What are cross-border payments for businesses?

In today’s globalised economy, cross border payments are a part of every day business. It’s as common to pay a supplier in China or receive funds from a client in New Zealand, as it is to manage payroll or buy office supplies.

But while these transactions are routine, they often still come with hidden fees and currency conversion challenges that can hit your bottom line.

Understanding what cross border payments are, the methods you can use, and how to complete them can give your business a competitive edge in a global business world. In this blog, we’ll explore just that, and introduce Wise Business as a way to complete cross border transactions cost-effectively.

Table of contents
What are cross border payments? Different ways Challenges involved 6 best practices Take control of your cross border payments - Wise Business

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What are cross border payments?

Cross border payments are financial transactions where the payer and the recipient are based in different countries. These transactions transfer funds across borders — from one country to another — and often require currency conversion and special payment processing to be completed.

Cross border transactions are generally defined by where a business is registered and where the payment instrument — card, bank account etc. — is issued. It’s not always about the physical location of the parties involved.

The key is money crossing international financial borders.

Businesses are involved in several types of cross border payments. These include:

• Transactions between companies across borders (B2B)
• Transactions where the business sells directly to or receives a payment from a customer abroad (B2C and C2B)
• Transactions on global platforms like Amazon, eBay, and Shopify between buyers and sellers in different countries

Examples of cross border payments for business

There are multiple scenarios where cross border payments are integral to day-to-day business. These include:

• Paying international suppliers when importing goods or raw materials from overseas.
• Receiving payments from overseas clients for products or services rendered.
• Paying remote freelancers abroad when managing a global team of employees.
• Purchasing software from foreign vendors that are priced in USD or NZD or billed by companies outside Australia.
• Sending profits or dividends to a parent company overseas as part of regular financial operations between a local subsidiary and its foreign HQ.

💸 The value of all cross border payments climbed to a colossal $162 trillion in 20241.

How do cross border payments work?

Despite the vast scale of cross border payments, the inner workings are actually quite straightforward and consistent. They involve:

1. Initiation of payment - The payer instructs their bank (or other provider) to send money to a recipient overseas using a preferred payment method, such as a bank transfer, wire transfer, or credit card.

2. Currency conversion — If different currencies are used, funds are converted based on the exchange rate set by the provider handling the transaction. Additional conversion and transaction fees also apply. Providers like Wise Business makes transfers using the mid-market exchange rate with no hideen markups.

3. Transmission - The funds are then sent through international payment systems such as SWIFT. This process can involve multiple intermediary banks that route the money from one spot (sender’s bank) to another (recipient's bank).

4. Compliance and security checks - During transit, the payment runs through a series of compliance and security checks to prevent things like money laundering and fraud and make sure everything is safe and above board.

5. Settlement - The receiving bank approves the funds and credits the recipient's account, who will be notified of an incoming payment. Confirmation is also sent to the payer.

Transaction times for cross border payments vary — taking anything from a few hours to several days depending on the payment method, processing times, and countries involved.

Different ways to make cross border payments

With speed and cost of the essence in 2025, businesses are looking at different ways to complete cross border payments.

Multi currency accounts

Traditional bank accounts are usually static and inflexible, catering for a single currency and transaction type. Multi currency account brings much more flexibility. Providers like Wise Business offers multi-currency accounts that allows businesses to hold, receive, send, and manage money in multiple currencies without having to open separate bank accounts in each country.

Let’s take a look at a couple of scenarios where Wise Business helps facilitate cross border payments with ease:

Managing employee payroll in different countries

A tech startup based in Melbourne might have remote employees in New Zealand, India, and the UK. With a multi-currency account, it holds NZD, INR, and GBP to pay staff directly in their local currency. There are no double conversion charges and employees are paid on time.

Receiving international client payments

A digital marketing agency in Sydney works with companies in the United States and Singapore. Instead of asking each client to pay in AUD, the firm simply receives USD and SGD. This reduces any delays and avoids any additional fees being added, for both parties.

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Bank transfer

A bank transfer is a direct transfer of funds from one bank to another. In Australia, you typically need a recipient’s name, bank state branch (BSB) code, and account number to send money via an online banking app or web portal².

While convenient, bank transfers can be expensive due to several layers of hidden costs involving exchange rate markups and network fees. They can also take longer to complete.

Credit card payment

Using a credit card for cross-border transactions is a common option, but not without its downsides. The foreign transaction fees are steep, and some countries may sneak in additional fees and charges on top. For businesses that make regular international payments, these costs can spiral — making credit cards one of the more expensive methods for sending money overseas.

Wire transfer

A wire transfer is an electronic money transfer between two bank accounts. While similar to bank transfers, wire transfers are faster and better suited to larger transactions and international payments as they use networks such as SWIFT and Western Union.

However, like bank transfers, wire transfers aren’t cheap — transaction fees can cost up to 5% of the transaction amount.

Money order

An international money order is a physical, prepaid document, similar to a cheque, issued by a bank or postal service. It allows the sender to transfer a specific amount of money to a recipient overseas. However, it must be completed by hand and then delivered by post or in person.

While money orders are safer than sending cash — especially for recipients without bank accounts — they are not really suitable for most businesses. The delivery and processing times are slow, while fees and exchange rates still apply.

