Streaming across borders: How Spotify overcomes global currency hurdles

Audio streaming giant Spotify has experienced a meteoric rise since its early days as a small startup in Stockholm, Sweden. Over nearly two decades, the company has grown into the world’s most popular audio streaming platform, with over 678 million users, including 268 million subscribers in more than 180 countries. 

That global reach exposes Spotify to cross-border flows in many different currencies, including to and from emerging markets, such as India, Argentina and Egypt. Many emerging markets currencies are subject to local regulations and restrictions when it comes to foreign exchange, posing unique challenges for companies transferring money to and from these markets.

“As Spotify has grown and expanded into more countries worldwide, we now have large volumes going into and out of emerging markets,” says Patrik Hallerström, Head of Treasury at Spotify. “This has created a need for expert advice on these markets and how we manage our flows and currency exposures effectively. The expertise Nordea provides from Copenhagen and Stockholm has been crucial for us to mitigate emerging market risks.”

Navigating complex regulatory environments

In Indonesia, for example, Spotify set up a subsidiary to handle its local operations. The country has numerous local rules that govern the use and exchange of Indonesian rupiah (IDR). Spotify faced the challenge of funding the local entity and making intercompany payments back to the Swedish parent company.

For guidance, Spotify turned to Jana Poulsenova, Head of FX EM Solutions in Nordea Markets, and her team of designated experts that provides advice and customised solutions for companies doing business in emerging markets. They developed a solution for Spotify to repatriate money from Indonesia to Sweden.

“Through conversations with Nordea, we have found an opportunity for an efficient process that aligns with our global organization,” says Patrik Hallerström. 

Nordea has also developed similar solutions for bringing money home from India and Brazil, helping companies avoid the risk of trapped cash.

“We are constantly working on new solutions,” says Jana Poulsenova. “We’re currently finalising a setup for Chile, sending and repatriating Chilean peso (CLP) for Nordea’s clients.”

Patrik Hallerström points to Turkey as another example, where Spotify faced the challenge of making tax payments from the local entity, where the current international banking provider used was not allowed to make domestic tax payments. Spotify was able to put a solution in place where Nordea handles the local tax payments via standalone accounts with Nordea Sweden, instead of opening an account with a local bank for this purpose.

“Tax payments in these markets are some of the most specialized forms of payment you can do,” he says. 

He adds that other Swedish corporates have inquired about Spotify’s setup for paying taxes in Turkey. 

“It’s a good example that we’re happy to share with other companies. There’s a Nordic bank that offers this solution, and it works,” he says. 

He also cites the Nordea team’s deep knowledge of Indian regulations, which helped Spotify with funding its local subsidiary there in a complex transaction.

The Nordic advantage

Despite competition from some of the largest global banks, Spotify chooses to trade emerging markets currencies with Nordea.

“Nordea remains our home bank, so it’s a natural starting point for us to begin the conversation there when entering regulated markets. Nordea knows our business, is geographically close and has strong cross-border expertise, which makes it quite easy,” he says.

Jana Poulsenova notes that the Nordea way is the Nordic way. The alternative is to work with a local or regional bank in regulated markets. However, that carries a higher counterparty risk, given that many of the regulated markets are high-risk countries, where there can be risks of default or capital restrictions.

Patrik Hallerström agrees: “It’s important for us to have our bank close and know who it is.”