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Cross-border payments are notoriously complex. In a 2026 research paper, the Bank for International Settlements (BIS) highlighted how fragmented standards, technologies, legal systems, and enforcement mechanisms continue to create coordination challenges across global payment systems.
Managing international payments isn’t just a back-office task; it’s a business-critical operation. Whether you’re paying freelancers, creators, vendors, suppliers, or partners across the globe, an efficient cross-border payments process helps businesses scale faster, reduce compliance risk, and improve the payee experience.
In this guide, we’ll explain what cross-border payments are, how they work, common payment types, key challenges, and what businesses should look for in a modern cross-border payments solution.
Key Takeaways
- Cross-border payments introduce hidden complexity across FX, compliance, and banking infrastructure—not just “sending money globally.”
- Every payment moves through multiple stages: initiation, currency conversion, routing, compliance checks, and final settlement.
- Traditional methods rely on fragmented systems, leading to delays, high fees, and manual reconciliation.
- Scalable payment operations require automation across the full workflow, improving speed, reducing costs, and ensuring compliance while delivering a better payee experience.
What Are Cross-Border Payments?
Cross-border payments are financial transactions between entities in different countries that involve currency exchange, varying regulations, and multiple banking partners. They power the payout engines behind creator platforms, adtech networks, online marketplaces, and global SaaS providers.
Examples of Cross-Border Payments
Common real-world XBP examples include:
- A U.S. company paying a supplier in Germany
- A marketplace paying sellers in multiple countries
- A SaaS company paying international affiliates
- A business issuing global contractor payments
- A consumer sending money to family abroad
These transactions vary widely in scale, but all involve currency exchange, international routing, and regulatory compliance.
Types of Cross-Border Payments
International transactions can be classified as wholesale or retail, and further broken down by payment method. Each type relies on different networks and rails, which impact speed, cost, and settlement times. For example, digital wallets may enable near-instant transfers.
Common types include:
- Wholesale (bank-to-bank for financial institutions, businesses, and governments)
- Retail (consumer/business and family remittances)
- Cross-border payment methods include:
- Bank-to-bank wire transfers through the SWIFT network
- Bank-to-bank global ACH
- Debit cards and credit cards
- Digital wallets
- Blockchain
Global ACH includes SEPA transfers between EU member states (countries) in Euros.
Digital wallets, including offerings from PayPal and other fintech payment systems, enable online payment transfers between members’ accounts. Blockchain uses cryptocurrencies without the need for currency conversion.
The World Bank highlights the need for interoperability in global Fast Payment Systems (FPS) to help overcome the inefficiencies of the correspondent banking network for payment services and lower costs and fees for end users. Interbank fund transfers to different countries are facilitated by a network of financial institutions and clearing systems, which may be interoperable.
Who Uses Different Cross-Border Payment Methods?
Different cross-border payment methods are better suited for different transaction sizes, payout frequencies, and business models.
- Wire transfers are commonly used for high-value B2B supplier payments where speed and security matter more than transaction cost.
- Global ACH and local bank transfers are often preferred for recurring payouts at scale, such as contractor, affiliate, creator, or marketplace seller payments.
- Digital wallets are commonly used by freelancers, creators, and consumers who prioritize fast access to funds and flexible withdrawal options.
- Prepaid debit cards may be used for gig-economy payouts or in regions with limited banking infrastructure.
- Blockchain and cryptocurrency-based payments are sometimes used for near-instant international transfers, though adoption varies by regulatory requirements and risk tolerance.
The best payment method depends on factors like transaction volume, geography, currency requirements, compliance obligations, and payee preferences.
Why They’re So Complex
Cross-border payments are complex because payment regulations, transfer systems, identifying numbers, banking systems, currencies, and fees vary significantly from one country to another. In some less developed countries, banking systems and payment infrastructure are less advanced.
