Finance teams at international businesses might spend hours tracking wire transfers across time zones, reconciling payments that arrive days apart (and with varying fees)—and then explaining to CFOs why currency fluctuations just added unexpected costs to this month’s expenses. Cross-border payments are still one of the most complicated aspects of global business operations. Fortunately, these essential payments are undergoing a transformation aimed at addressing long-standing friction points, which could alter how businesses move money internationally. Financial executives seeking global growth must navigate the current landscape and prepare for coming changes.

What Are Cross-Border Payments?

Cross-border payments are financial transactions in which the payer and recipient (or their bank accounts or digital wallets) are located in different countries. These payments typically involve currency conversions and require maneuvering through multiple financial institutions and regulatory jurisdictions.

For businesses with international activities that need to pay overseas suppliers or collect payments from foreign customers, cross-border payments represent both an operational necessity and a strategic consideration. They involve several layers of cost, time, and risk that financial executives must manage.

Key Takeaways

  • Cross-border payments are financial transactions between parties in different countries, normally involving multiple currencies and financial institutions.
  • Cross-border payments support global commerce and business growth opportunities, but they also present challenges, such as costs and processing delays.
  • The payment process comprises six key steps: selecting payment type, determining exchange rates, logging recipient details, verification, initiation, and tracking.
  • The lack of unified global payment systems means having to interpret compliance requirements in various jurisdictions with different rules.
  • Technology initiatives, including blockchain and ISO 20022, are making cross-border payments faster and more transparent.

Cross-Border Payments Explained

Cross-border payments exist in their current form because there is no unified, global banking system. Banks in different countries can’t transfer money to each other directly. Instead, they rely on a network of bilateral and multilateral relationships with partner banks to facilitate international transfers. These partners—known as correspondent banks—are located in different countries around the world and hold reciprocal accounts with each other that are specifically created for settling international transactions, called nostro and vostro accounts. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) network has been the primary infrastructure for these transactions since the 1970s, providing a standardized messaging system that lets financial institutions communicate payment instructions securely. More recently, new payment methods and networks are beginning to offer alternatives for specific use cases.

International payments operate through a series of accounting entries—debits and credits—to transfer value across the linked accounts. For example, when a US company pays a German supplier, the sending bank debits the US company’s account and sends payment instructions through the SWIFT network to its correspondent bank in Germany. The US bank records the balance in its nostro account, denominated in euros and held at the German bank, while the German bank records the same balance as a vostro account. The German bank then credits the German supplier’s bank, which in turn credits the supplier’s account in euros. Sometimes, additional intermediary banks enter the picture—for instance, if the US company’s bank has no relationship with any German correspondent banks. The more intermediaries, the greater the time and cost needed to effect the transaction.

How Do Cross-Border Payments Work?

Cross-border payment processes vary to accommodate a few key factors. First, the payment type chosen determines the speed and cost. Second, the transaction’s “corridor”—the specific country-to-country route required to get it to its destination—affects which payment networks can be used and what regulations apply. Furthermore, the particular banks and payment providers involved in that corridor, and the directness of their relationships, influences how many intermediaries must handle the transaction. Despite these distinctions, most cross-border payments follow a similar sequence of steps.

Though traditional correspondent banking through SWIFT still dominates high-value corporate transactions, alternative networks have emerged to address specific corridors and use cases. Meanwhile, the payment industry’s migration to ISO 20022 messaging standards provides richer structured data that improves transaction security, supports straight-through processing, and reduces the manual corrections that have long plagued international payments.

The following steps outline the typical journey of a cross-border payment from initiation to settlement:

  1. Payment Type

    The first step in any cross-border payment is selecting the most appropriate transfer method, a decision that will be based on the trade-offs arising from the payment’s urgency, cost, destination, and amount. Larger B2B payments tend to go through traditional wire transfers; senders of smaller or more frequent payments are increasingly turning to alternative digital solutions.

