Cross-border payments for international business (2025 guide)

Businesses everywhere are going global. Supply chain problems forced companies to look beyond their home countries. New opportunities emerged in foreign markets. Smart companies built international partnerships to spread their risk and accelerate growth.

This shift isn't temporary — it's the new normal.

Mastering cross-border payments is now essential for any business that wants to compete internationally. Get it wrong, and you'll lose money on fees, wait days for payments to clear and frustrate suppliers with zero visibility. Get it right, and you'll move money faster, cheaper and with complete control.

A 2022 survey of businesses by Mastercard showed that: 

• 65% of businesses said the pandemic opened new options for international supplier relationships
• 59% said they were able to find more competitive suppliers in foreign markets 
• 46% said cross-border supplier relationships reduced their level of risk to business operations
• 63% said they now “always” look globally to source vendors and suppliers

In this guide, we'll walk you through everything you need to know about cross-border payments — from how they actually work to choosing the right provider for your business. You'll learn why traditional banks fall short, what to look for in a specialised payment provider and how the right tools can transform your international operations.

What are cross-border payments?

A cross-border payment is simply any financial transaction in which the payer and the recipient of the payment are in different countries and/or jurisdictions. For businesses, cross-border payments could fall into any of the following categories:

• Payments to individuals, such as contractors or freelancers
• Payments between businesses, such as vendors and suppliers
• Payments to foreign governments for taxes and fees

How do cross-border payments work  in practice?

The payment process for domestic and international payments is broadly the same. But when the payment involves two different currencies, there are some differences worth mentioning.

Preparing payments

Each country has unique requirements for sending cross-border payments. Did you know that in China, for example, the payee's telephone number is required, while in Ukraine, it's a tax ID number.

Depending on where the payment is going, payers may need to provide the payee's sort code, IBAN, or BIC/SWIFT code. Payers need to have all the required information on hand before payment is initiated.  

Routing and processing

Once payment details are fed into the payment solution, they embark on a journey to the financial institution for assessment – a journey of approval or potential decline. With traditional banking, things can get intricate when more than two banks have to be involved. And that's often the case when it comes to global payments.

Approving payments and settling finances

When the green light of approval is given, that's most likely when the payment gets converted into the recipient's currency at the prevailing exchange rates. The foreign institution handles the final payment and, depending on the payment method and conversion requirements, determines the accompanying fees.

Tracking and harmonising

The Accounts Payable (AP) team tracks the final payment and reconciles it just as they would a domestic payment. However, the absence of a standardised communication bridge between banks, payers, payees, and financial institutions can cast a shadow over timely notifications. Delays or declines might play out incognito, leaving the concerned parties waiting in the wings.

Common cross-border payment methods (+ pros and cons of each)

You've got options when it comes to moving money internationally. Some are fast but expensive. Others are cheap but slow. A few might seem convenient until you're dealing with serious business volumes.

Here's the breakdown:

How currency conversion factors into cross-border transactions

Cross-border payments have one striking particularity: they enable payments to be made in one currency and received in another, often in USD or the receiver's local currency. This usually happens in one of two ways: 

1. Direct bank-to-bank cross-border payments

The most straightforward approach for cross-border payments is direct bank-to-bank payments.

Here's the reality, though:

Even when banks have a direct relationship, cross-border transactions — especially those involving currency conversion — still need to go through international payment systems like SWIFT or SEPA.

Here's how it works:

• The sender instructs their local bank to transfer the funds
• The payment travels through international networks (usually SWIFT for global transfers, SEPA for euro payments within Europe)
• Currency conversion happens along the way (if needed)
• The funds arrive in the recipient's account in their local currency
• Both banks need an established relationship, but the international payment infrastructure handles the heavy lifting

2. Cross-border payments involving intermediary banks or correspondent banks

Navigating the intricacies of international transactions isn't always straightforward. When direct bank relationships are lacking, intermediary banks can step in to bridge the gap.

Here's how it works:

• Your bank sends the funds to an intermediary financial institution first
• The intermediary bank then forwards the payment to the receiving bank (or additional intermediaries until it reaches the receiving bank)
• This adds time delays and extra fees to your transaction
• Each additional bank in the chain means more complexity and fees

At times, the challenge can be even greater, particularly when currencies involved are less common. Imagine initiating a payment in euros that needs to be received in Iranian rials — such scenarios might require passing through multiple intermediary banks and more manual processing steps.

This interconnected web of intermediaries, while necessary for facilitating the transaction, also complicates matters by elongating the process, introducing delays, and accumulating additional charges. In these intricate situations, using intermediary banking networks becomes a strategic necessity.

