Posted by admin on Apr 20, 2010


Everyone has read about the rise in cross border payments.  And the growth is real. 

Yet, international payments usually make up less than 2% of a country’s total transaction volume.  Banks in most countries have long focused on the immediate and largest market, which are payments inside national borders.

A bank must decide how much money to put into developing international payment options.  At what point is it worthwhile to bear the cost?  Or does it make more sense simply to outsource the function?

Adding international options is technically challenging.  Is really worth the time and effort to process what are, in essence, a small number of transactions compared with the total transaction processing volume?

There are other obstacles standing in the way that make smooth international payments challenging.  For instance, a bank in one country cannot clear ACH transactions in other countries.  Therefore, banks need to have banking partners in different countries.  Each link in the chain must understand the differences between world banking systems

For instance:

  • When should payment be released so it is received on the desired date?
  • What are the country currency holidays?
  • Is there time to settle the FX transaction to eliminate risk?
  • Are the payments compliant with international regulations?  For instance, sanctions from the US Treasury or other regulators.
  • How are FX currency conversions to be handled?  Does the bank have a trading desk and skilled personnel to handle the transactions?

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