    This choice has accounting implications because different payment types can affect the timing of revenue recognition and expense recording. For example, wire transfers provide clear settlement dates for accounting entries, while alternative solutions may involve multistep processing that blurs the lines between accounting periods. Different payment methods may also require adopting new internal controls and reconciliation procedures. Additionally, since payment methods settle at different speeds, foreign currency translation can become more complicated—companies may need to adjust their hedging strategies to reduce exchange rate exposure.

    Traditional Methods

    Wire transfers via SWIFT remain the standard for high-value B2B transactions and bank-to-bank activity; they are reliable and the correspondent banking network gives them a wide global reach. SWIFT wire transfers cost more than other traditional methods because of their relatively shorter processing times of one to five business days, with some corridors even offering same-day settlement. Wire transfers have tighter security, as each transaction is processed and verified individually in accordance with stringent authentication requirements. They are accepted almost everywhere but are usually irrevocable once sent.

    International ACH transfers (IATs) are a lower-cost traditional alternative. They are slower and provide less geographic coverage than SWIFT. IATs are batch-processed using a standardized format, which means they get less individual scrutiny than wire transfers and require three to five days of processing time. However, many can be reversed if errors occur, making IATs well suited for recurring payments, like international payroll, where predictable timing and the ability to correct mistakes matters more than speed.

    Other traditional methods, such as foreign drafts, money orders, and letters of credit, still exist for specific use cases, though wire transfers and IATs have largely replaced these paper-based options for most business transactions.

    Alternative Methods

    Alternative cross-border payment solutions have emerged to address some of the speed and cost challenges of traditional methods. They tend to tackle specific business needs with targeted capabilities. Credit card networks, for example, have expanded to offer B2B payment services, such as Visa Direct and Mastercard Cross-Border Services. These work by pushing funds directly to cards or bank accounts across broad global networks, sometimes settling within hours, but at least by the next day. They are commonly used for disbursements, such as contractor payments and employee reimbursements, whose recipients are looking for immediate access to funds.

    Another recent development, regional payment networks, can make cross-border payments within specific geographic areas almost as simple as domestic transfers. For example, Single Euro Payments Area (SEPA) is a low-cost, standardized payment network used by participating European countries for euro-denominated payments.

    Digital wallets and payment platforms like PayPal and Alipay connect to multiple payment systems through a single interface to handle currency exchange, compliance screening, and consolidated reporting. This type of bundled activity is particularly valuable when managing high volumes of smaller payments.

    Blockchain-based solutions offer the potential for nearly instant settlement, plus enhanced tracking. For example, RippleNet says it can process payments in three seconds in more than 55 countries, while other blockchain platforms are running various pilots and limited deployments. However, adoption remains low relative to established networks like SWIFT or regional systems like SEPA. Regulatory uncertainty and the lack of interoperability between different blockchain networks continue to limit broader use.

  2. Exchange Rate

    When cross-border payments involve different currencies, the exchange rate and timing of the conversion become critical considerations. Conversion typically happens at one of three points: The originating bank may convert funds before sending, intermediary banks may handle conversion during transit, or the receiving bank may convert upon arrival. The timing and location of the conversion can affect the final amount the recipient gets.

    Some banks and payment services add a margin above the exchange rate as part of their revenue model. Businesses can accept the provider’s quoted spot rate, or they can prearrange rates through forward contracts. Treasury teams often negotiate preferred rates for high-volume corridors or use real-time rate comparison tools to minimize conversion costs. The selected rate is then locked and documented as part of the payment instruction, though the conversion may not actually happen until hours or days later, depending on the payment method chosen.

    From an accounting perspective, the choice of where and when conversion occurs can affect the amount for the transaction that is recorded in the company’s functional currency. This, in turn, potentially changes reported revenues, expenses, assets, or liabilities. Companies with significant foreign currency exposure must also consider disclosure requirements. A company’s policies for managing exchange rate risk and the treatment of material foreign currency transactions may need to be explained in financial statement notes.

