What are cross-border payments?

The global reach of eCommerce business has compelled the merchants to adopt a secured payment process. The revenue of cross-border payments trade has been estimated to reach $1.9 billion.

The developing countries are looking forward to adopting robust payment growth options to make the business at a pace level. On the other hand, the developed countries will continue to increase the payment revenue.

Recently, the International remittance in times of COVID-19 has been shrunk to about 20 per cent due to capital crises. It also impacts the international payment operation and merchants are now looking forward to making their situation normal again.

The professionals who have a global presence for their business are expecting to have a strong cross border payment mechanism.

Cross-border payment – An introduction:

A cross border payment is defined as that transaction in which a payee and transaction recipient are in separate countries. This kind of transaction is an integral part of the international eCommerce business. For the same reason, they need to be more secure. Additionally, the cross border payment is more expensive than domestic one due to the involvement of a number of parties.

How can I make a cross-border payment?

The cross border payment solution needs a secured way to transfer the money so it is important for the parties to look for a trusted payment service provider. It also encrypts the confidential financial data that is being transferred between the relevant parties.

The cross-border payment can be made in multiple ways using the credit card, bank transfer and Alternative Payment Methods (APM). The payment also depends on the location of the sender and receiver.

In the case of international bank transfer, there is a need for an international bank account number (IBAN) and BIC (Bank Identifier Code) of the code. Moreover, the merchant could also make B2C SWIFT and B2B payment.

One should look for the local preference for the customers when it is about cross border transactions. Different regions have a different set of payment cards. For instance, in Russia and Eastern Europe, there is WebMoney’s e-wallet but AstroPay is the famous prepaid card in Latin America.

Thus, one should throw light on the local preference and adopt APMs to capture the local market. Furthermore, keep in mind a multilingual service leaves out a great impact on customer retention. Alternatively one could also hire a local proofreader and translator. The most used language in the international market is as follows:

  • Chinese
  • English
  • Spanish
  • Portuguese
  • Arabic

The working mechanism of Cross-Border Payment:

Cross border payment is an international fund transfer so it is complex because every country has its own rule. The system involved in this process carries the payment from the buyers account to the merchant account. It has to be passed through foreign transaction fees, currency change and their exchange rate as well.

The banks associated with the buyers and the merchant. The associated banks of the party that request the payment speak to the bank of the buyer to undertake the payment process. Whenever the buyer sends the payment, it will first go to the bank’s counterpart in the merchant’s country. This will prepare the remittance.
The bank of the merchant will then receive the fund and after that, it will be settled into the merchant’s account. The process could be slow because the international remittance solution involves transaction fees, varying taxes and navigating currencies.

Challenges in the cross-border payment:

Time and cost are the main concerns in cross border payment. Also, it might be a complicated process to transfer the fund to a different country. The merchant needs to look for the PSP that focuses on these points. Also, the merchant needs to acquire a partnership with the party that offers transparency about the foreign exchange fees.

Cross border payment types:


The other name of the eWallet is a digital wallet which is a digital money transfer software based electronic APM. This allows customers to pay online. The user could safely store the payment cards and pay for their respective purchase. The popular eWallets are Skrill, Apple Pay, Google Pay and PayPal.

Credit card payment:

t is a widely used method for international payment. The user simply needs to enter the card details to make the transaction. In cross border payment, there are extra efforts due to currency conversion.

Bank transfers:

Bank transfer is part of the cross border payment. However, there is a limitation in this kind of transaction due to a shortage of currencies in the particular bank. In such a case, the foreign banking partners are a great source to deal with.

Smaller banks do not have any currency in the stock, so they connect with larger banks to make the process.


Professionals who hold the vision to their business should be familiar with the cross border payment. It requires good security to make the payment error-free. Due to a complicated payment system, merchants need to get partnered with an experienced PSP. Major steps have been taken to improve the mechanism of international transactions.

Currently, Visa Direct, SWIFT gpi and Mastercard Send are offering fast and secured payment globally. However, they need to be accepted widely to achieve the best milestone.

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