Understanding Cross-Border Payments: How Money Moves Across Borders in a Digital World
What Are Cross-Border Payments, and How Do They Actually Work?
Sending money across borders is as essential as sending an email in today's economy. It doesn't matter if it's a company paying an international supplier, a freelancer invoicing clients abroad, or someone remitting funds to family—cross-border payments power our interconnected financial world.
But what actually happens when money crosses borders? What infrastructure supports it? And why are financial institutions racing to make these systems faster, more transparent, and cost-efficient?
Let’s break it down.
What Are Cross-Border Payments?
A cross-border payment is any transaction where the sender and receiver are based in different countries. These can support a wide range of use cases from corporate treasury operations and e-commerce to payroll and remittances.
They typically fall into two key categories:
Wholesale Cross-Border Payments: High-value transactions between financial institutions or large enterprises.
Retail Cross-Border Payments: Smaller transactions like remittances or online purchases made by individuals.
How Do Cross-Border Payments Work?
Think of it like mailing a package internationally. You drop it off locally, but it goes through multiple checkpoints (logistics hubs, customs, local carriers) before reaching its destination. It’s seamless on the surface, but layered underneath.
Cross-border payments are no different.
If your bank (Bank A) has a direct arrangement with the receiver’s bank (Bank B), the payment message flows directly. But most often, they rely on intermediary or correspondent banks to complete the process. This chain is facilitated by networks like SWIFT, which securely routes payment messages between global banks.
Some regions, like the eurozone or the U.S., have their own systems too like SEPA, TARGET2, and Fedwire offering varying speeds, coverage, and costs.
Common Methods of Cross-Border Payment
Here’s a breakdown of widely-used methods for moving money internationally:
Wire Transfers
These are bank-to-bank transfers often routed via SWIFT. They’re secure, but may take up to business days and include larger fees, especially if multiple intermediary banks are involved.Bank Transfers Using Regional Systems
In Europe, SEPA and SEPA Instant enable euro-denominated payments across 36 countries. SEPA Instant supports 24/7 real-time transactions under €100,000, while traditional SEPA may take up to one business day. In the U.S., Fedwire processes high-value same-day dollar transactions with finality. In the EU, TARGET2 ensures an efficient settlement of large-value euro transactions in central bank money—playing a key role in stabilizing the euro economy.Credit Card Transactions
Easy for end-users, but involve currency conversion and authorization flows that introduce complexity and cost for businesses.Alternative Payment Methods (APMs)
E-wallets like PayPal, Apple Pay, or Google Pay allow seamless payments and can connect to cross-border transactions when linked to banks or cards.
Challenges with Traditional Cross-Border Systems
Despite various options, legacy systems present key issues:
Delays – Transfers can span days, especially across continents.
Costs – Hidden or layered fees add quickly.
Lack of Visibility – Senders rarely have real-time insights into payment status or deductions.
This lack of efficiency is why innovation in cross-border payment infrastructure is accelerating.
Re-imagining Cross-Border Payments with Oneremit
As global trade moves online and borders blur, businesses need faster, clearer, and more scalable solutions.
Oneremit is a modern B2B cross-border payments platform designed to eliminate bottlenecks and simplify how businesses move money globally.
Here’s how we stand out:
Speed – Near-instant settlement in supported corridors.
Simplicity – No multi-hop confusion. What you see is what you pay—transparent fees and currency conversion.
Scalability – Our system adapts to growing transaction volumes and global use cases.
Whether your business deals in euros, dollars, or emerging-market currencies, Oneremit is built to streamline your flow.
Final Note
Cross-border payments are no longer a luxury, they’re foundational to global business. Whether you're an SME scaling internationally or a solo founder managing remote clients, understanding these systems gives you a competitive edge.
And as infrastructure evolves—powered by smarter systems like SEPA Instant, SWIFT, and Fedwire—platforms like Oneremit are ensuring your business is future-ready.
Want to experience cross-border payments without the friction?
Get started with Oneremit or follow us on LinkedIn for updates.