diff --git a/README.md b/README.md
index 5c12c1c47..8350a3855 100644
--- a/README.md
+++ b/README.md
@@ -27,19 +27,19 @@ key features:
 
 ```yaml
 steps:
-  - uses: ikalnytskyi/action-setup-postgres@v2
+  - uses: ikalnytskyi/action-setup-postgres@v3
 ```
 
 #### Advanced
 
 ```yaml
 steps:
-  - uses: ikalnytskyi/action-setup-postgres@v2
+  - uses: ikalnytskyi/action-setup-postgres@v3
     with:
       username: ci
       password: sw0rdfish
       database: test
-      port: "34837"
+      port: 34837
     id: postgres
 
   - run: pytest -vv tests/
diff --git a/action.yml b/action.yml
index f8f0076a1..dbd3ead98 100644
--- a/action.yml
+++ b/action.yml
@@ -42,7 +42,7 @@ runs:
     - name: Setup and start PostgreSQL
       run: |
         export PGDATA="$RUNNER_TEMP/pgdata"
-        pg_ctl init
+        pg_ctl init --options="--encoding=UTF-8 --locale=en_US.UTF-8"
 
         # Forbid creating unix sockets since they are created by default in the
         # directory we don't have permissions to.
diff --git a/test_action.py b/test_action.py
index 4f468a8c3..057ba2492 100644
--- a/test_action.py
+++ b/test_action.py
@@ -25,6 +25,19 @@ def test_connection_uri():
     assert connection_uri == expected_connection_uri
 
 
+def test_server_encoding(connection: psycopg.Connection):
+    """Test that PostgreSQL's encoding is 'UTF-8'."""
+
+    assert connection.execute("SHOW SERVER_ENCODING").fetchone()[0] == "UTF8"
+
+
+def test_locale(connection: psycopg.Connection):
+    """Test that PostgreSQL's locale is 'en_US.UTF-8'."""
+
+    assert connection.execute("SHOW LC_COLLATE").fetchone()[0] == "en_US.UTF-8"
+    assert connection.execute("SHOW LC_CTYPE").fetchone()[0] == "en_US.UTF-8"
+
+
 def test_user_permissions(connection: psycopg.Connection):
     """Test that a user can create databases but is not a superuser."""
 
@@ -53,6 +66,21 @@ def test_user_create_insert_select(connection: psycopg.Connection):
         assert records == [(1, "42")]
 
 
+def test_user_create_insert_non_ascii(connection: psycopg.Connection):
+    """Test that non-ASCII characters can be stored and fetched."""
+
+    table_name = "test_setup_postgres"
+
+    with connection, connection.transaction(force_rollback=True):
+        records = connection \
+            .execute(f"CREATE TABLE {table_name}(eggs INTEGER, rice VARCHAR)") \
+            .execute(f"INSERT INTO {table_name}(eggs, rice) VALUES (1, 'Україна')") \
+            .execute(f"INSERT INTO {table_name}(eggs, rice) VALUES (2, 'ウクライナ')") \
+            .execute(f"SELECT * FROM {table_name}") \
+            .fetchall()
+        assert records == [(1, "Україна"), (2, "ウクライナ")]
+
+
 def test_user_create_drop_database(connection: psycopg.Connection):
     """Test that a user has no permissions to create databases."""