Cross-border payments: How they work and what they cost

Cross-border payments involve transferring money between parties in different countries. They let businesses pay suppliers, collect from global customers, and manage international operations.

The global economy increasingly depends on efficient international payment flows. As companies expand and supply chains stretch across continents, payment speed and reliability directly affect cash flow management and business relationships.

For finance teams, cross-border payments represent both opportunity and complexity. They open new markets while requiring careful navigation of different financial systems.

What are cross-border payments?

Cross-border payments are financial transactions in which the sender and recipient are located in different countries, often involving currency exchange and coordination between multiple banks or financial intermediaries.

Businesses are expanding globally at an unprecedented pace. This creates a need for faster, more reliable, and cost-effective payment solutions. Companies, e-commerce platforms, and finance teams use cross-border payments to cover a wide range of activities, from paying suppliers and contractors to collecting revenue abroad.

Unlike domestic payments, cross-border transactions must account for foreign exchange rates, country-specific regulations, and international banking networks. Added layers of compliance, currency conversion, and clearing systems vary by region and transaction type.

Cross-border payments examples

Any time funds move between entities in two different countries, it qualifies as a cross-border payment. That includes payments between businesses, individuals, banks, and digital platforms.

Paying a remote contractor, sending funds to a supplier overseas, or receiving a customer payment in a different currency all fall under cross-border transactions.

Marketplace platforms such as Amazon, Shopify, and Airbnb process millions of cross-border payments daily. In fact, cross-border e-commerce reached $1.6 trillion in 2023, and it’s expected to exceed $3.3 trillion by 2028, according to a study from Juniper Research.

A few other cross-border payment examples are:

• Card transactions made abroad
• International payroll
• Recurring SaaS payments billed in foreign currencies
• Intercompany transfers between global subsidiaries

If your money leaves one country, lands in another, or changes currency along the way, you've made a cross-border payment.

How cross-border payments work

Cross-border payments rely on a network of banks, payment processors, and clearing systems to move money between countries. Unlike domestic payments, there’s no single global payment infrastructure. This is why each transaction often passes through multiple intermediaries.

1. Sender initiates payment: A business submits a payment request through its bank or provider, including recipient details, amount, and currency. Even small errors at this stage can cause delays or failed transfers
2. Sender’s bank runs compliance checks: The bank screens the transaction for anti-money laundering (AML), sanctions, and recipient verification. Payments may be held or rejected if red flags appear, so it’s critical to collect accurate data up front
3. Funds pass through intermediaries: If the sender’s and recipient’s banks aren’t directly connected, the payment moves through one or more correspondent banks via the SWIFT network. Each intermediary can deduct fees and add processing time
4. Currency conversion: When different currencies are involved, conversion happens at the sender’s bank, an intermediary, or the receiving bank. Exchange rates usually include a markup (FX spread), which raises the total cost
5. Recipient’s bank settles funds: The receiving bank clears and deposits the money into the recipient’s account. Settlement may take longer in countries with slower domestic clearing systems
6. Confirmation and reconciliation: Both parties receive payment confirmation, though not always in real time. Finance teams must track status and reconcile records, often relying on manual processes

This process typically takes 2–5 business days, depending on the countries involved, currency conversion, number of intermediaries, and local regulations.

Types of cross-border payments

There’s no one-size-fits-all method for moving money across borders. Different payment systems exist because businesses have different needs.

Some businesses prioritize speed to keep operations moving quickly. Others focus on controlling costs, especially when dealing with high volume. Many require built-in currency conversion or compliance support to meet regulatory requirements.

There are several ways to move money across borders, each with its own trade-offs. The table below gives you a quick comparison of the main options:

Let’s break down each method in more detail.

Bank wire transfers

A bank wire transfer is a method of electronically sending money from one bank account to another through a secure network. International wire transfers typically involve using the SWIFT network to move funds between financial institutions in different countries.

Bank wire transfers are one of the oldest and most widely used methods for sending money across borders. They are commonly used for high-value B2B transactions where reliability, traceability, and compliance are essential.

Settlement usually takes 2–5 business days, depending on countries involved, time zones, and the number of intermediary banks. Each intermediary can deduct a fee, which adds to the total cost.

Transfers typically cost $35–$50 per transaction. They’re best suited for large, one-off payments where traceability is essential.

