Businesses are no longer confined by geography. But behind every global transaction lies one critical question: How does the money move across borders?
Welcome to the world of international business payments - a complex yet essential part of modern commerce that quietly powers global supply chains, payrolls, and investments. From traditional wire transfers to cutting-edge fintech platforms, the methods of sending money internationally have evolved rapidly to meet the demands of speed, security, and cost-efficiency.
In this guide, we’ll review international business payments - what they are, how they work, and why choosing the right payment method can make or break your global growth strategy.
Whether you're a startup exploring your first overseas supplier or a multinational optimizing cross-border transactions, understanding the mechanics and best practices of international payments is a non-negotiable in today’s global marketplace.
What are international business payments?
International business payments refer to the transfer of money between entities located in different countries or regions of the world.
This transfer can serve multiple business purposes, such as purchasing goods or services, paying for overseas staff and collaborators, securing stock, and making investments. The transfer can occur between two businesses, for example, a supplier and a purchaser, or between a business and an individual, for example, in eCommerce retail.
International payments vs domestic payments
International payments, also known as cross-border payments, typically involve multiple currencies and require currency conversion.
Domestic payments, by contrast, are made between entities in the same country and typically involve a single currency. Domestic payments are typically faster and more cost-effective, given the lack of exchange currency.
What are the methods of payment in international business?
Despite seeming like a streamlined process, international business payments can be conducted in multiple ways.
International wire transfers
International wire transfers are the most common method of payment in international business. They offer a direct bank-to-bank transfer solution, although they can incur relatively high fees compared to other methods. These payments are typically processed through systems like SWIFT (Society for Worldwide Interbank Financial Telecommunication), which connects financial institutions globally and enables fast, secure and reliable transactions.
To make an international wire transfer, businesses need accurate beneficiary details, including the recipient’s name, account number or IBAN (International Bank Account Number), and the bank’s SWIFT/BIC code.
Fintech payment platforms
Fintech payment platforms are digital services that allow users to send and receive money internationally. Many of these platforms offer multi-currency business accounts, which allow their users to pay, collect and hold money seamlessly. With lower fees and quicker processing times, fintech payment platforms are becoming increasingly popular for international business transactions.
To make an international payment via a FinTech platform, businesses typically need to register for a verified account and provide basic company and banking information. Once verified, they can send payments by entering the recipient’s email address or account details, along with the amount and the currency. Some platforms require the recipient to have an account with the service, while others allow recipients to accept international payments without an account.
Transactions are processed through the platform’s internal network or local banking partners, often without intermediaries. This allows for faster settlement times and reduced transaction costs compared to conventional wire transfers. Many fintech platforms also offer exchange rates when facilitating international payments, often at more competitive rates than traditional banks.
Mobile & eWallets
Mobile and e-wallets, like Google Pay, are digital payment methods that allow users to make international payments via their smartphones or computers. They are mainly used by consumers for e-commerce retail or monthly subscription services.
Debit & credit cards
Debit and credit cards can also facilitate international business payments. While primarily used for consumer transactions, they can also play a role in some recurring expenses for businesses, like small-scale supplier payments.
Depending on the payment processor and the banks involved, these transactions typically take between 1 to 3 business days.
Electronic payment networks
In addition to international wire transfers, electronic networks like SEPA (Single Euro Payments Area) and ACH (Automated Clearing House) provide alternative methods for international payments. They enable secure and cost-effective transfers but are only available within specific regions.
The ACH network is primarily used for US-based domestic transactions, but can also support international payments to certain countries. To make international ACH payments, businesses must partner with an ACH-compatible financial institution or payment service provider. The sender initiates payment by providing the recipient’s bank account details, including the ACH routing number.
The SEPA network is primarily used in Europe, including all countries in the European Union, the United Kingdom, Iceland, Liechtenstein, Norway and Switzerland.
International money orders & checks
International money orders and checks are paper-based financial instruments that can be used to send money abroad. While less common and slower than traditional bank transfers or electronic methods, they can be a viable option in regions with limited access to digital payments or for businesses that prefer physical forms of payment.