What are the challenges of cross-border payments?

Globalisation makes mastering cross-border payments a business imperative for organisations of all sizes. Getting there, however, isn’t without challenges.  

1. Limited access

Not every corner of the globe has access to SWIFT. While the borders of cross-border transactions are stretching their horizons, there remain currencies that still fly under the radar. This means suppliers may not be able to be paid in their local currency.  

3. Complex fee structures

Different payment methods have different fee structures, and in many cases, a single payment can accumulate multiple fees throughout the transaction journey. Risk mitigation fees, currency conversion fees, and lift fees all apply to different types of cross-border payments. In the case of wire transfers, fees can easily top $50 USD. For businesses that make a large number of wire transfer payments each month, this can quickly add up. 

4. Lack of transparency and visibility

Imagine being handed a map without any landmarks. That's the feeling many cross-border payers experience with opaque fee structures. As if that wasn’t enough, the payment journey itself is often shrouded in mystery. Payers can’t readily track the progress of each payment or generate an audit trail across each of the touchpoints along the way.  

5. Payment speed

We might be living in the era of instant messaging and instant coffee, but it's not-so-instant cross-border payments. Depending on the chosen method, payees might have to wait for 2-10 days before their funds arrive, potentially jeopardising operational efficiency or supplier relationships and complicating the reconciliation process.

6. Exchange rate risk

Global transactions frequently involve currency conversion, leaving payers exposed to fluctuations in FX rates. The relative value of two currencies can change between the time the invoice is issued and the moment the payment is settled. It’s this unpredictability that makes it difficult to effectively manage currency exposure.  

Risk of fraud

Payment fraud is known to impact 70% of businesses, and fraud attempts have only increased since the pandemic. While the reasons for this aren’t clear, security experts believe that the switch to remote work has led to more vulnerabilities due to unsecured networks, devices, and files. 

8. Regulation and compliance

Moving money between countries and jurisdictions requires visibility into — and compliance with — local laws and regulations. Managing these manually is time-consuming and labour-intensive for internal teams. Not to mention that consequences can also be very costly when violations occur. 

9. Siloed, manual processes

Many cross-border payment methods aren’t easily integrated into standard business solutions such as ERP platforms and accounting software. This slows accounting and reconciliation activities and makes it difficult to automate and scale the payment process. Lack of integration and automation can slow business growth and leave the payment process prone to error.

How can you improve your cross-border payment process?

The current state of cross-border payments is unfortunately riddled with time-consuming and inefficient tasks, extended settlement periods and the burden of costly, unpredictable fees. Don’t you think it’s high time for a change? Businesses can — and should — take steps to optimise, simplify, and streamline their global payments.

Tip #1: Negotiate payment currency

Some organisations believe that paying in anything other than a major currency, such as the euro or USD, exposes them to risk. Little do they know that in many cases, paying suppliers in their local currency opens up opportunities to negotiate better payment terms and discounts by avoiding currency conversion fees. Remember: having the flexibility to pay in various currencies gives businesses a strategic edge and enhances their ability to skillfully negotiate and seamlessly execute cross-border payments.

Tip #2: Stay on top of foreign currency exchange rates

Currency risk is a significant issue for organisations that rely on cross-border payments to conduct business. By staying on top of FX markets and locking in favourable rates, you can protect your business and margins against rate fluctuations. Leading payment platforms offer deliverable forward payments to minimise your exposure to exchange rate risk. 

Tip #3: Partner with a dedicated cross-border payment provider

Traditional banks weren't built for today's global business needs. They're trying to serve everyone — from personal checking accounts to massive enterprise loans — which means international payments often feel like an afterthought.

Cross-border payment providers are different. They focus exclusively on moving money across borders and currencies. This specialisation translates into better exchange rates, faster processing times, and platforms actually designed for international business. Instead of fighting with clunky bank systems and opaque fees, you get tools purpose-built for global commerce.

The result? Most businesses see immediate improvements in both cost and efficiency when they make the switch. Your payments move faster, your fees become predictable, and you actually know where your money is during transit.

Why all international businesses should work with a cross-border payment provider

If you're doing business across borders, these providers offer three fundamental advantages that traditional banks simply can't match.

Multi-currency accounts give you complete control

Think of it as having a digital wallet with pockets for every currency you deal with. Instead of converting euros to dollars every time you pay a US supplier, you can hold both currencies in their own currency account. This lets you make transaction in each each currency without needing to convert (and pay the markup fees) every time, and gives you control over to when to convert between currencies.

