In a global economy that never sleeps, cross border payments are the fuel that keeps the engine running. Last year, the B2B cross border payments market hit $31.6 trillion. That figure is projected to grow 58% to reach $50 trillion by 2032, underscoring just how vital cross border transactions are to businesses, economies and communities around the world. The payments industry is constantly evolving to better meet the needs of institutions, businesses, and retailers worldwide.
Whether you’re a business leader eyeing international expansion or a payments provider navigating complex corridors, understanding how cross border payments work and the new blockchain solutions that make them faster, cheaper and more transparent is vital for global success.
What are Cross-Border Payments?
Simply put, cross border payments are financial transactions that occur across national borders. They allow individuals and businesses in one country to transfer money to an entity in another. That could include a US company paying a supplier in Germany, a migrant worker sending remittances home to family, or a shopper in Tokyo buying sneakers from an e-commerce site in London.
And with globalization and digitization on the rise, demand is exploding. E-commerce sales alone reached an estimated $6 trillion globally in 2024, and a growing share involves cross border transactions. For businesses, optimizing cross border payments can help unlock new markets, reach new customers and diversify revenue streams on a global scale.
How Cross-Border Payments Work
You swipe your card and hit “Send”. Easy, right? Not so fast.
These seemingly simple transactions are often highly complex. Beneath the surface, traditional cross border payments pass through a web of intermediaries like banks, fintechs or payment service providers that perform currency conversions, regulatory checks and more.
A typical transaction begins when a payer initiates a payment through their bank or app. Payment instructions are then shared between the sending and receiving institutions, necessary currency conversions are executed, and the payment is routed through the multiple payment networks that connect the two parties. It’s common for funds to pass through 3–5 intermediaries before they arrive at their final destination.
Customary elements of most traditional cross border payments include: ISO 20022-compliant messaging system like SWIFT, which has typically been used to standardize payment instructions; and a correspondent bank—a large financial institution that sends money from domestic Bank A (vostro account) to foreign Bank B (nostro account).
These extended, multi-party flows for traditional cross border payments add up, resulting in unnecessarily slow, expensive and opaque transactions that may be subject to multiple points of failure. Increasingly, organizations are turning to blockchain-based cross border payments to streamline these flows for greater speed, savings and transparency.
Types of Cross-Border Payments
Cross border payments can be conducted using different types of payment networks and transaction methods. These can vary depending on factors like cost, transaction purpose or size, personal preference, or which countries are involved.
Automated Clearing House (ACH)
ACH networks enable secure, cost-effective account-to-account electronic transfers. Their reliability means they are commonly used for recurring bill payments or B2B transactions. Funds sent using ACH typically take a few business days to settle and don’t usually support real-time authorization which can deter retailers from using this method.
Wire Transfers
Wire transfers send funds electronically between banks, often via SWIFT or regional systems. They are ideal for large transactions but can be pricey and slow, especially across continents.
Card Payments
Credit and debit cards enable businesses to accept payments globally and many automatically handle currency conversion. Fees can be steep, but they are a staple for cross border e-commerce.
Money Transfer Operators (MTOs)
MTOs allow consumers to send money without a bank account. They are widely used for remittances and person-to-person payments.
Crypto Payments
Cryptocurrencies, stablecoins and blockchain-powered payment rails can offer near-instant, secure cross border payments, often with lower costs and fewer intermediaries.
Cross-Border Payment Examples
The reasons for cross border payments are as diverse as the countries they span.
Person-to-person (P2P) payments include remittances, the practice of sending money to family or friends living in another country. For example, a worker living in the US might use a mobile app or an MTO to send part of their earnings to their family in the Philippines.
Business-to-business (B2B) cross border payments play a critical role in global commerce. Companies regularly send payments to international suppliers, manufacturers or contractors, helping to keep supply chains moving and operations running smoothly. This is especially important in sectors like retail, where businesses source products from overseas manufacturers, or in the gig economy, where companies hire freelancers from around the world for design, writing, software development and other services.
Consumer-to-business (C2B) payments are another common type of transaction, familiar to online shoppers everywhere. When someone purchases a product from a business in another country—whether handmade jewelry from an artisan in Thailand or specialty coffee from a roaster in Italy—cross border payment systems ensure a seamless shopping experience, including secure transfers and any necessary currency conversions.
Benefits of Cross-Border Payments
In many cases, cross border payments represent opportunity: helping families stay connected and supported or empowering consumers to access products and services from anywhere in the world.
For businesses, they can fuel international growth and expansion by enabling them to:
Expand to New Markets
Seamlessly sending and receiving payments to partners, suppliers and customers across borders enables businesses to confidently expand into international markets. And with this access to new markets comes the potential to diversify revenue streams and reach new customer bases—both of which are critical ingredients for long-term growth.