These international payments across country borders often involve currency conversion. Foreign exchange (FX) rates have fluctuations in a global economy experiencing volatility, which might require hedging. Financial intermediaries may be required to complete transactions.
It’s important to understand how the step-by-step process of sending multinational payments works. Let’s walk through the payment flows.
How Cross-Border Payments Work
At a high level, multi-country payments follow this process:
- Payment initiation – The payer submits payment details and currency
- Currency conversion (FX) – Funds are converted if needed
- Routing through banks or networks – Often via intermediary banks
- Compliance checks – AML, sanctions, and tax validations
- Settlement – Funds are delivered to the recipient’s account
Depending on the method used, this process can take minutes or several days.
Detailed Cross-Border Payment Workflow (Step-by-Step)
With international payments, extra steps and factors must be considered beyond basic steps for domestic payment processing. The following 10 steps for sending XBPs address their unique factors.
1) Purchasing
When sourcing from a global supply chain, find an international supplier. If buying online through e-commerce, you’ll be directed to the payee’s checkout page to make your B2B payment. Ideally, it will offer a localized experience, meaning it features your native language and local payment methods.
2) Preparing for Payments
When sending international payments, you’ll need to provide specific information for the recipient’s country. Not all payment methods are supported globally. For instance, even if you use Global ACH for most payments, you may need alternative methods for recipients in countries where ACH isn’t supported.
Here are a few country-specific examples:
- China: Payee’s telephone number required for Global ACH
- Ukraine: Tax ID number required
- United Kingdom: SORT Code needed
- Most European countries: IBANs required for SEPA ACH
- Various countries: BIC/SWIFT code may be necessary
Global Payables Platform
A global payables platform streamlines the onboarding process by allowing payees to enter their W-8 (or W-9) tax forms, payment preferences, and banking details (including their bank account), enabling payers to later initiate payments. This creates a centralized, secure record for each payee, making it easier to manage compliance and reduce manual entry errors.
Payables platform efficiency enables your business to make timely payments that earn early payment discounts and use payees’ local banks in more countries
3) Currency Conversion
If necessary, a conversion to a foreign currency will take place at the current exchange rate. This applies only if you are sending USD to an account that accepts a different currency and the payee has requested a different currency.
4) Verifying Compliance with Global Payment Rules
Verify that you are sending the payment in accordance with all applicable global payment rules. There are more than 26,000 rules, which makes the use of an automated global payments solution all the more valuable.
Global regulatory compliance for anti-money laundering (AML), Know Your Customer (KYC), sanctions lists, and the specific jurisdiction’s banking requirements is performed before the payment is approved or denied.
5) Monitoring and Oversight of Global Payments Status
Sending international payments requires maintaining complete oversight of each payment. When making hundreds or thousands of international money transfers, achieving complete oversight can be time-consuming. Using a global payments platform gives you a single platform to view the status of each payment, improving the user experience.
6) Routing and Processing
Ensure Smooth Payment Authorization
Once payment details are entered, the transaction is sent through an encrypted gateway for authorization. However, if your global payments platform is connected to only one bank, the transaction may be flagged. Using a platform integrated with multiple global banking partners increases the likelihood of successful, first-time payment processing.
Automate One-Time and Recurring Payments
Whether you’re paying publishers, creatives, or suppliers, a global payments platform can automate both one-time and recurring transactions—reducing manual effort and errors.
Leverage Recurring Payments for Discounts
For regular payees, setting up recurring payments can help you negotiate better pricing terms and ensure timely delivery—supporting stronger vendor relationships and reducing the risk of payment delays.
Protect Business Continuity with Timely Payments
Prompt payments to freelancers and affiliates help prevent churn and reduce recruitment costs. Similarly, paying suppliers on time helps avoid shipment holds and production delays caused by unpaid invoices.
7) Payment Approval or Denial
Your payment will be approved or declined. Verification is performed to ensure you have sufficient funds in your account. If the multi-country payment is made through banks that support international trade with international payments, the transaction is more likely to be approved. A global payments platform excels at intelligently routing payments to a bank likely to approve the transaction.