You can receive payments from customers in their local currency, store the funds until exchange rates improve, then convert at the optimal moment. This kind of flexibility is impossible with traditional single-currency bank accounts.

FX risk management tools protect your margins

Currency markets never sleep, and exchange rate swings can demolish your profit margins overnight. Some cross-border payment providers give you access to forward payment contracts and other foreign exchange risk management tools that let you lock in favourable rates for future payments.

These aren't complex financial instruments reserved for Fortune 500 companies. They're straightforward tools that help you budget accurately and protect against currency volatility — something most traditional banks only offer to their largest clients.

More efficient payment processes save time and money

International payments are messy by nature. Your money bounces between multiple intermediary banks, gets stuck in processing queues across different time zones, and crawls through various security checks and regulatory requirements.

What normally takes 5-7 business days through traditional channels? Cross-border payment providers can often cut that down to 1-2 days (sometimes even same-day delivery).

They've built their entire infrastructure around navigating these complexities efficiently. While your payment might still touch multiple banks along the way, specialised providers have optimised routing, streamlined processes, and technology designed specifically to move money across borders faster.

How to choose the right cross-border payment provider

Not all cross-border payment providers are created equal. Some focus on freelancers making small transfers. Others target enterprise clients with massive volumes. You need one built for growing SMBs with serious international payment needs.

Here's what separates the good from the great.

Multi-currency accounts that actually support your business

You'd think this would be obvious, right? But plenty of providers offer "multi-currency accounts" that only support 5-10 major currencies.

Look for platforms that handle the currencies you actually work with — not just USD, EUR and GBP. If you're paying suppliers in Southeast Asia or customers are sending you money from Latin America, make sure those currencies are covered.

The best providers also let you open new accounts digitally in minutes. If you have to wait multiple weeks for approval, that's not ideal.

Real human support from FX experts

Here's where we find most providers fall completely flat: Support.

You don't want chatbots when you're dealing with a time-sensitive payment issue. You definitely don't want general customer service reps reading from scripts when you're trying to figure out how to open a forward payment contract (or if it even makes sense to do so).

The best providers connect you with dedicated experts who actually understand FX markets and international payments. These aren't order-takers in a call centre — they're specialists who know your business and can help you make smart decisions about currency risk.

• When exchange rates move against you? They're there.
• Not sure when to convert currencies? They've got your back.
• Wondering which type of FX forward payment to use? They can help you.
  
  

Currency risk management tools that protect your margins

Currency volatility can wreck your margins if you're not prepared. Look for providers that offer more than just basic spot payments.

Look for a provider that lets you open FX forward payment contracts to lock in today's exchange rates for future payments. Even better, make sure the provider you work with offers multiple types of forward payments as well, so you have flexibility. The most important three to look for are:

• Fixed forward payments lock in a specific rate for a specific date with no wiggle room.
• Flexible forward payments secure your rate but keep the freedom to execute your payment anytime within a set window.
• Dynamic forward payments protect against poor rate movements while still letting you benefit when rates move in your favour.

These aren't nice-to-have features. When you're dealing with significant payment volumes, the right hedging strategy saves thousands on every transaction.

Payment tracking that keeps everyone in the loop

The last thing you want when dealing with cross-border transactions is to be left completely in the dark while your funds are on the move.

Look for a provider that gives you real-time visibility into where your money is at every step. For example, with iBanFirst you'll have access to detailed payment tracking for SWIFT payments that shows you which intermediary banks are handling your transfer and when it'll arrive. Plus, you can share tracking links with your suppliers and beneficiaries to keep everyone in the loop in real-time.

Why 10,000+ international businesses trust iBanFirst

Everything we just talked about? The multi-currency support, FX expertise, risk management tools, and payment tracking?

iBanFirst checks every single box.

We built our platform specifically for growing SMBs who are serious about international payments. Businesses like yours that need professional-grade tools without the enterprise price tag.

Here's what you get:

• Multi-currency account to hold, send and receive funds in 25+ currencies
• Dedicated FX experts who understand your business and currency markets
• Advanced risk management tools like fixed, flexible and dynamic forward payments to protect your margins
• Real-time payment tracking to see exactly where your money is and share updates with suppliers
• Transparent pricing with no monthly fees, so you know exactly what you're paying for

Thousands of SMBs have already made the switch to iBanFirst. They're saving money, making international payments faster, and sleeping better knowing their currency risk is under control.

Ready to join them?

Request an account today and see why we're the cross-border payment provider growing businesses choose.