, because the clearing balance is AUD.

Refunds are converted at today's rate

This is where the AUD-only set-up still produces currency differences. Shopify's multi-currency refunds page says "the current currency rate, and not the currency rate at the time of the order, is used in the conversion", and that conversion fees "aren't returned to you when you issue a refund". The local currencies guide adds that even with manual rates, refunds use the current market rate, not your manual rate.

Continue the example. Two weeks later the customer returns the product and is refunded NZ$112.20. The rate is now A$1 = NZ$1.05, so the refund costs A$106.86 (112.20 / 1.05, rounded to the cent). The original sale was recorded at A$102.00.

Reversing the sale at its original AUD amount and posting the difference as an exchange loss keeps net sales tied to what you actually sold. AASB 121, paragraph 28, requires exchange differences on settling monetary items to go to profit or loss in the period they arise. A refund owed in NZD fits that description. Some businesses instead book the whole A$106.86 against sales. Whichever approach you take, write it down and apply it the same way every month. The A$2.04 conversion fee stays as an expense either way. If the rate had moved the other way, the difference would be a gain.

Multi-Currency Payouts: the month-end translation

Once orders are paid out in USD to a USD account, the clearing balance for that currency, and the bank account it settles to, are amounts you have a right to receive in a foreign currency. AASB 121 calls those monetary items. Paragraph 23 requires foreign currency monetary items to be translated at the closing rate at the end of each reporting period, and paragraph 28 sends the difference to profit or loss.

An illustration. At 31 October, US$10,000.00 of captured sales sits in your USD Shopify clearing account waiting for payout. Recorded at each day's rate, those sales total A$15,300.00. The closing rate is A$1 = US$0.6500, so the balance is worth A$15,384.62 (10,000 / 0.65). The A$84.62 difference is an unrealised exchange gain for October. The same step applies to the balance in the USD bank account.

Accounting software that handles foreign currency bank accounts does part of this for you. Xero lists multi-currency as included on its Comprehensive and Ultimate plans in Australia. The clearing account is often the balance that gets missed. If it is set up as an AUD account holding converted USD amounts, nothing revalues it unless someone does.

Also book the Multi-Currency Payout fee as its own expense line, separate from card processing fees, so its cost is visible when you decide whether holding foreign currency is worth it.

A month-end checklist

1. Confirm which set-up you run: AUD-only payouts, or Multi-Currency Payouts with foreign currency bank accounts.
2. Check that sales are recorded at the converted amount Shopify paid out, and that conversion fees sit in their own expense account rather than netted into revenue.
3. For every refund on a foreign-currency order, compare the AUD cost of the refund with the AUD amount of the original sale, and post the difference consistently.
4. If you hold foreign currency, translate the clearing account and the bank account at the closing rate, and record the closing rate you used in your workpapers.
5. Book Multi-Currency Payout fees separately and check them against the payout reports.
6. Prove each payout. The converted sales, less fees and refunds, should sum to the deposit to the cent, in the currency of the account it landed in.

Bringing it back to your close

Foreign-currency selling adds no new principles to the close. It adds more numbers that have to come from the source rather than from an estimate: the rate on the order, the fee in the Timeline, the rate on the refund date, the closing rate on the last day of the month. Each one is small. Across a month of international orders, they are the difference between a clearing account that reaches zero and one with a residual nobody can explain.

That last check, proving every payout back to the deposit with the working attached, is the part of the close Vert is built to automate. If foreign-currency payouts are part of your month, you can join the pilot and see it on your own data. For the GST side of overseas and processor flows, see our September BAS checklist.