Cross-Border Business Payments: How They Work, Challenges & Solutions

Cross-border business payments are more important than ever, especially today. Cross-border transactions enable companies to pay overseas suppliers, receive funds from international clients and manage remote payrolls, all while navigating currency conversions, fees and compliance requirements.

While technology has made global payments faster and more accessible, challenges like exchange rate fluctuations, regulatory differences and security risks still exist. Choosing the right payment provider and understanding the available methods, such as SWIFT wires, fintech platforms or multi-currency accounts, can make a huge difference in both cost and efficiency.

So let’s take a look at what cross-border payments are and why you may need to use them as a business owner.

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Table of contents

What Are Cross-Border Payments and Why Do They Matter? What Are Cross-Border Payments For? How do Cross-Border Payments Work in a Global Business Landscape? Types of Cross-Border Payments Every Business Should Know Cross-Border Payment Methods Cross-Border Payments vs. Domestic Transfers Pros and Cons Of Cross-Border Business Payments Cross-Border Payment Solutions for Modern Businesses The Role of APIs in Modern Cross-Border Payment Systems What Is Being Done Internationally To Improve Cross-Border Payments Save Time and Money On Overseas Payments With Wise Business Final Thoughts FAQ’s

What Are Cross-Border Payments and Why Do They Matter?

Cross-border payments are transactions where the payer and the recipient are based in different countries. They’re essential for today’s global economy, powering almost everything, such as paying international suppliers and sending money to remote employees. These payments can flow through traditional banking networks, like SWIFT, or newer digital platforms built for speed and transparency.¹ They are convenient, but they’re not without challenges.

That’s why modernization is a hot topic, with financial institutions pushing for faster, easy-to-use systems.³ Businesses benefit when they can make payments that are secure, cost-effective, and timely, especially in emerging markets where infrastructure may vary.⁴ In fact, improving cross-border payments is now a priority for regulators and central banks worldwide.⁵

What Are Cross-Border Payments For?

Cross-border payments are used whenever money is sent between people or businesses in different countries. For businesses, these payments are essential for:

• buying goods from international suppliers
• paying overseas employees or contractors
• collecting payments from global customers

Let’s say your company is based in the U.S., but you work with a graphic designer in the Philippines or a manufacturer in China; cross-border payments make that possible. They also support industries like e-commerce, travel, and global consulting, where international transactions happen every day. But even beyond business matters, cross-border payments are used by individuals to send remittances to family members abroad or to pay for international education.

So we would describe cross-border payments as a financial bridge that keeps the global economy connected. As more businesses go international, even small ones, international payments help you grow beyond borders, build stronger global relationships and take advantage of opportunities anywhere in the world.

How do Cross-Border Payments Work in a Global Business Landscape?

Cross-border payments may seem complex, but they’re an important part of global business today. Simply put, they’re transactions where the sender and receiver are in different countries, and money must travel across borders, usually involving multiple banks, currencies and regulations.

Cross-border payments often rely on networks like SWIFT to move funds securely between financial institutions.¹ However, the traditional system can be slow and expensive, which is why modern innovations are reshaping the landscape.² Fintech companies now offer faster, more cost-effective cross-border payment solutions using APIs, local clearing partners, and digital wallets.³ Businesses also benefit from tools that reduce foreign exchange risk and offer real-time settlement.⁴

Types of Cross-Border Payments Every Business Should Know

Understanding the different types of cross-border payments is key to making smart financial decisions. But not all cross-border payment methods are created equal; some are faster, some are more cost-effective, and others are better suited for large transactions. Below, we break down the most common types of cross-border payments every business should know, so you can choose the right solution for your needs.

Bank Wire Transfers

Bank wire transfers are one of the oldest and most commonly used cross-border payment methods. They involve moving funds from one bank to another through international networks like SWIFT. They’re considered secure and reliable, but they can be expensive and slow, often taking several days to process.¹ Fees vary depending on the bank and destination, and exchange rates may include hidden margins. Despite the cost, many businesses still use wire transfers for high-value B2B payments due to their familiarity and institutional trust. However, for small or frequent transactions, they may not be the most efficient solution.¹

Digital Wallets and Fintech Platforms

Fintech providers and digital wallets are transforming how businesses send and receive money internationally. Such platforms offer faster transactions, transparent fees, and competitive exchange rates.² Many of them allow businesses to hold multiple currencies, so it’s easier to manage international customers and vendors. They're particularly helpful for freelancers, e-commerce sellers and startups operating across borders. However, businesses should consider transaction limits, regional availability, and compliance requirements.

