What Are Cross-Border Payments?

A cross-border payment refers to any transaction in which the payer and the payee are located in different countries; these transactions can take place between individuals, companies and banking institutions. The value of cross-border payments is expected to reach over $250 trillion by 2027, making it one of the fastest growing segments within the global payments ecosystem.

Why use cross-border payments?

Globalization, digitalization and the rise of eCommerce have changed the way consumers around the world shop, creating a truly global marketplace. In this environment, merchants have the opportunity to enter new markets and access new customer bases — but in order to take advantage of that opportunity, they must first understand the nuances and expectations of consumers in different regions.

For example, merchants who wish to grow their customer base in Europe would do well to offer SOFORT, an online payment system that acts as an intermediary between buyers and merchants. Owned and operated by Klarna, SOFORT is widely used throughout Germany, Austria, Belgium, the Netherlands, Poland, Italy, Spain and Switzerland. Merchants hoping to do business in Latin American will similarly want to support PayPal, which is one of the most popular payment methods in the region, as well as voucher-based payments such as Boleto in Brazil, OXXO in Mexico and Via Baloto in Colombia.

The entire purpose of cross-border payments is to help merchants adapt their global commerce strategy to local markets; by offering consumers in different regions payment options familiar to them, merchants can both enhance the customer experience and capitalize on new revenue streams.

What Are Some Examples of Cross-Border Payments?

Cross-border payments take many forms, including (but not limited to):

  • Bank transfers
  • International wire transfers
  • Electronic funds transfers
  • Credit card payments
  • Debit card payments
  • Prepaid debit card payments
  • Global ACH payments
  • Digital currencies
  • Digital wallets
  • Mobile wallets
  • Buy now, pay later
  • Blockchain-based payments
  • Voucher-based payments
  • Cash-based payments
  • Paper checks