  3. Log Recipient Details

    Accurate recipient information is essential for successful cross-border payment processing, and it’s required to satisfy anti-money laundering (AML) and know-your-customer (KYC) regulations. Necessary details vary by destination and payment method but typically include the recipient’s full legal name, bank account number, and bank identification codes, such as SWIFT’s Bank Identifier code or International Bank Account Number. Additional information needed to comply with local rules may include the receiving bank’s full name and address, intermediary bank details, and payment reference or purpose codes.

    Managing this should be a core part of a company’s master data management plan because it can affect accounts payable processes and financial reporting. Errors—even minor ones, such as transposing a digit or abbreviating a name—are a leading cause of extended payment time, payment returns, and regulatory holdups. To minimize these risks, treasury teams regularly update vendor banking details and use payment platforms that automatically validate recipient particulars before sending payments.

    Strong internal controls play a key role at this stage. Segregation of duties, for example, separates staff who enter or modify recipient details from those who approve payments. Audit trails document all changes to banking information for internal and external review. And since recipient details often flow through multiple systems, including ERP, treasury management, and banking platforms, procedures need to be in place for careful synchronization and reconciliation. Lastly, given the sensitive nature of banking information, companies must deploy controls to adhere to data protection regulations, such as GDPR, which stipulates how the information should be stored, processed, and disclosed.

  4. Payment Verification

    Before processing, each cross-border payment undergoes verification checks to confirm regulatory compliance and prevent fraud. A 2025 survey by the Association of Finance Professionals found that 79% of US organizations faced payment fraud attempts in 2024, with wire transfers—the backbone of cross-border payments—most vulnerable to attack. Financial institutions screen transactions against sanctions lists, AML requirements, and KYC regulations in both originating and destination countries. This process includes verifying the legitimacy of the transaction, confirming the identities of sender and recipient, and checking for any red flags that might indicate money laundering or terrorist financing.

    The enhanced data in ISO 20022 helps reduce instances where legitimate payments are incorrectly flagged as suspicious by providing clearer transaction purposes and more complete party information. However, complex or high-value transactions may still trigger manual reviews, adding hours or days to processing time. Costs associated with compliance checks are recorded as operating expenses, which cut into profits on the income statement. Therefore, payment verification represents a critical balance between security and efficiency—too little scrutiny exposes businesses to fraud loss and financial institutions to regulatory penalties, yet excessive checks can be costly and delay legitimate business transactions. Fintech payment providers have begun automating verification using AI; this cuts down on manual intervention and tends to make approvals faster and cost less.

  5. Payment Initiation

    Once verification is complete, the actual payment instruction is transmitted through the chosen payment network. For wire transfers, the originating bank sends a SWIFT message (nowadays, in ISO 20022 format) containing all payment details either to the recipient’s bank or via correspondent banking relationships. The message states the amount, currency, receiver’s details, and any special instructions. For businesses processing multiple global payments, many banks and payment platforms now offer mass processing capabilities that initiate hundreds or thousands of payments simultaneously, improving operational efficiency.

    Alternative payment solutions may do things differently. For example, card networks process through their own rails, and regional systems like SEPA use standardized file formats for bulk submissions. Regardless, the payment initiation phase is when transaction reference numbers and time stamps are generated; these are crucial for tracking the payment throughout its journey.

    Advanced treasury management systems automate this step by pulling approved payments from ERP systems and formatting them according to each payment method’s requirements.

  6. Payment Tracking

    Not long ago, a cross-border payment’s journey was a “black box,” with senders in the dark about final payment timing or what fees would be deducted. Today, SWIFT can provide end-to-end visibility, showing payment status throughout the process, any fees being deducted, and when the recipient can expect the payment to arrive. With this transparency, businesses become better able to manage cash flow and respond quickly to any issues. Alternative payment networks offer similar tracking capabilities, often with automated notifications issued at each stage of the payment journey.

    For accounting teams, improved payment tracking means cleaner fiscal cutoffs and more accurate accruals for in-flight payments. Internal controls are strengthened, too, thanks to clearer audit trails and faster investigation of anomalies or delays.