International ACH transfers

An international ACH transfer moves funds between bank accounts using the Automated Clearing House (ACH) network. These payments process in batches rather than in real time, and settle in 1–5 business days, depending on the countries and banks involved.

International ACH is commonly used for routine transactions such as global payroll, vendor payouts, and recurring invoices. It’s especially useful if you send high volumes of smaller payments.

Because your payments group and process in batches, they move more slowly than wires. But they cost much less, usually less than $5 per transfer, making them ideal if you're focused on reducing transaction fees. Not all countries or banks support international ACH, so availability depends on your provider.

Card-based payments

Card-based payments involve using credit, debit, or prepaid cards to complete cross-border transactions. These payments run through global card networks such as Visa, Mastercard, or American Express.

When a card is used in another country or currency, the network handles currency conversion and routes the transaction to the correct issuer. This enables near-instant approvals but introduces foreign transaction fees, typically 1% to 3%, and exchange rate markups that add to costs.

Card-based payments are widely used for international e-commerce, business travel, SaaS subscriptions, and employee expenses. In fact, according to Statista, 12% of payment card spending in Europe was from cross-border transactions in 2022. These payments offer fast authorization and are easy to track, making them a go-to method for many finance teams.

Digital wallets

Digital wallets allow you to send and receive real-time payments across borders without going through traditional banks. These include platforms such as PayPal, Wise, Revolut, Alipay, and Apple Pay. Funds can often be transferred in minutes instead of days, especially when both sender and recipient use the same platform.

You'll find wallets widely used for international peer-to-peer transfers, e-commerce transactions, and freelancer payouts. Some platforms also support business use cases, such as vendor payments or contractor disbursements.

Fees vary by platform, but they usually offer better transparency on fees and FX rates than traditional banks. This makes costs easier to predict and helps you avoid surprises. For low-to-mid-value cross-border payments, digital wallets offer a fast, cost-effective alternative.

Blockchain and cryptocurrency

Blockchain-based payments use distributed ledger technology to move funds directly between parties without relying on traditional banks or intermediaries. These transactions are recorded on a public or private blockchain, offering transparency and near-instant settlement.

Cryptocurrencies such as Bitcoin, Ethereum, and stablecoins (e.g., USDC and USDT) are the most common assets used for blockchain payments. Some platforms also offer blockchain rails for fiat-backed transfers, allowing users to send traditional currencies over decentralized networks.

Unlike legacy systems, blockchain can clear cross-border payments in seconds or minutes. This reduces settlement risk and improves cash flow visibility.

Fees are often lower than banks charge, especially for high-value or frequent transfers. But they can rise when networks are congested.

B2B payment platforms

B2B payment platforms are built specifically to help businesses move money internationally with more control, visibility, and efficiency. They typically support multi-currency payments, real-time FX rates, invoice management, and automated reconciliation. Many integrate directly with ERP and accounting systems, streamlining frameworks, from initiation to settlement.

Popular platforms in this space include Airwallex, Payoneer, and Stripe. These tools help reduce manual work, improve tracking, and reduce payment errors. Unlike traditional banks, these platforms often offer flat fees or transparent pricing structures, which help you forecast costs and reduce hidden charges.

They also offer integrated compliance and competitive rates. For finance teams managing multiple global vendors, recurring payouts, or international teams, B2B cross-border payment solutions offer a scalable, efficient alternative to legacy systems.

Benefits and drawbacks

Cross-border payments open new opportunities for businesses, but they also come with challenges. Here’s a quick overview of the pros and cons:

Benefits

• Global reach: Pay and get paid in multiple countries, supporting expansion into new markets
• Business growth: Access to international suppliers, partners, and customers
• Operational flexibility: Choose from a variety of payment methods to match speed, cost, and compliance needs
• Better vendor and customer relationships: Meeting local payment preferences builds trust and credibility

Drawbacks

• High fees: Wire transfers and intermediary banks can add significant costs
• FX spreads: Currency conversions often include hidden markups that reduce value
• Slower processing times: Payments may take several business days depending on the route
• Regulatory complexity: Different jurisdictions require varying levels of compliance, AML, and KYC checks
• Reconciliation headaches: Manual tracking and documentation can drain finance team resources

Case study: Expanding into Europe

Imagine a renewable energy consulting firm decided to expand into European markets. They had built strong relationships with clients in Germany and the Netherlands, creating an opportunity to establish a permanent presence abroad and serve customers more effectively.