Tap into Global Talent
The rise of remote work has made hiring internationally more feasible and more attractive than ever. Cross border payments make it simple for businesses to compensate employees, contractors and freelancers quickly and securely in their local currency. That ease of payment is a competitive advantage when businesses want to attract the best talent, no matter where it resides.
Improve Cash Flow and Liquidity
Faster, more reliable cross border payments can significantly improve a company’s cash flow management. When businesses use new technologies like blockchain to reduce the time they have to wait for international payments to clear, they can boost liquidity and reinvest working capital more quickly into operations, payroll or other growth initiatives.
Reduce Costs
Traditional cross border payment methods can be weighed down by multiple intermediaries, each taking a fee along the way. Payments solutions that leverage blockchain technology can reduce the number of hops required to move money from point A to point B.
Fewer intermediaries means fewer cross border transaction fees, fewer markups on currency exchange and less friction overall. For businesses moving significant volumes of cross border payments, these cost savings can quickly add up, improving profitability and competitiveness.
Strengthen Customer & Partner Relationships
Payments are more than just a back-office function—they’re a core part of the customer and partner experience. When businesses can offer a fast, reliable and transparent payment method to international partners or customers, it builds trust and strengthens relationships.
Suppliers are more likely to prioritize partners who pay on time and without unnecessary complications. Customers are more loyal when checkout experiences are smooth and predictable, regardless of currency. In an interconnected global economy, being seen as a reliable payer or payee can give a business an edge.
Challenges with Cross-Border Payments
High Costs
Moving money across borders has traditionally been expensive. Multiple intermediaries—correspondent banks, payment processors, currency exchanges—often take a cut at every step of the payment journey. For small- and medium-sized businesses in particular, these costs can be disproportionately high, eating into margins and making it harder to compete internationally. Reducing these fees without compromising speed or reliability is a challenge that many companies are eager to solve.
Slow Settlement Times
Cross border payments don’t often move at the speed that businesses require to maintain operational synergy or stay competitive in their respective industries. Traditional systems can take several days to settle, especially when multiple banks and jurisdictions are involved.
Further delays caused by time zone differences or manual processing errors can turn these already-slow payments into a crawl. For businesses that depend on fast-moving supply chains, slow payments can disrupt cash flow, create exposure to FX risk, delay shipments and strain vendor relationships.
Regulatory Complexity
Cross border payments also cross regulatory regimes. Every transaction must comply with the rules and regulations of both the sending and receiving country. AML and KYC, sanctions screening, tax reporting—the list of compliance requirements is long and continually evolving. Navigating this regulatory maze can be time-consuming and resource-intensive, especially for businesses expanding into new markets where they lack local expertise.
Lack of Transparency
For most traditional international transactions, visibility into the status of a cross border payment is limited. Businesses and individuals often don’t know where a payment is in the process, how long it will take to arrive or how much will be lost to fees along the way. This opacity makes it difficult to manage cash flow, reconcile accounts or provide updates to partners and customers. In worst-case scenarios, it can damage reputations and erode trust.
Shrinking Correspondent Banking Network
Over the past decade, the number of financial institutions with the ability to send money internationally has steadily diminished, especially in small or high-risk markets. As a result, businesses and individuals in these regions have fewer options for sending and receiving cross border payments. Limited access to local payout partners can mean longer delays, higher costs or a complete inability to transact.
Risk of Failed Payments
Most cross border payments still rely on manual processes. A typo in an account number, an incorrect SWIFT code or incomplete payment instructions can all cause a transaction to fail. Failed payments don’t just waste time, they also incur costs, create operational headaches and can strain relationships with partners or customers awaiting funds. Reducing manual touchpoints and increasing automation are key to minimizing these risks.
Cross-Border Payments with Ripple
Ripple Payments offers a cross-border stablecoin payment solution that is a modern alternative to traditional cross border payment rails. It leverages blockchain and digital assets such as XRP and stablecoins such as Ripple USD (RLUSD) to provide businesses with a powerful solution for quickly, reliably and affordably sending and receiving stablecoin payments across borders.
With Ripple, transactions settle in near real time, costs are a fraction of traditional cross border payments and participants have complete visibility into the status of a transaction and associated fees. And through single onboarding, businesses gain access to Ripple’s global payout network which covers over 90% of the world’s financial exchange market and supports pay-in and pay-out in both stablecoins and local fiat currencies.
Ripple’s proven technology and trusted global network empower crypto businesses, payment providers and fintechs to make cross border payments that are faster, more affordable and more transparent. It’s a smarter way to move money worldwide, built for the demands of modern business.
Connect with a member of our sales team to learn how Ripple Payments can improve global transactions for your business.