International checks are issued by the seller's bank in one country and are payable to the buyer's foreign bank, usually in a different currency. International money orders are usually sent through mail or transmitted electronically via a third-party provider. They can be purchased at banks, financial institutions, post offices or retail stores.
Cryptocurrencies
Cryptocurrencies are virtual currencies based on blockchain technology. Unlike traditional fiat, like the GBP or the EURO, cryptocurrencies are universal and do not require foreign exchange. Cryptocurrencies are, however, more rarely used due to their high volatility, which makes them a less predictable option for international transactions.
To make an international payment using cryptocurrencies, businesses need a cryptocurrency wallet and the recipient's wallet address. The payment is made directly from one wallet to another through the blockchain, without any intermediaries such as banks.
Letters of credit
A letter of credit is a financial document typically issued by the buyer’s bank which guarantees payment to the seller once specific conditions, such as providing shipping or quality documentation, are fulfilled. This method provides financial security for the seller since the bank guarantees payment, even if the buyer has insufficient funds. It is most commonly used in international trade, especially in high-value import and export transactions.
Best practices for sending and receiving international business payments
To seamlessly transfer funds across borders, it is recommended to follow key best practices.
Understand the costs involved
International payments involve several charges. Understanding these costs is crucial for any business looking for an efficient way to send and receive international payments.
- Transfer (Transaction) Fees are charged by the payment service provider (typically a bank) for processing the payment. The total cost can vary depending on the amount of the transaction and the recipient’s country. Some providers offer a fixed fee structure, which can provide predictability and consistency, especially for businesses making regular, smaller payments.
- Currency exchange fees are charged when exchanging one currency for another. They are usually based on the exchange rate at the time of the transaction, but may also include an additional margin or markup applied by the financial institution or payment provider. Businesses may also have to pay a flat charge for the exchange service. This is known as a currency conversion fee.
- Intermediary bank fees are charges levied by banks that serve as intermediaries during the transaction process. Intermediary banks facilitate the international transfer of funds between two banks that do not have a working relationship. They are fairly common in international business payments and can significantly impact the overall cost of the transaction.
- Other Fees can include charges for services like payment tracking or urgent transfers. Providers may also impose additional fees for certain payment methods, such as credit card payments or cash pick-ups.
Analyze transaction volumes
Before choosing a method for international payments, businesses should assess their current and expected transaction volume and select a plan accordingly. Banks offer different account options depending on the frequency of transfers, and if a business exceeds the transaction limit of its chosen plan, it could result in payment delays or disruptions.
Many providers also offer better terms for high-volume or recurring transactions. Regular transfers can, therefore, benefit from certain discounts or preferential rates, as well as a more streamlined process, as some providers offer better terms for high-volume or recurring transactions. Infrequent transfers, on the other hand, face higher processing fees or less favorable exchange rates.
Ensure regulatory compliance
Cross-border business payments must comply with various regulations, including anti-money laundering (AML) and know-your-customer (KYC) laws. Countries also have varying rules around currency controls, tax reporting, and sanctions. Failure to comply with these regulations can result in significant fines and legal costs, as well as delays or even blocked payments.
Set out clear payment terms
Clear terms are essential in every international payment in order to avoid delays and financial risks. When businesses operate across borders, they face varying banking systems, currencies and processing times. Setting out precise terms, such as the currency, payment method (e.g. wire transfer or card), deadlines, and applicable fees, ensures both parties are aligned.
In business-to-business transactions, payment terms are typically negotiated between the parties and formally documented in a binding legal contract or purchase order. For consumer transactions, payment terms are typically outlined in the terms and conditions of sale, which customers must accept before making a purchase or subscription.
Analyze your supplier & customer base
For the most efficient international payment solution, businesses need to examine the payment methods and currencies used by their customers and suppliers.
As businesses seek to source materials from global suppliers, understanding their payment preferences and requirements is crucial. This helps avoid unnecessary fees and ensures smoother transactions within the supply chain. Understanding the customers' payment preferences enhances customer satisfaction, drives revenue growth, and reduces card abandonment.
Verify & monitor payment security
As international business payments involve multiple parties, currencies, and banking systems, the risk of data breaches or unauthorized transactions increases. Implementing strong security measures, such as encryption and multi-factor authentication, helps mitigate these risks.
