Global Payment Types: Which is Best for You?

According to McKinsey, global payment revenues grew 11% in 2022, a double-digit rate for the second year in a row, highlighting the volume of international payments made electronically.¹ If you’re ready to step up your international commerce, here's a list of the most common payment types.

List of Global Payment Types

From the most traditional methods to cutting-edge digital solutions, this list will give you an overview of the methods available for global transactions. Read on to discover which could best suit your international commerce needs.

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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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Costs

Wise Business operates on a transparent, pay-as-you-go system where you’ll see exactly what you’re paying for each transfer. Getting local account details for multiple currencies costs a one-time fee of 31 USD, and sending and converting money depends on the currency but starts at 0.43% per transfer.²

Wire Transfers

One of the oldest and most historically reliable global payment systems is wire transfers. While they may sound relatively modern, they were established during the telegraph era in the mid-1800s. After many developments since then, wire transfers have become a tried-and-true method of transferring money electronically. How does it work? Using the SWIFT or Fedwire networks, money is moved from one financial institution to another.

Pros and Cons of a Wire Transfer

Pros

• Convenience – Wire transfers offer a relatively hands-off approach to transfers, as banks and credit unions typically handle processing.
• Global reach – As you can transfer funds to almost anywhere in the world, wire transfers are a widely accepted form of international payment.
• Large transfers – Wire transfers are particularly popular for transferring large sums of money, which is especially useful for corporations.
• Security – Since these transactions are carried out between verified banks or financial institutions, wires rank highly when it comes to robust security.

Cons

• Cost – While wire transfers are convenient, that convenience often comes at a price. Both the sender and receiver may be subject to fees, which can become expensive, especially for international transactions.
• Complexity – In some cases, wire transfers require a lot of information, such as SWIFT codes, bank names and addresses, account numbers, and more.
• Irreversibility – Once a wire transfer has been sent out, it is usually irreversible, and rectifying them can be challenging.
• Speed in international transfers – While domestic wire transfers are fast, international wire transfers can take anywhere between 1 - 5 business days or longer, depending on whether you send the transfer before or after cut-off times.

Costs

Generally, domestic wire transfers are cheaper than international wire transfers. On average, incoming domestic and international transfers cost 15 USD each, outgoing domestic transfers cost 30 USD each, and outgoing international transfers cost 45 USD each.³

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International ACH

ACH payments work similarly to wire transfers in that they transfer money between two financial institutions. However, ACH transfers are managed by the Automated Clearing House (ACH) network, which is only available in the US. As world payment systems have evolved, so has the ACH network. In response, Nacha (the company that runs ACH) has developed international ACH transactions.⁴

Pros and Cons of International ACH

Pros

• Convenience – As ACH transfers are automated, there’s no need for manual input, which makes the entire process much more efficient.
• Cost-effective compared to wire transfers – Compared to traditional international wire transfers, ACH transactions often come with lower fees, which makes them better for small to medium-sized transactions.
• Mass payments – While they’re suitable for smaller-sized payments, their security and nature make them appropriate for mass payments as well.
• Secure – With standard bank-level security measures, they’re a sure and secure way of transferring money.

Cons

• Slower – Although they’re efficient to send, international ACH payments can be slower than real-time payment methods.
• Limited global reach – Not all countries participate in international ACH due to the complexities when it comes to agreements between banks and countries.
• Compliance requirements – For business-to-business transactions, regulations, and compliance requirements can make ACH transfer complicated, especially if there are strict banking control laws in place.

Costs

International ACH transfers typically cost less than $5.⁵

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Direct Debit and Bank Transfer

Direct debit and bank transfers are the most common payment methods of transferring money from one account to another. They’re a smart way of bypassing the complications and costs of other, more traditional payment options.

Direct debit involves the payer allowing the payee to collect payments from their account on specific dates, often used for recurring payments like subscriptions. Bank transfers, on the other hand, involve a direct transaction between two accounts, which may be limited for international transfers.

Pros and Cons of Direct Debit and Bank Transfer

Pros

• Control – Businesses can set up recurring payments for a steady and predictable cash flow, and individuals can automate payments for convenience.
• Saves time – No need to complete invoices or authorize payments for each transaction. Once set up, funds automatically leave or go into the recipient’s account.
• More cost-effective than card payments – Compared to card payments that rely on costly card networks, direct debit is typically cheaper as it takes a smaller percentage.
• Lower payment failure – Card payments come with the chance of failure thanks to expiry dates, while direct debit is directly linked to bank details, which lowers the risk of payment failure.

Cons

• Initial setup – While the process of direct debit and bank transfer becomes automated later on, setting up the process for the first time can take a while because of its cyclical nature.
• Transaction delays – International bank transfers could face unexpected delays because of time zone differences or processing times.
• Trust required – Both methods operate on trust, especially for direct debit. Once a direct debit or bank transfer has been set up, it is difficult to cancel or change those transfers.