8) Confirmation (Approval or Denial) and Fulfillment
You will receive confirmation that the transaction has been approved or declined. If declined, you’ll receive a return code outlining why it wasn’t processed. If approved, your order then goes into fulfillment.
9) Settlement
At this point, depending on the type of payment you’ve used, there’s a good chance the funds will still appear in your account and not in the payee’s. A Global Automated Clearing House (ACH) payment takes anywhere from two to five days of processing time to reconcile before going to the payee’s account.
10) Tracking
You will receive a reconciliation report from each bank that you work with. This can be extremely confusing and is an inefficient way to keep track of your XBPs. With a global payments platform as your cross-border payment system, you can receive a consolidated reconciliation report showing all payouts through all banks and which transactions have been reconciled, as well as which ones have not.
Cross-Border Payment Pitfalls and Costs
Businesses making multinational payments through traditional banking methods often incur additional costs and friction due to the complexity of the process. This is because traditional payment methods, such as wire transfers and manual processes, are not ideal for cross-border transactions.
Some overseas payment methods require intermediaries, which are bank service providers that serve as middlemen. These payments are also subject to U.S. and recipient-country rules for global regulatory compliance and taxes.
Pitfalls or challenges of cross-border payments include:
1) Manual Payment Workflows and Siloed Systems
Manual processes, spreadsheets, and siloed, fragmented systems often result in bottlenecks, payment delays, duplication of efforts, and rising overhead costs, with no scalability for growth.
2) Poor Payee Experience
Creators, affiliates, and freelancers expect fast, timely, and accurate payouts. A poor payout experience could lead to payees leaving, requiring extra time to recruit replacements and causing reputational damage.
3) Regulatory Risk and Tax Complexity
Compliance with OFAC and AML, FATCA, DAC7, and local tax requirements is increasingly complex as your payee network expands globally.
4) Limited Visibility into Payouts
With manual or siloed systems, payers and payees have limited visibility for cash flow, liabilities, and payment status.
Costs of international payments include payment method fees, currency exchange fees, sending and receiving bank charges, intermediary fees, and any investigation fees for tracing payments not received. Potential payment fraud initiated by scammers is an additional cost that companies may incur on XBPs.
What Are Correspondent Banking Fees?
Correspondent banking fees are charges applied when intermediary banks help process a transaction across different countries. Because many international payments pass through multiple banks, each intermediary may deduct a fee.
These fees can:
- Increase total transaction costs
- Reduce the final amount received by the payee
- Add delays due to additional processing steps
This is one reason businesses are shifting toward payment platforms that optimize routing and reduce reliance on intermediary banks.
Comparing Best International Payment Methods
| International Wire Transfers | International ACH | Prepaid Debit Cards | PayPal | Paper Checks | |
|---|---|---|---|---|---|
| Best for | Low volume of high-dollar transactions | Supplier and payee transactions at low cost | When foreign fees don’t apply, limited amounts | Low-volume freelancing payments; weak bank network in countries | Not preferable – fraud risk, lost, mail time |
| Electronic funds transfer (EFT)? | Yes | Yes | Yes | Yes | No |
| Cost-effective? | No – fees are high | Yes | Yes | Yes, but payment fees are higher than ACH | Yes, but checks can be stolen and altered |
| Use for high-volume transactions? | No – too expensive | Yes | No limits on card value | No – too expensive | Not advisable – labor intensive |
| Fast or slow? | Slower than SEPA global ACH (1 – 5 business days) | Fast – SEPA (in the EU) can be within 1 business day | Fast | Fast instant transfers, but bank transfers can take 1-5 days | Slow – the in-transit mail time is long |
| Easy to return funds if canceled? | No – limited traceability | Yes | Yes | No – Instant transfers are not returnable after receipt | Yes – stop payment |
How Leading Companies Simplify Global Payouts
Choose an automated global payments platform that includes:
- Mass payment processing
- Integration with algorithmic banking rules
- Advanced payment configuration options and thresholds
- Automatic OFAC and other global regulatory compliance
Mass Payments Processing
To maximize the benefits of cross-border payments, choose a global payments platform that supports mass payment processing. You’ll be able to schedule thousands of payments in a batch with multiple payment methods. Additionally, consider a solution like Tipalti, which supports payments to over 200 countries and territories in 120 different currencies.
