Cross-border payment is a term referring to transactions involving individuals, companies, banks or settlement institutions operating in at least two different countries.
Types of cross-border payments
The countries involved do not necessarily need to share a border. For instance, a payment from the UK to Spain will be regarded as a cross-border payment, even though they are not neighbouring countries.
Cross-border payments in the EU are subject to Regulation (EC) No 924/2009, which compels banks to apply the same charges to cross-border transactions as those applied to domestic (or national) transactions where these payments are in euros.
When the two countries involved in the transaction use different currencies, the parties need to carry out a foreign currency exchange to complete the payment.
Multinational companies relying on a global supply chain or with many foreign suppliers might face significant volumes of payments on a daily basis. In order to free the treasury team from the manual workload that would be entailed in processing all those payments manually, some companies integrate payment processing software to automate cross-border payments.