Businesses must monitor their payment security continuously and ensure that any suspicious activity is detected early. Regular audits, secure payment gateways, and compliance with data protection regulations are vital to maintaining trust with suppliers and customers.
How to optimize cross-border transactions?
To streamline cross-border payments and improve efficiency, businesses can:
- Leverage Fintech Innovations: Many fintech platforms offer all-in-one solutions to streamline international transactions. Smart routing, for example, automatically selects the fastest and most cost-effective route for international payments, based on destination and currency. Fintech platforms also reduce the reliance on manual processes and provide payment scheduling solutions to ensure timely and efficient transactions.
- Choose Efficient Partners: Choosing the right payment partners can significantly streamline international payments. If your business sends money to a particular country or region, for example, you should partner with a platform that offers fast processing times and competitive fees for that specific country or region. It is also essential to ensure that your chosen partner can integrate seamlessly with your systems and support the payment methods preferred by your suppliers and consumers.
- Use Correct Details: Ensuring the accuracy of payment details is crucial to prevent errors and delays. Providing precise bank account information and clear invoicing instructions prevents failed or misdirected payments.
How to reduce fees in international payments?
To reduce fees in international payments, businesses can:
- Open Multi-Currency Accounts: This strategy allows businesses to hold and manage their funds in different currencies, reducing the need for frequent currency exchange. Multi-currency accounts minimize conversion costs and eliminate the intermediary fees associated with international payments. They are usually offered by fintech payment platforms and some traditional banks.
- Monitor Exchange Rates: Businesses should regularly keep an eye on the market and choose the most competitive exchange rates available. Since exchange rates are based on real-time market value, which can fluctuate, businesses can time their transactions to take advantage of favorable fluctuations. Many fintech platforms and financial institutions offer rate alert features, which allow businesses to get notifications when the rates reach a target level. Businesses can also use foreign exchange brokers, which often provide more competitive rates.
- Consolidate Payments: Instead of small international money transfers, businesses can consolidate payments into fewer, larger transactions that can reduce the total fees incurred. Since many payment providers charge a flat fee per transaction, consolidating payments can spread out the costs and reduce the overall expense.
How to ensure compliance in international payments?
To ensure compliance in international payments, businesses can:
- Conduct Due Diligence: Businesses must conduct thorough due diligence and verify the identity of recipients before initiating any payment transactions. They must also ensure that the recipient and the recipient's bank are not listed on relevant sanction lists or involved in fraudulent activities.
- Establish Internal Controls for Outgoing Payments: Businesses can also implement internal compliance protocols and procedures, such as limiting payment amounts and requiring multiple levels of approval for large payments.
- Keep Transaction Records & Receipts: Maintaining comprehensive transaction records and receipts is essential for accounting, tax, and auditing purposes. By keeping detailed records of their international payments, businesses can ensure compliance with tax regulations and have accurate documentation for financial reporting and audits.
How Nuvei facilitates seamless international transactions for businesses?
Nuvei is a solution-oriented, regulation-compliant payments partner that offers valuable expertise for international transactions. With tools like advanced payment gateways and global acquiring capabilities, Nuvei helps businesses process payments securely and quickly, regardless of location.
Nuvei supports multiple currencies and offers real-time payment processing, helping businesses avoid delays and reduce currency conversion costs. It also integrates with various local payment methods and complies with international regulatory standards, ensuring both security and compliance.
Conclusion
Managing international payments effectively is essential for any business looking to tap into the global supply chain and expand its reach. By familiarizing themselves with international payment methods and customer preferences, companies can choose the most suitable solution for their supply chain needs and drive revenue.
Different payment methods, such as international wire transfers, fintech platforms, electronic networks, or cryptocurrencies, offer different benefits depending on the region and business requirements.
Businesses must also implement best practices to reduce transaction costs and ensure compliance. Opening multi-currency accounts, monitoring exchange rates, and conducting thorough due diligence on payment recipients can significantly reduce the costs and risks associated with international payments.
Partner with a payment service provider like Nuvei and find out how international business payments work to make your business successful.
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