Examples of Cross-Border Payments

Cross-border payments span a broad spectrum of transaction types: business-to-business (B2B), business-to-consumer (B2C), consumer-to-business (C2B), and person-to-person (P2P). For businesses, these payments underpin almost every aspect of international operations, from routine operational expenses to strategic capital deployments. Each use case brings distinct aspects of payment frequency, transaction size, regulatory considerations, and urgency. They also create unique accounting challenges, especially with regard to timing of revenue and expense accruals, along with tax and currency translation. Examples across the full spectrum include:

  • Multinational payroll: Companies with global workforces must meet the challenge of managing payroll across different countries while meeting local tax-withholding requirements. Treasury teams coordinate bulk payments in multiple currencies and varying payroll cycles, often relying on specialized providers to help them comply with each country’s unique labor laws.
  • Imports and exports: Cross-border payments support global trade management by letting businesses pay international suppliers and receive funds from foreign customers. For example, a US manufacturer importing components from Asia might use SWIFT wire transfers but receive ACH payments from European distributors in euros.
  • Paying freelancers: The rise of remote work has businesses paying independent contractors living anywhere in the world. These B2B and B2C payments tend to be smaller than other transactions, but they occur frequently and require careful logging and attention to tax reporting.
  • Tourism: Travel and hospitality businesses often handle high volumes of international payments, in multiple currencies, for hotel bookings, flights, tours, and vendor settlements. For instance, a US hotel chain may receive credit card payments in various currencies from global travelers (C2B), while paying local suppliers and staff in the destination country’s currency.
  • Service payments: These payments are for services from international providers, such as SaaS subscriptions, cloud computing, consulting fees, and digital marketing services. These cross-border payments are often smaller in amount but recur regularly, making them well suited for automated payment solutions that manage multiple vendors across different countries.
  • Charity or grants: International nonprofit organizations and foundations make cross-border payments to support their global missions. These transactions require careful documentation for grant accounting purposes. Organizations also encounter heightened scrutiny during payment verification in order to confirm that the recipients are legitimate and that the payments comply with tax-exemption rules in multiple jurisdictions.
  • Investments: Common cross-border investment transactions include purchasing foreign securities, buying international real estate, making capital contributions to overseas subsidiaries, and funding joint ventures with foreign partners. Exchange rate timing becomes particularly critical when moving these large sums, prompting many companies to use forward contracts or other hedging strategies to lock in rates.
  • Remittances: These are P2P money transfers, typically from workers in a developed country who are sending a portion of their salaries to family members in their home countries. These personal payments are often sent via specialized money transfer operators, such as Western Union or MoneyGram.

Advantages and Challenges of Cross-Border Payments

Effective cross-border payment capabilities can separate market leaders from competitors by helping them expand into new geographic markets and build new partner networks. For finance executives, this presents a classic cost-benefit tension. Opportunities and operational advantages must be weighed against increased complexity, higher costs, and new risk exposures.

Advantages

Cross-border payments enhance business agility and support market expansion, providing opportunities for competitive differentiation in an increasingly global marketplace. The strategic and operational advantages they offer include:

  • Enabling international trade: Cross-border payments are the foundation of global commerce. They let businesses source materials from suppliers worldwide and sell to customers in any market.
  • Improving flexibility: Companies can quickly respond to changing market dynamics without needing to establish local banking in every country, allowing them to adjust their supply chain, for example, or scale operations up or down, as needed. This flexibility lets finance teams adjust pricing strategies in real time to reflect currency shifts, competitive pressures, or sudden changes in demand.
  • Providing growth opportunities: International payment capabilities unlock access to new customer segments and revenue streams, enabling businesses to expand into new markets. They also encourage new product development, as expanded sourcing options give companies access to materials and partners that aren’t available domestically.
  • Enhancing convenience: With automated processing and real-time tracking, international payments can be nearly as straightforward as domestic ones. This stands in stark contrast to the days of foreign drafts and money orders, when there was little visibility into when funds would arrive.
  • Diversifying currencies: Maintaining operations in multiple currencies provides natural hedging against exchange rate fluctuations and reduces exposure to economic volatility in any single market.

