Business models are changing. Globalization made it much more general for business owners to expand their operations across the globe.
In this regard, cross-border payments have become more popular, with more people looking for seamless and cost-effective ways to make instant cross-border payments. Unfortunately, standard wire transfer services are unduly slow and expensive for frequent cross-border transactions, especially when using traditional banks. It calls for much higher performance in the process of international remittance payments.
On the brighter side, the emergence of digital payments, blockchain, and Ai, which are the products of technological advances, makes it now possible to make instant cross-border payments. It becomes easier for people and businesses to conduct transactions with customers and suppliers worldwide.
This post will explain how cross-border payments work and how you can make instant cross-border payments with iPeakoin.
What are cross-border payment?
Also known as international payments, cross-border payments are transactions where the payer (customer) and the recipient of the transaction (merchant) are not based in the same country. Such payments can be performed among individuals and companies to name a few who are looking to transfer funds across territories.
If your eCommerce brand operates away from your home country, it becomes vital that you accept payments across all the markets you’re after.
Many different scenarios need to be accounted for when a merchant needs to deal with international payments because each country has its own set of rules. The demand for cross-border payments is so high that steps are being made to improve cross-border payments as a whole.
How do cross-border payments work?
In most cases, cross-border payments rely on bank transfers. This means that to make a cross-border payment, the transfer has to go through a corresponding bank where the recipient is located. The sending bank will transfer funds to the correspondent bank, which will forward the money to the recipient's bank. To accomplish this, the payment process is done in three stages. And here's how it works
Three Processes of Cross-border Payments
◆◆ Pre-funding: In the pre-funding stage, the sender (an individual or a company) creates or funds a local bank account.
◆◆ Clearing: The clearing phase involves routing the funds through a clearing bank (correspondent bank) in the recipient's country.
◆◆ Settlement: Lastly, the settlement stage involves the crediting of the recipient's bank account by the receiving bank.
Furthermore, a cross-border payment may involve one or more intermediaries/ banks for each stage of this process. This also depends on the amount of money being sent, the location of the recipient and the banks involved.
Four major components of a cross-border payment
You should pay attention to several critical factors, whether you are sending or receiving a cross-border payment.
▷ Currency: The currency the payment makers want to use to pay for a product or service e.g US dollars, Euro, GBP etc.
▷ Exchange rate: The amount charged by a bank for converting one currency into another during a foreign exchange transaction.
▷ Payment ways: The most common payment types are wire transfer and credit card, but when it comes to international payments, other options such as Automated Clearing House (ACH) and direct debit play an important role too.
▷ Payee details: The person, company, or institution you're sending the money to.
How to make instant cross-border payments with iPeakoin?
iPeakoin, a global institution-grade cash management platform, can provide cross-border merchants an integrated financial solution for payments settlement. With iPeakoin Global Account, businesses of all sizes can open multi-currency accounts in the name of company, able to receive and make payments for suppliers, shipping, and manufacturing. Through strategic data-driven advisory and a product offering combining features such as fraud prevention tools as well as local and global payment options among others, we help you overcome any obstacles impeding your road to mastering cross-border payments and conquering your desired markets.
Create and Account
Securely and freely create an account in minutes ipeakoin.com/sign-up
Fund your balance
Fund your account securely through bank transfer
Select the payment channel and currency
You can choose to pay for a bank account or iPeakoin account in the currency you prefer, and payments in bulk are also supported.
Input the receiver details
Provide the details of the recipient. Click on SEND and wait for us to do our magic.
If you are contemplating a cross-border transaction, it is in your best interest to contact a qualified international business provider sooner rather than later.
today to schedule an initial consultation.