Multicurrency BINs

Card networks represent transaction amounts in three ways:

• Local amount — The amount of the transaction in the currency at the point of sale
• Settlement amount — The amount to be transferred between issuer and merchant in the currency of settlement
• Billing amount — The amount that is posted to the cardholder account in the currency of the account

When a card issued in the United States is used to make a purchase in the United States, the local, billing, and settlement amounts are the same, because they are all in the same currency: USD (U.S. dollar).

When a card issued in the United States is used to make a purchase in Spain, the local amount is in Euros, and the billing and settlement amounts are in USD.

When a card issued in Mexico is used to make a purchase in Argentina, the local amount is in Argentine pesos (ARS) and the settlement and billing amounts are in Mexican pesos (MXN). However, an issuer may determine that it is better to settle in a different currency than the billing currency, such as when there is considerable daily fluctuation in the exchange rate between the local currency and the card account's currency.

For example, when a Mexican cardholder makes a $1000 ARS purchase in Argentina, it may convert to $197 MXN on the day of the purchase, but when the transaction is cleared three days later, the conversion rate may result in much different settlement and billing amounts, either higher or lower than the original authorization amount. This fluctuation can negatively affect how much an issuer owes the network.

To help mitigate this effect, the issuer can decide to settle transactions in a third currency, such as USD, that has less fluctuation between the local currency and the currency of the card account. To settle in a different currency than the card account, an issuer must use a multicurrency BIN.

Setting up multicurrency BINs

Galileo clients who want to settle in a different currency than the card account must make arrangements with their banks and with the card networks. All of the currency conversion is performed by the card networks.

You can set up complex multicurrency arrangements such as specifying that only international transactions be settled in a different currency, or that when a purchase is made in currency A, B or C, the settlement is in currency D, whereas purchases in currency E, F or G are settled in currency H.

Multicurrency BINs at Galileo

When Galileo is the system of record for a program—meaning that Galileo maintains the ledgers for all program accounts, recording all transactions and being the single source of truth for an account's balance—then Galileo can support any settlement currency that uses two places after the decimal. Galileo is required to use only one billing currency per core (most of Galileo's clients have only one core), but the settlement currency can be different from the billing currency. The program can also request, for example, that the different settlement currency be used only for international transactions.

When Galileo is not the system of record, the program may use any currency for billing and settlement, and Galileo can support it when the program performs reconciliation for settlements that are a different currency from the billing currency.

Multicurrency data

The ISO 8583 messages that card networks send to Galileo contain six data elements (DEs) that relate to multicurrency BINs:

Using the example of the Mexican card making a purchase in Argentina, with the account settling in USD, the fields might be populated as follows:

Authorization request

For the $1000 ARS authorization request, the billing amount converts into $197 MXN. The program approves the transaction because the account contains $197 MXN or more.

Settlement

At settlement time a few days later, the exchange rates between ARS and the other currencies have changed, but the change between ARS and MXN is less favorable to the program than the change between ARS and USD. The program sends $9.60 USD to the card network instead of $225 MXN.

Viewing multicurrency data

This table shows where to see the six DEs described above. It also shows the transaction amount and currency, which is DE004 multiplied by the exchange rate in DE009, making it the same as the billing amount. The transaction amount is the amount that is authorized in authorization requests.