What are cross-border payments? A complete guide (2026)

Key takeaways:

• Cross-border payments are financial transactions between a payer and recipient in different countries, often involving currency conversion and multiple financial institutions.

• Traditional payment methods like wire transfers can be slow and costly — local payment rails offer a faster, more affordable alternative for businesses making frequent international payments.

• Airwallex helps Singapore businesses send payments to 200+ countries, with free transfers to 120+ countries via local rails.

Cross-border payments are transactions where money moves from a sender in one country to a recipient in another — and they're the backbone of global business. The value of cross-border payments is estimated to grow from almost US$150 trillion in 2017 to over US$250 trillion by 2027.¹

For Singapore businesses, that growth creates both opportunity and complexity. Paying overseas suppliers, receiving funds from international customers, and managing global teams all depend on getting cross-border payments right. Get them wrong, and you face delays, hidden fees, and cash flow disruption.

This guide explains how cross-border payments work, what types exist, and how to choose the right solution for your business.

What are cross-border payments?

Cross-border payments are financial transactions where the payer and recipient are based in different countries. They cover both individuals and businesses — a worker sending money home to their family, a company paying an overseas supplier, or an eCommerce store receiving funds from international customers.

These payments often involve currency conversion and pass through multiple financial institutions before reaching the recipient. That's what makes them more complex, slower, and costlier than domestic transfers.

Types of cross-border payments

There are two main categories of cross-border payments: wholesale and retail.

Wholesale cross-border payments

Wholesale payments are high-value transactions between financial institutions, governments, or large companies. They support activities like importing and exporting goods, foreign currency exchange, and trading in financial markets. These transactions are large in value but relatively low in volume.

Retail cross-border payments

Retail payments are transactions between individuals and businesses. They are larger in volume but smaller in individual value. The four main types are:

• Business-to-business (B2B): A Singapore company paying an overseas supplier or contractor.

• Business-to-consumer (B2C): A business paying salaries or disbursements to individuals in another country.

• Consumer-to-business (C2B): An individual making an online purchase from an international merchant.

• Person-to-person (P2P) / Remittances: An individual sending money to family or friends abroad.

For most Singapore businesses, B2B and C2B payments are the ones that matter most — whether you're paying suppliers in China, receiving orders from customers in Australia, or managing a regional team.

How do cross-border payments work?

When you send money internationally, the funds don't physically travel across borders. Instead, banks send instructions to each other to credit and debit the right accounts on both ends.¹

Here's how the process works from start to finish.

Step 1: Initiation

You initiate a transfer through your bank or payment platform, providing the recipient's details, the amount, and the destination currency.

Step 2: Currency conversion

If the payment involves different currencies, the amount is converted at the prevailing exchange rate. The rate — and whether a markup is applied — depends on your provider. Some banks build their margin into the rate itself, making the true cost hard to see upfront.

Step 3: Routing through intermediary banks

Your bank may not have a direct relationship with the recipient's bank. In that case, the payment travels through one or more intermediary banks — also called correspondent banks — each of which passes the funds along the chain.

The more intermediaries involved, the slower and more expensive the transfer.

Step 4: Compliance and regulatory checks

At each step, the payment is screened for anti-money laundering (AML) compliance, sanctions, and Know Your Customer (KYC) requirements. These checks are non-negotiable, but they add time — especially for large transfers or payments to certain countries.

Step 5: Settlement

Once all checks are complete, the recipient's bank credits their account. Settlement times vary depending on the payment method, the countries involved, and how many intermediaries handled the transfer.

Step 6: Notification

Both the sender and recipient receive confirmation once the payment is complete.

Modern fintech platforms like Airwallex bypass much of this chain by connecting directly to local payment rails in key markets. Instead of routing a payment through multiple correspondent banks, the transfer moves through domestic networks — the same way a local payment would. This cuts both the cost and the time.

How can businesses make cross-border payments?

Businesses can make cross-border payments through four main methods: SWIFT wire transfers, local payment rails, card payments, and digital wallets. Each has trade-offs on speed, cost, and ease of use.

Here's how they compare:

SWIFT payments

SWIFT (Society for Worldwide Interbank Financial Telecommunication) has been the standard for international wire transfers for over 50 years. It connects more than 11,500 financial institutions across 200+ countries and is widely accepted and reliable.

The drawback is cost and speed. SWIFT payments travel through a chain of correspondent banks, each adding fees and processing time. Transfers typically take one to five business days to complete, and costs can include transaction fees, foreign exchange markups, and intermediary bank charges.

Local payment rails

Local payment rails are domestic payment networks that process transfers within a specific country or region — such as the Automated Clearing House (ACH) in the United States or the Single Euro Payments Area (SEPA) in Europe.

Modern fintech platforms connect to these local networks in key markets, which means your international payment moves like a local one. This removes the need for multiple intermediary banks, making transfers faster and significantly cheaper.

For businesses paying suppliers or teams in countries where local rails are supported, this is usually the most cost-effective option.