The company's CFO faced the challenge of choosing reliable cross-border payments for their new Amsterdam office. After evaluating several options, including digital payment platforms and international banking solutions, the firm weighed speed and cost. Traditional wire transfers proved slow and expensive, often taking 3–5 business days while charging hefty fees.

They chose a fintech provider offering real-time transfers at competitive rates. This allowed them to maintain cash flow while supporting their European operations.

The costs of cross-border payments

Cross-border payments distribute costs to the sender, the receiver, or both, depending on the method, provider, and currency route. Usually, senders cover fees and FX markups, while receivers take on deductions from intermediary or receiving banks. Hidden charges like these can reduce the final amount delivered, especially in multi-bank transfers.

Common cost factors include FX spreads, transfer fees, intermediary deductions, and payment delays. The table below shows how each one typically impacts cross-border payments:

Cross-border payments involve multiple costs, but the right provider and tools can help you gain control over your international transactions.

How to send cross-border payments

Sending money across borders requires careful planning and attention to detail to avoid delays, extra costs, and compliance issues. Here are the key steps:

Step 1: Choose the right payment method

Match the method to your needs:

• Wires offer security for large transfers but come with higher costs
• ACH and digital platforms are better for recurring or smaller payments
• Wallets and cards provide convenience but may include higher FX fees

Step 2: Gather recipient and transaction details

Collect complete information before initiating the transfer:

• Legal names and addresses
• Bank name, branch address, and account details
• SWIFT/BIC codes or routing numbers

Double-check spelling and numbers, and confirm details with the recipient. Even minor errors can cause delays or extra fees.

Step 3: Understand fees and FX rates

Look beyond the advertised exchange rate. Compare:

• Transfer fees charged by the provider
• FX markups added to conversion rates
• Extra costs from intermediary or receiving banks

Always check what the recipient will actually receive so there are no surprises.

Step 4: Handle compliance and documentation

Be prepared with the right paperwork:

• Purpose codes or reason for transfer
• Invoices, contracts, or other supporting documents
• Identity verification for AML and KYC checks

Incomplete documentation can delay or block payments.

Step 5: Initiate and track the payment

Submit the transfer through your provider’s platform and save the tracking number. Share expected timing with the recipient so they can follow up with their bank if needed.

Step 6: Reconcile and record the transaction

Update your financial records with:

• The actual FX rate used
• Total fees paid
• Final amount received

This supports accurate reporting and helps you spot cost-saving opportunities for future transfers.

Key players, trends, and modernization in cross-border payments

Leading fintech companies are reshaping how businesses move money across borders. Stripe continues expanding its global reach. PayPal provides seamless international transfers, while corporate specialists like Ramp and Brex build platforms that help teams manage multi-currency expenses with greater transparency.

Payment modernization has accelerated with blockchain technology and regulatory support. The Financial Stability Board’s G20 initiatives push for better global systems, while central bank digital currencies (CBDCs) are gaining traction through national pilots.

Despite progress, global payments remain challenging. Compliance complexity varies by jurisdiction, creating hurdles for growing businesses. Still, emerging tools like programmable money and real-time settlement networks present new opportunities.

Companies that successfully navigate regulatory requirements while adopting new payment rails often discover substantial cost savings and improved cash flow management.

How Ramp makes cross-border payments work for your business

Cross-border payments remain essential to operating in the global economy, but they come with tradeoffs. Choosing the right payment method depends on your goals: speed, cost control, compliance, or scalability. Businesses that understand the mechanics, cost structures, and available tools are better positioned to avoid friction and gain a competitive edge.

Ramp equips finance teams with tools to enforce vendor standards at scale, from contract visibility and automated workflows to pricing benchmarks and usage insights. Instead of reacting to vendor issues, teams can take control of their vendor ecosystem and align compliance with business goals.

Ramp also simplifies cross-border payments by enabling you to send international transfers to vendors in more than 185 countries through our Bill Pay platform. You can pay international vendors in USD or select local currencies, with support for foreign currency payments through integrations with NetSuite, QuickBooks, Xero, and Sage Intacct.

Pay smarter. Save money. Ramp gets you there.

Learn more about Ramp Bill Pay.