You’ve probably noticed that when you top up your Google Ads account, a little more than the expected amount gets deducted. And no, it’s not VAT. This is a result of double currency conversion when paying to a foreign bank. Today, let’s dive into why this happens and how you can calculate the difference.
Categories we’ll be working with:
- Your account is usually in your local currency, which is different from dollars. In our case, we’ll use the Ukrainian hryvnia (UAH);
- The exchange rate of USD to UAH according to the National Bank of Ukraine (NBU);
- The USD exchange rate at your bank (the one that issued your card).
How does double currency conversion work, and why does more money get deducted?
Let’s break down the payment mechanism step by step:
1. Your account in UAH requests a top-up, for example, 1,000 UAH.
2. To process this payment, the account internally converts this to USD using the NBU rate, let’s say 30 UAH per USD. So, inside the system, the payment needs 33.3 USD to complete.
3. Then, the foreign bank deducts this 33.3 USD at the exchange rate of your bank (the one that issued your card). In this case, let’s say the rate is 32 UAH per USD. As a result, instead of 1,000 UAH, you’re actually charged 1,066.66 UAH.
This is a simplified explanation of the process. If you dig deeper, there are more factors at play, but this covers the basics.
How can you calculate the difference caused by double conversion?
You can use this formula:
(charged amount / NBU rate) * USD bank rate - charged amount = extra amount paid
In our case, it looks like this:
(1,000 / 30) * 32 - 1,000 = 66.6 UAH
☝ So, if you’re paying 1,000 UAH, you’ll actually be charged 1,066.6 UAH.
This situation applies to any bank, whether it’s PrivatBank, Monobank, Aval, or any other. This is simply how payments to foreign banks work, and you usually need to request an update on these operations from your bank.
How can you avoid double currency conversion?
👉 Use a USD-based account. But this can cause conversion issues in your analytics and lead to inaccuracies in final reports.
👉 Pay via bank transfer. This skips one step of conversion.
👉 Add a USD card to your account. However, the expenses will remain the same in practice.
👉 Use Monobank and try making transactions up to 300 UAH. Based on feedback from colleagues and clients, there’s no double conversion on such small amounts.
In general, double conversion will become noticeable when there’s a significant gap between the NBU exchange rate and your bank’s rate. However, we don’t recommend changing your account just to avoid these minor fees.
Order a service