Real-Time Payment Networks

Real-time payment (RTP) networks are emerging as a modern solution to traditional delays in international transactions. These systems are designed to process payments instantly or within seconds, even across borders. They’re often supported by APIs and real-time clearing houses that facilitate smoother cross-border payment processing.³ They’re not available in every country yet, but RTP systems are becoming more accessible as countries modernize their payment infrastructure. Businesses that rely on time-sensitive payments, like payroll or high-frequency B2B transfers, can benefit from this type of system.

Correspondent Banking Networks

This is a traditional system, where banks work together across borders using “correspondent” relationships to complete international transactions. It's how many cross-border wire transfers are still processed today.⁴ It’s widely used; however, correspondent banking can be inefficient due to multiple intermediaries, which slows down the payment and increases costs. It also creates challenges around transparency and compliance, as each intermediary may apply its own fees and checks. So despite modernization efforts, this particular method still plays an important role in global trade, especially in areas lacking access to modern infrastructure.⁴

Central Bank Digital Currencies (CBDCs) and Emerging Models

As central banks explore digital currencies, new types of cross-border payments are emerging. CBDCs are state-backed digital currencies designed to offer secure, fast transactions, especially across national borders. It is still in the early stages; they promise reduced costs, faster settlements, and better transparency for international payments.⁵ The Bank of England and other institutions are actively exploring how CBDCs could reshape global money movement. Businesses won’t be using them widely just yet, but understanding this potential shift is important for staying ahead of the curve in cross-border payment innovation.⁵

Cross-Border Payment Methods

When sending or receiving money internationally, businesses have several cross-border payment methods to choose from. Each method offers different benefits in terms of speed, cost, security, and convenience. Choosing the right one often depends on your business’s size, frequency of international transactions and where your partners or clients are located. Below are some of the most common cross-border payment methods, explained clearly to help you make an informed choice.

SWIFT Wire Transfers

SWIFT wire transfers are one of the most established and secure methods for cross-border payments. They use a global messaging network to send payment instructions between banks. They are reliable, however, SWIFT transfers can take several days to settle and often involve intermediary banks, which may add additional fees or slow down processing.¹ SWIFT Wire Transfers are typically used for high-value transactions and are trusted between financial institutions worldwide.

Fintech Payment Platforms

Fintech platforms like Stripe, Wise and Payoneer have revolutionized cross-border payments by offering faster and often cheaper solutions than traditional banks.⁴ Fintech platforms typically allow businesses to hold funds in multi-currency accounts, make same-day transfers and track transactions in real time. Many fintech services also offer competitive exchange rates with minimal fees, which is ideal for small to medium-sized businesses operating globally.³ They’ve become especially popular for e-commerce, freelancing, and SaaS companies needing to pay or receive money across borders with ease.²

Real-Time Payment Networks

Real-time cross-border payment systems are emerging as a major trend, enabling near-instant transfers between countries.² Real-time payment networks aim to eliminate the multi-day delays associated with legacy systems by connecting domestic real-time infrastructures across borders. Examples include the RTP system in the U.S. and similar efforts in the EU and Asia. They’re particularly attractive for businesses that rely on speed and cash flow, such as global marketplaces or logistics companies.⁵

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Cross-Border Payments vs. Domestic Transfers

At first glance, cross-border payments might seem similar to regular domestic transfers, but there are a few important differences that can impact cost, speed, and compliance requirements. Domestic transfers are usually quick, low-cost, and straightforward; cross-border transactions often involve more steps, additional fees, and complex regulations due to the involvement of multiple currencies, banks, and countries.¹ It’s important to understand how these two types of payments differ and can help businesses plan their operations more effectively and choose the right tools for each type of transaction.³ Below is a simple comparison to help break it down.