Cash remittance

Remittance is the process of sending money — usually cash — to another person overseas. It’s mainly used for personal transfers to friends or family in other countries, and isn’t as popular for business.

E-wallet

An e-wallet, or digital wallet, is an online service that stores payment information and allows users to send money electronically. Popular e-wallets include PayPal, Skrill, AliPay, Apple Pay, and Google Pay. They are fast and secure, and great for improving customer experience and checkout options for B2C transactions.

However, most e-wallets are not tailored for global payments and managing business finances at scale. Apple Pay, for example, is not a money transfer service — you can’t use it to pay suppliers or freelancers overseas.

Challenges involved with cross border payments

Cross border payments are a significant growth tax. Small businesses in the United States lose a staggering $153 billion in hidden fees every single year⁴.

It is one of the multiple challenges associated with international transactions:

• High costs - Frequent and costly cross border payments can put a major ding in profit margins. Fees from banks, currency conversions, and credit cards quickly add up and neuter the many benefits of trading overseas.
• Lack of transparency - Businesses often make payments in the dark without full knowledge of what they’ll be paying. There are unclear (and exorbitant) rates and fees associated with many payment methods. This makes it harder to budget and make smarter financial decisions.
• Currency fluctuations - Exchange rates aren’t static and can be volatile, which impacts the value of transactions.
• Slow processing times - Time is money in business. Waiting for international payments to clear — often several days or more — can disrupt cash flow and stall operations.
• Regulatory requirements - Navigating regulations in different countries and making sense of legislation, such as double tax agreements (DTAs), is complex and can be a burden for small businesses.
• Fraud and security risks - Cross border payments often involve huge sums, making them a target for cyberattacks and theft.

6 best practices for efficient cross border payments

Addressing these challenges can free small businesses from the shackles of costly, traditional international payments. Imagine being able to make moves that’ll grow your business across the world without the fear of excessive fees and constant processing delays.

It’s a goal you can make a reality by following these steps:

1. Choose the right payment method for business

Ideally, you want a payment method that perfectly balances speed, cost, and convenience. Each has its pros and cons. Bank wires, for example, are a conventional option for business finances, but they can be expensive. A multi-currency account is more flexible with lower fees and better transparency.

Factors to consider include:

• Cost and speed: Get a full rundown of pricing and fees to evaluate cost and check the standard processing times for global payments.
• Reach: Find out how many countries and currencies are supported.
• Features: Do you need batch payments, QuickBooks integration, invoicing, and other advanced features?

2. Be aware of exchange rates

A provider that uses the real, mid-market rate offers better value than banks with standard rates (which often hide charges). If you’re moving funds regularly, even a small difference in the exchange rate can add up to big savings over time. This will also free up cash flow and improve your margins, empowering you to make more strategic investments.

3. Negotiate fees

If you’re planning on getting through lots of international payments, talk to your provider about volume-based discounts or lower transaction fees. Be wary of ‘lock in’ too. Many banks offer tiered pricing with hard limits for usage and features. Wise Business lets you scale without monthly fees or subscriptions. If you’re unhappy with your current setup, shop around for a better offer.

4. Learn local regulations

Every country has its own financial compliance and tax requirements. You should read up on all the rules for foreign payments to avoid delays or fines. This includes understanding import and export controls, transaction limits, reporting obligations, and any required documents. For Australian businesses, keeping tabs on AUSTRAC obligations and withholding tax rules is important.

5. Prioritise compliance and security

International payments are prime targets for financial crime — fraud, scams, cyberattacks, identity theft etc. Opt for a provider that takes safety and security seriously, with strong encryption and fraud detection capabilities. Also, make sure your own systems are built to combat security threats and meet strict Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations in Australia.

6. Use multi currency accounts

Multi-currency accounts give you all the tools you need to manage cross-border payments effectively. You can hold, send and receive money in the currencies that matter to your business. This will reduce fees and speed up payments to your clients and suppliers overseas.

Summary: Take control of your cross border payments with Wise

If you’ve got ambitions to go global, getting to grips with cross border payments is a necessity. But they don’t have to be costly or complex. By choosing the right tools, you can start building relationships with clients and customers overseas without the fear of inflated exchange rates scuppering your growth plans.

With Wise Business, you can get account details to receive money in 8+ different currencies for a one-time 65 AUD fee. You’ll also benefit from our fair prices, with no hidden fees. You only pay for what you use, and can scale up and down as you see fit. A couple of other features you’ll find helpful, include:

Wise Business helps streamline overseas business payments without foreign transaction fees, saving up to 3x compared to other providers.

• Free to register — Send money to 140+ currencies with no hidden exchange rate markups
• Make up to 1,000 transfers at once with the Wise batch payments feature
• Fast, low-cost payouts to customers, freelancers, employees, investors, and suppliers globally
• Automate invoice payments, recurring transfers, and international payroll
• Fast and fully secure payments through Wise, even for large amounts
  Tired of hidden fees and complex processes when making overseas payments?

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Sources:

1. McKinsey & Company - How banks can win back lower-value cross-border payments business
2. Wise - Guide to AUD transfers
3. Wise - International wire transfer fees
4. Wise - State of US SMBs Report