Costs

Direct debit and bank transfers usually come with fees of 1% - 3% of the total amount.⁶

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Paper Checks

Paper checks are one of the original ways of transferring money from one person to another. Checks can be delivered in the mail and serve as a contract to pay a specified amount from the sender’s bank account to the recipient. Despite being a slightly outdated method of payment in the digital world, paper checks have their own pros and cons as a global payment source.

Pros and Cons of Paper Checks

Pros

• Security – Checks have security features such as watermarks, chemical-sensitive paper, and microprinting, which makes them difficult to forge.
• Control – When someone issues a check, they can control when the recipient cashes the cash.
• Ease of use – Checks are universally understood and easy to use, especially if the recipient isn’t familiar with digital payment systems.
• No digital footprint – If you’re looking for a form of payment that is done offline, without the use of physical cash, checks are a great option to avoid leaving a digital trail.

Cons

• Speed – Sending a check internationally can take days or weeks, making it inefficient.
• Cost – Cashing international checks can come with unfavorable conversion fees and bank processing fees.
• Risk of loss – Because of their physical nature, checks can get lost, damaged, or stolen while in transit.
• Convenience – Compared to digital methods, the process of writing, mailing, receiving, and cashing a check is quite time-consuming for both the sender and receiver. There is also often a minimum amount required to process an international check.

Costs

For the sender, there are costs to purchase a checkbook and the envelope and stamp to send the check in. For the receiver, foreign check processing fees vary but are typically two to three-digit amounts. For example, BCU charges $20 per foreign check.⁷

Credit Card

The trusty credit card has been a mainstay as a cross-border payment type for decades. As many major credit cards are accepted globally, it removes the barriers that many other payment methods have.

Pros and Cons of a Credit Card

Pros

• Universal acceptance – Most credit cards have near-global acceptance, which makes them a convenient payment type in many countries.
• Security – Credit cards use sophisticated encryption technology and have layers of financial security.
• Convenience – Credit cards provide instant payments, especially through payment gateways or similar platforms.
• Value-added benefits – Many credit cards come with reward programs, buyer protection policies, and other perks that can make them more appealing.

Cons

• High fees – Credit card companies charge high transaction fees for currency conversions and certain transactions.
• Risk of chargebacks – If a transaction is disputed, it can result in a chargeback, which causes additional costs and other complications.
• Fraud risks – Although credit cards have advanced protections, they can still be targeted by fraudsters.
• Credit limit restrictions – When charging consumers, they may have a set spending limit, which should limit potential sales or cause issues with charges.

Costs

Fees for credit card transactions depend on the card network you’re using, whether American Express, Visa, Mastercard, Discover, or something else. The average transaction costs for these top four networks are 1.29% to 3.3%.⁸ On top of this, there are also the payment processor fees to consider and potential card issuer fees.

Prepaid Debit Card

Prepaid debit cards are a popular international payment method for businesses around the world. It lets people access their goods and services without the need for cash or even a bank account, making cross-border commerce a lot more accessible.

Pros and Cons of a Prepaid Debit Card

Pros

• High accessibility – Prepaid debit cards don’t require bank accounts – they’re simply bought and pre-loaded with funds, making them accessible to everyone.
• Simplicity and speed – Getting access to a prepaid card is straightforward and easy, and funds are transferred quickly.
• Security – Unlike traditional debit and credit cards, prepaid cards aren’t linked to a bank account, reducing the risk of fraud and theft. If the card is lost, thieves can only access the pre-loaded amount.

Cons

• Fees – Some prepaid cards come with various fees, such as activation, monthly maintenance, reloading, and transaction fees, which can add up over time.
• No credit building – Prepaid debit cards don’t help to build credit history because they don’t involve borrowing money or making regular payments. This could be a con for businesses that want to establish creditworthiness.
• Low fraud protection – While credit cards have strong protection measures, prepaid debit cards offer limited protection if the card is lost, stolen, or used fraudulently.

Costs

On average, prepaid debit cards charge monthly maintenance fees of around $10 and activation fees of around $5.⁹ As mentioned, there may also be extra fees to check your balance, get cash from an ATM, and so on.¹⁰

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**Sources:**

4 - Nacha - International ACH Transactions
5 - US Bank - Cross-border Payments Wire and International ACH
6 - Nerdwallet - Foreign ATM and Debit Card Transaction Fees
7 - BCU - Foreign Checking Processing
8 - CNBC - Best Prepaid Cards
9 - Consumer.gov - What You Should Know About Prepaid Cards
10 - Wise Trustpilot