How do Cross Border Payments Works?

Cross-border transfers are financial transactions between parties that are located in different countries. They encompass all wholesale and retail payments, as well as remittances, which is a term that refers to money sent back to a home country by migrants. Payments across borders can be created in a variety of forms.The most popular means of exchanging money across borders are bank transfers, credit card payments, and alternate payment methods.

Cross-border transfers are divided into two categories:

Wholesale cross-border payments: They are usually made by financial institutions to fund the operations of their clients or to support the financial institution’s own cross-border activities (such as borrowing and lending, foreign exchange, and the trading of equity and debt, derivatives, commodities and securities).

1. Multinational non-financial businesses usually make wholesale payments to support:
a) trading or other corporate transactions;
b) financial resources for the firm, such as cash management, which necessitates transferring money through foreign branches to meet the company’s liquidity needs.

Wholesale markets may also be used by governments to conduct major trades with other governments or foreign companies.

2. Cross-border transfers by individuals and companies are known as retail cross-border payments. Person-to-person, person-to-business, and business-to-business are the three main categories

How do you send a cross-border payment?

Payments across borders can be made in a variety of forms. The most popular methods of moving funds across boundaries are bank transfers, credit card payments, and Alternative Payment Methods (APMs). The best payment form for your company can be determined by where you are located and where you choose to make payments.

You’ll need the recipient’s International Bank Account Number (IBAN) and (Bank Identifier Code) BIC, as well as their personal information, to make an international bank transfer. B2B and B2C SWIFT transfers are now available to merchants.

Credit cards are a convenient way for shoppers to make international online purchases. They just need to input their card information, but there are always higher transaction and FX fees.

Types of cross-border payments

Credit card payments, bank transfers and APMs are all types of cross-border payments. Customers like to pay in a way that is convenient for them. On top of this, they like to be offered tailored choices and be assured that their payment data will be securely handled. As a result of this, merchants need to cover all bases and offer multiple ways for their customers to pay across borders.

Credit card payments

Credit cards play a large role in cross-border payments and are a go-to option for many consumers. From the consumer’s perspective, they simply have to enter their card details and wait for the transaction to be verified. Behind the scenes, there is more going on. Cross-border payments require more work from the involved credit card networks and acquiring banks as they need to convert between two different currencies. This additional workload results in increased fees that are passed down the payment chain.

Bank transfers

International bank transfers are another long-standing way of placing a cross-border payment. Most larger banks will have a limited range of currencies stocked, but it is not possible to accommodate more than a handful at any given time. Therefore, when a customer in the UK is looking to transfer money to a country that they don’t have the currency in stock for, they will have to rely on their foreign banking partners to engineer the transaction. Smaller banks often do not hold any foreign currencies, so look to large banks to host cross-border payments on their behalf.

This is just a snapshot of cross-border payment processing and there can be many more parties involved that cause delays to the transaction. SWIFT gpi, which we will discuss further below, is an attempt to speed up the processes behind cross-border payments.


An eWallet, also known as a digital wallet, is a software-based electronic APM that allows customers to pay for online or in-store transactions. Commonly available through apps for smart devices, eWallets allow users to safely store their payment cards of choice so they can pay for goods and services. A popular eWallet with fast and secure cross-border transaction is Jeton Wallet.

Jeton allows consumers to operate in multiple currencies and to place orders across borders. Although wallet to wallet transactions do not technically count as cross-border payments, they do help facilitate the transaction. It is not until the funds are withdrawn from the eWallet and transferred to the merchant’s bank account, that the process can be classified as a cross-border payment.