All you need to know about Cross-Border Payments

Introduction to cross-border payments

Today, the e-commerce industry has a worldwide reach. Payments, remittances, and purchases all frequently need the exchange of money across borders. Cross-border payments are described as funds made to or received from different countries, where the seller’s location differs from the nation where the consumer’s cards were issued.

When a business accepts foreign payments, several scenarios must be considered because each country has its own set of rules and restrictions. Because of the increased demand for cross-border payments, efforts are being undertaken to enhance cross-border payments in general.

Banks and various domestic companies collaborate to move funds in every cross-border payment. When a purchase is made, a “correspondent bank,” or the entity asking money, communicates with a “respondent bank,” representing the entity purchasing something.

Improving cross-border payments by making them quicker, cheaper, transparent, and inclusive will promote economic growth, global commerce, development, and financial inclusion. However, change takes time, and the actual implementation of new competitive cross-border payment schemes across all nations necessitates international cooperation.



Types of cross-border payments

  • Person-to-person (P2P): both the payer and the payee are persons. The most common P2P use case is the transfer of money to relatives or friends in another country without an underlying business transaction. International remittances are another term for such transactions.
  • Person-to-business (P2B): the payer is an individual, and the payee is a company. Payments for retail products and services from businesses overseas through the internet, payment of bills (e.g., school tuition or utilities) directly to a provider abroad, and payments arising from foreign tourists or business trips are all important P2B use cases.
  • Business-to-business (B2B): Both the payer and the recipient are businesses. Because of the vast range of organization characteristics, B2B use cases vary greatly and sometimes require big payments.

SWIFT Payment Ecosystem: Over the past two decades, there has been a drastic upgrade in the payments ecosystem. Perhaps, due to COVID-19, the payments ecosystem has digitally accelerated. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) payment gateway has steadfast in over 200 countries and 11,000+ financial institution clients and transmits around 8.4 billion financial messages every year. It has made it much easier to pursue cross-border payments. While progressing through various technologies, SWIFT has recently confirmed a proof-of-concept project with blockchain oracle provider, Chain link. The project will connect SWIFT’s network to nearly every blockchain to allow conventional financial institutions to manage digital and traditional assets on one network.




Going more global and borderless is one of the most evident effects of digitization in practically all company fields. According to statistics, 95% of all purchases will be made online by 2040, and the total amount of all worldwide payments is expected to exceed $250 trillion by 2027.

How do cross-border payments work?


A simple cross-border transaction involving accounts kept at each bank would entail a payment message providing an instruction to debit an account in Bank A and credit an account in Bank B. This is also known as a wire transfer.

However, because not all banks have direct relationships, they must occasionally trade through an intermediary or a correspondent banking network. A correspondent bank opens accounts for Bank A and B, allowing the transaction to occur. The correspondent bank is a crucial component of the global payment system for cross-border transactions.

Digital Wallets

Digital wallets, which are often available through applications for smart devices, allow users to securely keep their payment cards of choice so that they may pay for products and services. Some digital wallets allow you to use various currencies and place orders across borders. Although wallet-to-wallet transactions may not strictly classify as cross-border transactions, they aid in transaction facilitation.

Below are a few more examples of cross-border payments.

  • Credit card transactions
  • Debit card payments
  • Global ACH payments
  • Blockchain-based payments



Benefits of cross-border transactions

As globalization becomes more integrated into corporate operations, improving cross-border payment management strategies becomes more significant. According to the study, 73% of US-based businesses make cross-border payments regularly. Refined management processes can result in considerable savings and enhanced international tax and regulatory compliance.

Quick facts:

According to Straits Research, cross-border payments are estimated to reach $2,515 billion by 2030, implying a 10.8% growth rate for the B2B payments sector over the next eight years.

Cross-border payments provide a more customized customer experience by allowing companies to offer customers a selection of popular regional payment methods.

Most cross-border payment services are mobile-enabled, allowing retailers to pay suppliers’ invoices from any device and place; intelligent scheduling also will enable merchants to plan invoice payments.

Cross-border payment systems use a unified platform to conduct domestic and international fund transfers, improving accounts payable accuracy, efficiency, and transparency.

Cross-border payments empower businesses to tailor authentication and fraud rules via configurable processes and risk management tools.

Also, we have a DeFi payment platform recommendation for you. PayCircle is one of the most exemplary payment applications that enable multi-currency Fiat and digital asset transactions. You can send, receive, custody funds and invest from a single platform.



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