As the world becomes increasingly globalized, more and more business is being done across international borders using different forms of currency. This can often create problems, as a person may have a bank account denominated in one currency and receive payment in another. Whether a person will be able to successfully deposit a foreign currency into his checking account will depend on a number of factors, including the capabilities of the bank in which he holds the account.
Generally, checking accounts are denominated in a single currency, such as U.S. dollars. However, this does not mean that the bank cannot accept other currencies. Many banks are equipped to receive payment in other currencies, but this money must usually be first exchanged for the currency in which the account is denominated.
Whether a bank can exchange one currency for another depends on whether the bank has a policy of accepting that particular currency. For example, while a bank may be willing to trade U.S. dollars for British pounds, the bank may be less likely to exchange dollars for a less stable currency, such as the Zimbabwe dollar or the North Korean won. Also, while a bank may, as a policy, accept a certain currency, a particular banking branch may not be equipped to receive some foreign currencies.
When a person pays for a purchase with a debit card, money is automatically withdrawn from her checking account. When this card is used in another country that does not use U.S. dollars as its currency, the transaction will be entered by the merchant in the native currency. The bank will automatically calculate the exchange rate and withdraw the appropriate amount of money from the person's checking account. The same is true of deposits made to foreign banks, in which an appropriate exchange rate is calculated on wire transfers.
A person will usually be unable to deposit foreign currency to an ATM, which is programmed to place deposits into the person's checking account. This is because most ATMs are not able to accept more than one type of currency. An ATM programmed to accept U.S. dollars will usually have no method of reading a foreign currency. Nor will these machines be able to accept checks denominated in other currencies.