Card payments

Corporate cards let you make payments online or in person almost anywhere, instantly. They're convenient, but they're also the most expensive option. Foreign transaction fees can reach up to 3%² of the payment amount, and not all suppliers accept cards. Some countries also charge recipients an additional fee on top of the standard interchange costs.

Cards work well for ad hoc purchases and employee expenses, but they're rarely the right tool for regular B2B supplier payments.

Digital wallets

Digital wallets — such as PayNow, GrabPay, Alipay, and PayPal — let individuals and businesses send and receive money across borders through an app or online platform. They're fast, easy to use, and often cheaper than SWIFT for smaller transactions.

Their main limitation is reach. Not all suppliers or recipients use the same wallet, and coverage varies significantly by country. Digital wallets work best for specific corridors where adoption is high.

Cross-border payment challenges

Cross-border payments come with costs and complexities that domestic transfers don't. Understanding these challenges helps you choose the right solution and avoid surprises.

Challenge 1: Transaction costs

Every step in the payment chain has a price:

• Your bank charges a fee to initiate the transfer.

• Intermediary banks deduct their own charges as the payment passes through.

• If currencies need to be converted, a foreign exchange markup is applied on top.

For businesses making frequent international payments, these costs can have a real impact on profit margins.

The good news is that not all methods carry the same cost. Payments routed through local payment rails — rather than SWIFT — skip most of the intermediary fees, making them significantly cheaper for the same transfer.

Challenge 2: Payment delays

Cross-border payments are processed during banking hours, and only in the time zones where the banks involved are open. A payment initiated on a Friday afternoon may not begin processing until Monday. Public holidays in any country along the route add further delays.¹

The more intermediary banks involved, the longer the journey. For less common currency pairs or payments to emerging markets, a transfer can take several days to arrive. This creates cash flow uncertainty and can strain supplier relationships.

Challenge 3: Currency risk

When you make a cross-border payment, the exchange rate at the time you initiate the transfer may be different from the rate when it actually settles. If the rate moves against you in that window, you receive less — or pay more — than you planned.

The most practical ways to manage currency risk are to use a multi-currency account that lets you hold foreign currencies without forced conversion, or to lock in exchange rates in advance through forward contracts. Either approach gives you more control over what you actually pay.

Challenge 4: Regulatory and compliance complexity

Every cross-border payment passes through compliance checks in each jurisdiction it touches. Banks screen transactions against sanctions lists, anti-money laundering (AML) rules, and Know Your Customer (KYC) requirements — and the standards vary from country to country.¹

This means the same payment may be checked multiple times by different institutions using different criteria. Transactions that trigger additional review can be paused for manual inspection, adding hours or days to settlement.

For businesses paying into markets with strict capital controls or foreign exchange regulations, these checks are especially time-consuming. Working with a payment provider that handles compliance automatically — rather than leaving it to you — reduces this burden significantly.

Challenge 5: Legacy technology

Much of the global banking infrastructure was built decades ago, before international payments operated at the scale and speed businesses expect today. Legacy systems often process transactions in batches rather than in real time, which slows settlement and limits visibility into where your payment is in the chain.

This is one reason fintech providers — which run on modern, purpose-built infrastructure — can often move money faster and more transparently than traditional banks.

How businesses benefit from cross-border payments

Done well, cross-border payments don't just support your operations — they open up new ones.

Benefit 1: Access to global markets

Being able to pay and receive payments internationally means you can sell to customers in other countries and source from suppliers anywhere in the world. You're no longer limited to what's available or priced competitively in your home market.

Businesses that handle cross-border payments efficiently can move faster when opportunities arise — whether that's a supplier offering better pricing, a new market showing strong demand, or a partnership that requires quick payment setup.

Benefit 2: Better cost competitiveness

Sourcing from a wider range of international suppliers gives you more options on price and quality. Instead of relying on a small number of local vendors, you can compare suppliers across markets and negotiate from a stronger position.

Over time, this can meaningfully reduce your input costs and improve your margins.

Benefit 3: Access to global talent

Hiring doesn't have to be limited by geography. Many Singapore businesses now work with contractors, freelancers, and full-time employees based across Southeast Asia and beyond.

Reliable cross-border payments make it practical to pay people in their local currency, on time, without the friction of expensive wire transfers or manual processes.

How to choose a cross-border payments platform

The right cross-border payment solution depends on how often you pay, where you pay, and how much those payments cost you. Here are the key factors to weigh up.

1. Cost of transfers

Look beyond the headline transfer fee. The real cost of a cross-border payment includes the exchange rate markup, any intermediary bank charges, and whether conversion is forced at a rate you didn't agree to.

A provider that offers mid-market exchange rates — the rate banks use when trading with each other — will almost always be cheaper than one that builds a margin into a quoted rate. Ask to see the full cost of a sample transfer before you commit.

2. Speed of transfers

How quickly do your suppliers or employees need to be paid? Providers that connect to local payment rails in key markets can often settle payments the same day or within a few hours. Providers that rely entirely on SWIFT will typically take longer, especially for less common currency pairs or payments to emerging markets.