Challenges

Although cross-border payments empower global growth, they also introduce operational difficulties, financial risks, and accounting issues that require careful management. Finance teams must overcome these challenges to protect profit margins and maintain efficient international operations:

  • Potential for hidden costs: Fees can accumulate quickly beyond the expected transaction cost. Businesses can encounter additional charges for services like compliance screening and payment amendments. This can make it difficult to accurately budget for international transactions.
  • Managing regulations and compliance: Every country has different financial regulations, causing businesses to wend their way through varying AML, KYC, tax, and reporting requirements. Compliance failures that result in a payment delay or frozen funds can disrupt operations—not to mention any fines the company might have to pay.
  • Security and privacy: International payments face elevated fraud risk, particularly due to business email compromise and account takeover schemes. Additionally, companies must protect sensitive payment data in multiple jurisdictions with different privacy laws.
  • Currency volatility: Exchange rate fluctuations between the time a payment is initiated and when it is settled can materially impact transaction values. This volatility complicates budgeting and forecasting.
  • Processing times: Despite improvements, some cross-border payments still take days to settle, particularly in emerging markets. Yet, others can be almost instantaneous. This variability muddles cash flow management and can strain supplier relationships. It may also impede a business’s ability to take advantage of time-sensitive opportunities.

Why Are Cross-Border Payments So Complicated?

Cross-border payments are complicated because they’re at the center of inherently conflicting forces that lack any global authority to coordinate them. They operate in an environment where technology and sovereignty clash: Technology thrives on standardization and automation, but sovereignty drives each nation to maintain control over its financial system. When a payment crosses borders, it moves from one closed-loop domestic system to another. The disconnects create cascading complications: Even a simple formatting error can trigger compliance holds, necessitating manual intervention across time zones and potentially causing exchange rate exposure if currency values move during the delay. What begins as a routine payment can become a multiday, multiparty ordeal.

Practical realities compound the structural complexity. Banks operate on different schedules, so a Friday afternoon payment from New York might not reach Singapore until Monday, with questions or corrections lengthening the processing time. Language barriers and character limits force abbreviations that obscure information. Even basic business practices vary. For example, some countries require purpose codes for every transaction, others demand supporting invoices, and even recipient name formatting differs. Currency cutoff times rarely align, so a payment might clear one system but sit idly waiting until the next business day for conversion. These frictions multiply—a minor data error on a late-day payment to a country with strict compliance requirements can take several more days to fix.

These complications persist when there are conflicting priorities in the payment ecosystem. Banks prioritize security over speed because regulatory penalties far exceed complaints about delays. Governments prioritize control and tax collection over payment efficiency. Business risk departments focus on compliance over customer experience. Correspondent banks, which collect fees for managing the complexity, have little or no incentive to simplify.

The Future of Cross-Border Payments

The good news for businesses seeking faster, cheaper, and more transparent cross-border payments is that technology innovation and newfound government coordination are propelling just that. Although there is still no complete global solution on the horizon, and although adoption timelines vary by corridor, businesses that prepare for the following changes can capture operational and strategic advantages.

G20 Roadmap for Enhancing Cross-Border Payments

The G20 forum of major world economies—together representing 85% of global GDP—have made cross-border payment improvement a priority. Recognizing its importance for global economic growth, the G20 launched a roadmap in 2020 whose goals include reducing average transaction costs to below 1% and enabling payments to reach recipients within an hour by 2027.

The roadmap tackles core issues through 19 “building blocks” organized around 5 focus areas:

  • Commitment to a joint public-private vision for coordinating reforms
  • Improving existing payment infrastructures and arrangements
  • Enhancing data standards for interoperability and transparency
  • Aligning regulatory frameworks for global consistency
  • Exploring the potential of new payment technologies

Key G20 initiatives include extending payment system operating hours for round-the-clock processing and encouraging universal adoption of ISO 20022. Implementation is advancing but progress varies by payment corridor, with individual countries adopting building blocks at different speeds to accommodate their infrastructure readiness and regulatory priorities. For businesses, the roadmap signals upcoming infrastructure changes that could significantly reduce costs and processing times.

