Cross border payment systems work a bit differently to domestic payment systems because they incorporate currency exchange. For example, if an Australian business makes a payment to a partner in Spain, the AUD wouldn’t be physically transferred to a Spanish bank account. Instead, it must be converted first into EUR with the corresponding value deposited, in Euros, into the Spanish bank account. This means a third party is required to facilitate cross border payments. Accounts are credited in one country and debited in another, using a payment processor or gateway as a third-party correspondent.
As with any type of payment, there are many different methods that can be used for cross border transactions. These include international bank transfers, credit card payments, digital wallets, and mobile apps.
Transactions are processed using the intra-bank SWIFT network, so you’ll need the following details to send and receive cross border payments:
Full name and address of account holders
Account numbers and sort codes
SWIFT/BIC code to identify bank
Bank and wire transfers can take up to five business days for processing, which is why many businesses use online or mobile payment services instead. How Long Do Cross-Border Payments Take?