Features	Domestic Transfers	Cross-Border Payments
Currencies	Same currency	Involves currency exchange⁴
Speed	Often instant or same day	1–5 business days, unless using fintech or real-time solutions2
Fees	Usually low or none	Can include bank, intermediary and FX fees1
Regulations	Governed by local financial laws	Must meet international and local compliance standards5
Complexity	Simple transaction between local banks	May involve multiple banks and clearing systems3
Risk Of Delays	Minimal	Higher due to time zones, checks and intermediaries2

As shown in the table, domestic transfers are generally simpler and cheaper because they stay within one country's financial system. Cross-border payments require more steps and regulatory oversight, which can introduce delays and costs.⁵ Businesses operating globally need to understand these differences and work with providers that simplify the cross-border process and minimize friction.⁴

Pros and Cons Of Cross-Border Business Payments

As businesses continue to expand globally, cross-border payments have become a crucial part of managing international transactions. However, cross-border business payments come with both advantages and limitations. Technology and modern infrastructure have many aspects, and challenges still exist around fees, processing time and compliance.

Pros	Cons
Access to global markets and customers4	High fees and exchange rate markups1
Faster payment processing with modern solutions2	Processing delays due to compliance checks⁵
More options from fintech platforms and multi-currency tools3	Complexity navigating regulations and international standards⁵
Builds stronger supplier and partner relationships⁴	Risk of fraud or security breaches if not properly managed3

While cross-border payments open the door to new markets and partnerships, businesses must approach them with care. Modern solutions like real-time payments and fintech tools are making transactions faster and more efficient.⁴ However, issues like fluctuating exchange rates, strict compliance requirements, and security risks still need close attention.⁵

So, in order to complete your cross-border transaction successfully, we recommend choosing a reputable payment provider and staying informed on regulatory requirements for managing both the benefits and challenges of international transactions.

Cross-Border Payment Solutions for Modern Businesses

Cross-border payment solutions have come a long way, and modern businesses now have more flexible, faster options than ever before. Traditional systems like SWIFT are still widely used, but they often come with delays and high fees.¹ That’s why businesses are turning to digital platforms and fintech networks that offer real-time tracking, local currency payouts, and better transparency.²

The Role of APIs in Modern Cross-Border Payment Systems

APIs (Application Programming Interfaces) are playing a huge role in transforming how businesses manage cross-border payments. Instead of relying on slow, manual processes, companies can now use APIs to connect directly with payment providers and automate transactions in real time.³ This means faster transfers, fewer errors, and better transparency. APIs also allow businesses to track payment status, manage currency conversions and stay compliant with regulatory requirements, all within their existing systems.²

As more financial institutions and fintech companies adopt open banking models, APIs help speed up data sharing and enable smoother international payment flows.⁵ They’re especially useful for platforms that send high volumes of payments, like global marketplaces or payroll providers.¹ So with that being said, APIs are making cross-border payments faster, smarter and more accessible for businesses of all sizes.

What Is Being Done Internationally To Improve Cross-Border Payments

Improving cross-border payments has become a global priority, and major steps are being taken to make them faster, cheaper, and more transparent. Central banks, financial institutions and fintech companies are all working together to modernize outdated systems.¹ For example, the G20 has set clear goals to enhance cross-border payment infrastructure, focusing on speed, cost reduction and better access.⁵

Banks are investing in real-time networks that can link domestic payment systems across countries, which helps eliminate delays and reduce reliance on intermediaries.² There’s also increased collaboration on global standards and data sharing to reduce fraud and improve compliance processes.⁴ Overall, these efforts are creating a more connected and efficient international payment ecosystem that benefits both businesses and consumers.

Save Time and Money On Overseas Payments With Wise Business

Wise Business can help you save big time on international payments.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in currencies.

Signing up to Wise Business allows access to BatchTransfer which you can use to pay up to 1000 invoices in one go. This is perfect for small businesses that are managing a global team, saving a ton of time and hassle when making payments.