Blockchain Technology

Blockchain promises almost real-time settlement, lower costs through eliminating intermediary fees, and improved reliability because it’s a distributed system with no single point of failure. Blockchain’s “smart contracts”—software that executes automatically when preset conditions are met—can potentially automate transactions, such as releasing payment when goods clear customs, to reduce both payment bottlenecks and the risk of paying before goods are accepted. On the downside, blockchain’s large computational requirements have so far kept its own cost high enough to muddy its value propositions in the context of cross-border payments.

Still, financial services companies and central banks are expanding blockchain experimentation following initial pilots. About 90% of central banks globally are now working on central bank digital currencies (CBDCs) and testing cross-border digital currency transactions between multiple countries. CBDCs are state-backed digital versions of a country’s currency. In blockchain applications, they provide a government-backed alternative to cryptocurrencies. In the near term, blockchain is expected to complement, rather than replace, existing payment systems. Regulatory uncertainty and incompatible blockchain networks add to the cost concern, limiting adoption.

Regional Payment Networks

The number of new regional payment networks—similar to the EU’s SEPA—is growing. Most initiatives connect domestic instant payment systems (IPSes) across borders. For example, Project Nexus, led by the Bank for International Settlements, would allow consumers and businesses to send real-time payments to participating countries, using simple identifiers like phone numbers or email addresses. Nexus uses a “hub and spoke” approach in which each IPS connects to Nexus, rather than to each other. This tackles a key limitation: While many countries have built domestic IPSes, they remain siloed from each other. Similar efforts include the Association of Southeast Asian Nations’ PayNow–PromptPay in Singapore and Thailand and Africa’s Pan-African Payment and Settlement System. As more regions develop these interconnected networks, businesses could see improvements in payment speed and cost within specific geographic zones, even without true global integration.

Centralize Payment Processing With NetSuite

The challenges of cross-border payments, from multicurrency management to compliance requirements and multiple payment methods, demand integrated financial systems that can handle global operations. NetSuite payment processing solutions address these challenges through a unified platform that combines payment processing with multicurrency capabilities to reduce the risk of errors that can distort results and slow down financial closes. Integrated payment processing consolidates multiple payment types directly within the accounting software, including support for PayPal, Apple Pay, and other digital payment types that international customers and suppliers prefer. With full tokenization and PCI DSS compliance, finance teams maintain cleaner records and stronger controls, no matter where payments originate. Features, such as card-on-file, recurring billing, and 3D Secure authentication, help global businesses decrease failed transactions and keep revenue flowing smoothly across borders.

Instead of reconciling fragmented systems or fixing duplicate entries, CFOs and controllers get visibility into the full cross-border payment lifecycle within NetSuite, giving them confidence in their data accuracy and compliance, even as payments flow through multiple external providers.

Cross-border payments fuel international trade but require a multiplicity of complex steps. Each step adds time, cost, and accounting hurdles. Smart managers can optimize their cross-border payments for today’s reality as they make plans to take advantage of near-future improvements promised by the G20 roadmap, blockchain, regional payment networks, and other initiatives. Effective payment strategies can reduce friction and support global growth, turning international transactions from an operational burden into a competitive advantage.

Cross-Border Payments FAQs

How long do cross-border payments take?

Processing times vary significantly by payment method and route, ranging from same day to up to five business days. Traditional methods, such as wire transfers and money transfer operators, skew longer while alternative methods, such as card-based networks, generally settle faster.

Why are cross-border payments expensive?

Costs to send cross-border payments accumulate from multiple sources because their route from originating country to destination country may require them to go through several intermediaries. Costs accrue mostly from transaction fees at each bank in the chain, currency exchange rate spreads, and compliance screening charges.