Cross-Border Payments

Why Trust Techopedia

What are Cross-Border Payments?

Cross-border payments are monetary transactions made between two people or entities in different countries, requiring the payment to “cross borders” in order to be completed.


What are Cross-Border Payments?

Key Takeaways

  • Wire transfers, remittances, electronic payments, and international money orders can be types of cross-border payments.
  • Cross-border payments are useful for both consumers and businesses to send money abroad.
  • Cryptocurrencies have become a cheap way to conduct transactions across borders.
  • Currency exchange rates may affect the transaction amount and how much is received.
  • Consider fees, restrictions, and risks before choosing a payment method.

How Does Cross-Border Payment Work?

The process for cross-border payments depends on how and where the money is being sent and received. However, there are a few general steps that are required by most cross-border payments.

A typical international payment between banks could look something like this:

  1. The sender provides their bank with the transfer details, including the recipient’s name, account number, amount to be transferred, and currency.
  2. The sender’s bank initiates the transfer, accounting for fees.
  3. The sender’s bank contacts the recipient’s bank, and payment is initiated.
  4. The payment is passed through an intermediary bank to facilitate the transaction and convert the currency if needed.
  5. The recipient’s bank receives the money and credits the recipient’s account minus fees.
  6. The recipient is notified by their bank that the funds are available in their account.

    Things to Consider Before Choosing a Cross-Border Payment Method

    • How much will the payment cost?
    • Is there a fee for currency conversion?
    • How long will the payment take?
    • What are the risks?
    • Is the payment private?

    Types of Cross-Border Payments

    Types of Cross-Border Payments

    International wire transfers
    Wire transfers are used to make payments across borders directly between banks. This payment type requires banks in different countries to transfer money to one another, usually with the help of a third-party to facilitate the transaction. Wire transfers can be a helpful tool for conducting B2B cross-border payments.

    International money orders
    A money order allows funds to be sent by mail or another delivery method to someone in a different country. This can be a helpful tool for sending money to someone who doesn’t have access to a bank account. 

    If you need to send money to family or friends in another country, you’ll be conducting a remittance payment. This can be useful for people located in a wealthy country to send money back to family members who are struggling financially. Remittances are a huge part of the global economy and are expected to surpass $1.3 billion by 2032.
    As digital assets with no jurisdiction restrictions, cryptocurrencies can be used to conduct cross-border transactions. Users can send funds directly from their digital wallet to another digital wallet, regardless of location, and for a low fee. 

    Cross-Border Payments Methods

    Remittance services

    Companies like Western Union or MoneyGram that specialize in remittances allow you to send money across borders quite easily. These companies are often referred to as money transfer operators (MTOs), and offer competitive exchange rates and a wide range of services to send money to friends and family in other locations.

    Foreign exchange services

    A foreign exchange service can convert currencies, allowing you to send the appropriate currency to someone in another country. Some exchange providers do offer services for international business that make it easier for companies to send money.

    Online payment platforms

    Fintech companies like PayPal, Wise, and Revolut provide ways to send and receive cross-border payments. One benefit of these online platforms is that many support multi-currency wallets, allowing you to manage money in various currencies all in one platform.

    Credit and debit cards

    Today, most credit and debit card issuers will allow you to use your card internationally. While this makes it extremely easy to spend money abroad, you’ll likely pay a hefty fee for this type of cross-border payment.

    Cross-Border Payments Uses

    Conduct business
    To pay for a service or materials with an international company, you’ll need to make B2B cross-border payments.

    Transact online
    If you make an e-commerce payment, you may be required to send money across borders aligning with the cross-border payments definition.

    To send money to family and friends abroad, you can make a cross-border payment.

    Pay for travel-related expenses when you’re on vacation or visiting another country.

    Investors can diversify their portfolio across borders by purchasing stocks, real estate, or other assets abroad.

    How to Send Cross-Border Payments

    To send a cross-border payment with a bank or financial institution, you’ll need the name and account number of the recipient, along with other details of your payment.

    Online platforms may allow you to complete a transfer with just the recipient’s email address. Meanwhile, cryptocurrency transactions can be sent to anyone as long as you provide the recipient’s wallet address.

    How to Save Money with Cross-Border Payments

    The method you use to pay for and receive a cross-border payment matters a great deal in the cost of these transactions. Depending on the method you use, a cross-border payment can be costly or relatively inexpensive.

    For example, international wire transfers can be costly, but if you conduct a cryptocurrency transaction, it can be relatively cheap.

    Always do your research to see which cross-border payment method will be the cheapest for you.

    Cross-Border Payments Pros and Cons


    • Allows you to conduct business around the world
    • Can be cheap depending on the payment method
    • Can send money to family and friends who are in need


    • Can take several days to complete
    • Can be subject to regulatory and compliance restrictions
    • May include fees for transfer and currency conversion

    Cross-Border Payments Challenges

    • Your bank can restrict payment to countries based on regulatory compliance restrictions.
    • International payments can take longer than domestic payments to settle and may require multiple banking intermediaries to complete.
    • Transaction fees may make it not economical to send small amounts of money to family and friends abroad.
    • Currency exchange rates fluctuate regularly and can affect the final amount received.
    • Cross-border transactions can be subject to fraud, identity theft, and phishing attacks by cybercriminals.

    The Bottom Line

    Whether you’re a business looking to transact overseas or an individual trying to send money to family in another country, exploring cross-border payments meaning can help you with your next international transfer.

    Fortunately, technology has made it easier than ever to send money anywhere in the world, cheaper and safer than ever before.


    What are cross-border payments in simple terms?

    What is the cross-border payment regulation?

    What is the cross-border payment protocol?

    Who uses cross-border payments?


    Related Terms

    Daniel Pelberg
    Financial Journalist
    Daniel Pelberg
    Financial Journalist

    Dan has been a content and copywriter in the financial services and fintech industries for over a decade where he has seen firsthand the evolution of financial services and helped many companies convey complex information to a wide audience, both in the B2B and B2C markets. Dan has an affinity for all types of content in the financial sector, whether it’s writing an educational script for a new financial product video, a monthly newsletter for a financial advising firm, or a blog post for a new Bitcoin service. As a digital freelancer, Dan has had the opportunity to work with…