Cross-Border Payment

Cross-border payments include international business transactions, payments to overseas suppliers, money sent home by migrant workers, online purchases from foreign retailers and international investments.

Traditionally, many cross-border payments have been processed through chains of correspondent banks, which hold accounts with each other in different countries. A payment may pass through several banks before reaching the recipient, with each adding time and cost. The SWIFT network provides the messaging system used by many banks for these payments.

For example, a small business in Canada paying a supplier in Vietnam might send a wire transfer that passes through intermediary banks, with fees taken along the way and a currency conversion applied.

Cross-border payments have often been slower, more expensive and less transparent than domestic ones. International bodies, including the Group of Twenty and the Financial Stability Board, have set targets to make them faster, cheaper and more transparent. Fintech companies, linked real-time payment systems, improved bank networks and, in some cases, digital currencies are among the developments aimed at improving cross-border payments.