Some key features of Wise Business include:

• Mid-market rate: Get the mid-market exchange rate with no hidden fees on international transfers

• Global Account: Send money to countries and hold multiple currencies, all in one place. You can also get major currency account details for a one-off fee to receive overseas payments like a local

• Access to BatchTransfer: Pay up to 1000 invoices in one click. Save time, money, and stress when you make 1000 payments in one click with BatchTransfer payments. Access to BatchTransfer is free with a Wise Business account

• Auto-conversions: Don't like the current currency exchange rate? Set your desired rate, and Wise sends the transfer the moment the rate is met

• Free invoicing tool: Generate and send professional invoices

• No minimum balance requirements or monthly fees: US-based businesses can open an account for free. Learn more about fees here

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Final Thoughts

Cross-border business payments are no longer just for large enterprises; they’ve become an important part of how modern businesses operate globally. With the rise of digital platforms and payment modernization, companies now have access to faster, more efficient and more transparent payment systems.² Still, understanding how cross-border payments work and the types available is imperative if you want to avoid delays and high fees.⁴ As the technology continues to evolve, staying informed and adaptable will be the best strategy for keeping your international payments smooth and reliable.

FAQ’s

What factors influence the cost of cross-border payments?

The cost of cross-border payments depends on several factors. Currency exchange rates often include a markup, which can add to the overall expense.¹ Not to mention, banks and payment providers may charge fixed fees or percentage-based commissions for processing international transactions.³ Transfer speed also affects cost; faster options like real-time payments tend to be pricier than standard wire transfers.²

How long do cross-border business payments usually take?

Cross-border payment timing varies widely based on the payment method, countries involved, and banking networks. Traditional SWIFT wire transfers often take one to five business days, depending on intermediary banks and time zone differences.¹ Faster options, like fintech platforms or newer real-time payment networks, can reduce this to minutes or hours.^2,4 However, some delays can occur due to compliance checks, weekends, or holidays in either country.⁵ Choosing providers that specialize in international payments and offer transparent timelines can help businesses plan better and avoid unexpected delays.³

Are cross-border payments secure?

Yes, cross-border payments are generally secure but rely heavily on the security practices of the banks and payment providers involved. Most international payments use encrypted networks like SWIFT, which has strict protocols to prevent fraud and data breaches.¹ Many providers implement multi-factor authentication, fraud detection algorithms and anti-money laundering (AML) checks.⁴ Despite these safeguards, risks such as phishing scams, identity theft and cyberattacks remain, so businesses must make sure their payment partners comply with the highest security standards and keep their systems secure.³

Can small businesses benefit from cross-border payment solutions?

Absolutely! Cross-border payment solutions are no longer just for large corporations. Small businesses benefit by expanding their customer base globally, paying overseas suppliers directly, and managing international payroll efficiently.⁴ Many fintech platforms and payment gateways offer affordable, user-friendly services tailored for small businesses, including competitive exchange rates and low fees.²

What currencies are commonly supported in cross-border payments?

Most cross-border payment providers support major global currencies like the US dollar, Euro, British pound, Japanese yen and Chinese yuan.¹ Many providers offer options for several local currencies, so businesses can pay or receive funds in the currency of their trading partner.⁴

How do exchange rates impact cross-border business payments?

Exchange rates can significantly impact the amount your business ultimately sends or receives. Since currencies fluctuate constantly, the rate at the time of payment affects costs or revenue.¹ Providers often add a margin on top of the mid-market exchange rate, increasing expenses.³ Businesses paying suppliers may end up paying more if rates move unfavorably, while those receiving payments can see reduced income.⁴

What regulations affect cross-border payment processing?

Cross-border payments are subject to various international and local regulations designed to prevent money laundering, fraud, and terrorism financing.⁵ These include Know Your Customer requirements, Anti-Money Laundering laws and sanctions compliance.³ Payment providers must verify the identities of senders and recipients and monitor transactions for suspicious activity.⁴

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Sources:

1. Cross-Border Payments Explained | Stripe
2. Cross-Border Payment Modernization | J.P. Morgan
3. Cross-Border Payment Processing | ACI Worldwide
4. Business Cross-Border Payments | Thunes
5. Cross-Border Payments| Bank of England