What are cross-border payments? Understand the different types and methods of sending money internationally.
Universal Partners London is an award-winning payment specialist UK, redefining the finance industry through intelligent, client-led solutions. Driven by advanced technology, deep market expertise and a commitment to real partnership, we design solutions around your business ambitions to keep you moving forward.
What are cross border payments?
At its core, a cross-border payment is simply the process of transferring money abroad. Businesses use them to pay suppliers in other countries and get paid by customers from different places. In today’s global economy, understanding cross-border payments is a must. In fact, a survey of UK consumers showed that 80% of them make online purchases from international retailers. Cross-border payments are like financial exchanges between people or businesses in different countries, which helps us trade more. They can be used for businesses to pay suppliers in other countries or for people to buy stuff online from other countries, making smooth international currency exchange and competitive FX rates more important than ever.
There are a bunch of ways to send money across borders. You can use bank transfers, credit cards, or even e-money wallets or mobile payments. Choosing the right approach can help businesses save on exchange rates and streamline cash flow.
Two main types of cross-border payments are:
- Wholesale cross-border payments
These involve large-value transactions typically between financial institutions or large corporations, either to support the financial institution’s customers’ activities, or its own cross-border activities (such as borrowing and lending, foreign exchange, and the trading of equity and debt, derivatives, commodities, and securities). They often use financial networks like the Society for Worldwide Interbank Financial Telecommunication (SWIFT) to achieve timely international trade. Governments and big non-financial companies also use wholesale cross-border payments for huge transactions involving the import and export of goods and services, or trading in financial markets.
- Retail cross-border payments
These are smaller-value transactions between individuals or small businesses. Examples include remittances – most notably money that migrants send back to their home countries, online purchases from international retailers, and payments to overseas freelancers. The key types are person-to-person, person-to-business, and business-to-business.
With the current volatility, contacting a currency specialist will allow you to safeguard your business and finances by planning ahead. If you are a business transferring funds overseas, get in touch with Universal Partners and our dedicated team to discuss the latest market movements ahead of your currency exchange. Universal Partners FX can provide invaluable help on efficient risk management, payment and finance tailored solutions to your business’ transfer needs.