Imagine being able to partner with any overseas affiliate, creator, or freelancer and pay them through your payment provider in their local currency. This type of payment processing is at the heart of enterprise scalability.
Integration with Algorithmic Banking Rules
No matter the platform you choose, ensure it integrates the 26,000-plus commercial banking rules when processing payments. This will ensure payments are processed quickly.
Advanced Payment Configuration Options and Thresholds
Your global payments platform should offer advanced payment configuration options that let you split transaction fees between you and the payee. Additionally, payment threshold features can let you hold payments until a predetermined margin is reached, optimizing transaction margins and improving cash flow.
Automatic OFAC Regulatory Compliance
A global payments platform worth partnering with will guarantee complete OFAC compliance. Regulatory screening can be a headache, but it must be conducted once suppliers provide their banking details. With a global payments platform, there is no need to run manual queries of SDN/OFAC databases. Instead, the global payments platform can do the screening for you and check all payees against blacklists. This reduces the risk of fraudulent or prohibited payment activities and prevents losses from payment errors. It also keeps you from criminal liability in regard to doing business with a supplier who is on the OFAC’s sanctions blacklist.
Choosing a Global Payout Partner
Choosing the best cross-border payment provider is crucial. Your ideal solution should offer:
- Global functionality meeting payee needs: Payouts to 200+countries and territories, 120+ currencies, and 50+ payment methods
- Regulatory and tax compliance: Built-in tax compliance across the US with a KPMG-approved engine, the UK, EU, and Canada, and compliance with sanctions, KYC, and AML requirements
- Outstanding payee experience: Self-service onboarding with multilingual support in 27 languages, with a payment method choice and real-time payout status visibility
- Integration flexibility: Seamless API and ERP integrations with ERP and accounting software like NetSuite, Xero, QuickBooks Online, and Sage Intacct, and performance marketing systems for payouts
- Automation with scalability: Eliminate 80% of your payout workload through end-to-end payables and payouts automation
Tipalti’s global payout software provides these capabilities. Consider the following use case and testimonial from a Tipalti customer, along with the Tipalti Mass Payments Overview Table, when selecting a cross-border payment platform.
With Tipalti, there are no limitations with scalability—we haven’t had any incremental work going from hundreds to thousands of publishers
Jason Wechsler, VP Finance, PubMatic
Global Payment Optimization
Your business may operate overseas or work with global partners, such as creatives, freelancers, and royalty recipients. It needs to make efficient, mass payments in local currencies, using automated payables software that ensures global regulatory compliance and manages foreign currency conversion.
Automate your global payments at scale
Modernize your finance operations with end-to-end automation that streamlines global payables—from payee onboarding and tax compliance to payment execution, reconciliation, and reporting.
Cross-Border Payments FAQs
What is a cross-border payment?
A financial transaction where money is transferred between parties in different countries.
How long do cross-border payments take?
Anywhere from minutes (digital wallets) to 1–5 business days (Global ACH or wires).
Why are cross-border payments expensive?
Due to FX conversion, intermediary bank fees, and compliance requirements.
What is the cheapest way to send international payments?
Global ACH or local payment rails are typically the most cost-effective.
Can I manage multiple entities?
Yes, Tipalti supports multi-entity workflows (with multi-entity ERP capabilities), branding, approval flows, and consolidated reporting with entity views.