3. Global reach

Check how many countries and currencies the platform supports — not just in total, but specifically for the markets you operate in. A broad global network matters less if it doesn't cover your top five payment destinations.

Also check whether the platform supports local payment methods in those markets, not just SWIFT transfers.

4. Multi-currency accounts

If you receive payments in foreign currencies, look for a platform that lets you hold those balances without automatically converting them. A Global Account gives you local bank details in key currencies, so you can collect payments like a local business and convert on your own terms.

5. Batch payments

If you pay multiple suppliers, contractors, or employees at the same time, look for a platform that supports batch payments.

Initiating payments one by one is time-consuming and error-prone. The ability to upload a file and pay dozens of recipients in a single action saves your finance team significant time each month.

6. Security and compliance

Your payment provider should be licensed and regulated in Singapore. Airwallex is licensed as a Major Payment Institution by the Monetary Authority of Singapore (MAS), which means your funds are safeguarded according to MAS requirements.

Look for providers that also meet international security standards, including PCI DSS, SOC1, and SOC2 compliance.

7. Integrations

A payment platform that connects to your existing accounting software — such as Xero or QuickBooks — reduces manual reconciliation work. If you run an eCommerce store, check whether the platform integrates with your storefront so payments flow directly into your accounts without manual intervention.

Simplify your cross-border payments with Airwallex

Most of the friction in cross-border payments comes from the same source: too many intermediaries, too many fees, and too little visibility. Airwallex is built to remove that friction.

With an Airwallex Business Account, you can send payments to 200+ countries. The majority of transactions go through local payment rails instead of SWIFT, and 93% of transactions arrive on the same day.

You also get Global Accounts, with local currency accounts in 21 countries. These let you receive payments from overseas customers as though you were a local business in their country. No forced conversion, no SWIFT fees on inbound transfers, and no waiting for funds to clear through correspondent banks.

Beyond transfers, the same account gives you Corporate Cards, Expense Management, Bill Pay, and integrations with accounting software like Xero and QuickBooks. Everything runs from one platform, so your finance team isn't stitching together separate tools for different payment types.

Frequently asked questions (FAQs)

What is the difference between a cross-border payment and a domestic payment?

A domestic payment moves money between two accounts in the same country, using the same currency and the same local payment network. A cross-border payment moves money between two different countries, often in different currencies, and typically passes through multiple financial institutions along the way. This is why cross-border payments tend to take longer and cost more than domestic transfers.

How long do cross-border payments take?

It depends on the payment method. Transfers sent through local payment rails can settle within hours or the same business day. Transfers sent via SWIFT typically take one to five business days, depending on the destination country, the number of intermediary banks involved, and whether currency conversion is required. Payments initiated on weekends or public holidays may take longer.

How much do cross-border payments cost?

Costs vary by method and provider. SWIFT wire transfers often carry a flat transaction fee plus a foreign exchange markup from each bank in the chain. Card payments can add foreign transaction fees of up to 3%² of the payment amount. Local payment rails are generally the cheapest option — some providers, including Airwallex, charge no transfer fee for payments sent via local rails. Always check the full cost, including the FX rate, before choosing a method.

What are the main types of cross-border payments?

There are two broad categories: wholesale and retail. Wholesale payments are high-value transactions between financial institutions, governments, or large companies. Retail payments are transactions between individuals and businesses — including B2B supplier payments, B2C payouts, consumer purchases from international merchants, and person-to-person remittances.

What is the safest way to make cross-border payments?

Use a payment provider that is licensed and regulated in your country. In Singapore, look for providers licensed as a Major Payment Institution by the Monetary Authority of Singapore (MAS). Reputable providers also comply with international security standards such as PCI DSS, SOC1, and SOC2. Airwallex is licensed by MAS and meets all three standards. Beyond your provider's credentials, always verify recipient details before sending — errors in account numbers or routing codes are a leading cause of delayed or failed transfers.

How can businesses reduce cross-border payment costs?

The most effective way is to use local payment rails instead of SWIFT wherever possible. Local rails bypass intermediary banks, which removes the fees each bank deducts along the chain. Using a multi-currency account also helps — holding foreign currency balances means you convert on your own terms rather than at your bank's default rate at the time of transfer. Batch payments reduce the number of individual transactions you initiate, which lowers per-transfer overhead.

Sources:

1.  https://www.bankofengland.co.uk/payment-and-settlement/cross-border-payments

2.  https://www.capitalone.com/learn-grow/money-management/foreign-transaction-fees/

This publication does not constitute legal, tax, or professional advice from Airwallex, nor does it substitute seeking such advice, and makes no express or implied representations / warranties / guarantees regarding content accuracy, completeness, or currency. If you would like to request an update, feel free to contact us at [[email protected]]. Airwallex (Singapore) Pte. Ltd. (201626561Z) is licensed as a Major Payment Institution and regulated by the Monetary Authority of Singapore.