Cross-border payments: What they are and how they’re evolving

Sending money across borders should be as simple as sending an email, but for most people and businesses, it’s still slow, expensive, and opaque.

Cross border payments move through a maze of correspondent banks, card schemes, local instant payment systems, and increasingly, crypto rails.

Each layer has its own rules, fees, and cut-off times, which makes it hard to know when funds will arrive or how much will land on the other side.

At the same time, demand for fast, low-cost global transfers has never been higher. Freelancers work for clients abroad, SMEs rely on international suppliers, and millions of migrant workers support families back home. Legacy infrastructure is struggling to keep up.

In this guide, we break down how cross border payments actually work today, where traditional models fall short, and how crypto-powered rails, AI, and tokenisation are reshaping the landscape. Finally, we’ll look at what this means for financial inclusion.

Cross-border payments are financial transactions where the payer and the recipient are located in different countries or different economic territories. Funds must move across at least one national boundary. Often, multiple intermediaries or correspondent banks are involved in this process.

The process typically involves four key parties:

Payments are executed through various channels, from correspondent banking networks to digital solutions like crypto payment rails.

And because these transactions are subject to the regulations of multiple countries, such as Anti-Money Laundering (AML), Know Your Customer (KYC), and Foreign Exchange (FX), it’s more complex.

Under the hood, cross-border payments all follow a similar sequence, regardless of whether they use traditional bank or blockchain infrastructure. We’ll break down the process below.

The payer creates a payment through a bank, card, wallet, or exchange. They select the amount, currencies, and destination details (bank account, card, or wallet address).

The platform gathers the key information, validates the request, and checks that the sender has enough funds before the payment can move.

In most cross-border payments, the sender and recipient use different currencies. When that happens, the payment provider converts the funds at an agreed FX rate and applies any fees.

On traditional rails, this often means routing through FX providers or correspondent banks, which takes longer and adds extra costs.

With crypto-based flows, the path is simpler. The payer converts local fiat (USD, EUR, etc.) into a stablecoin (like USDC) or a major cryptocurrency, which is used as the bridge asset for the transfer.

It’s then converted back into the recipient’s local currency via an on/off-ramp provider.

Banks and payment providers run AML and KYC checks on both the sender and the transaction to screen for sanctions, fraud, and other risks before any money moves.

If they detect red flags, they can pause or block the payment. This step is mandatory for both fiat and crypto flows, and we’ll explore it in more detail below.

In traditional finance, the payment instruction and funds travel through networks like SWIFT, SEPA, global card networks, and often several correspondent banks.

Each adds its own fees, cut-off times, and checks, which slows the payment processing down.

With blockchain rails, value moves on a single shared ledger, so transactions have fewer intermediaries.

Once processing is complete, the funds are released to the recipient’s bank account, card balance, or crypto wallet.

In blockchain-based flows, this often happens in near real time, 24/7, with off-ramps reconverting digital assets into local currency if needed.

Cross border payment methods rely on a mix of legacy systems and emerging technologies, each designed to solve different parts of the global money movement puzzle.

Here’s a quick look at the main infrastructure models shaping how funds move across borders today.

Correspondent banking enabled global financial connectivity long before digital payment systems existed. It allows banks without international branches to send funds anywhere in the world.

How it works: The sending bank passes funds through one or more intermediary banks until the money reaches the recipient’s bank. These banks maintain accounts with each other and are called correspondents.

Credit and debit card networks such as Visa and Mastercard remain widely used for international money transfers.

How it works: Card payments route from the merchant’s bank or processor (acquirer) through the card network to the cardholder’s bank (issuer). The card network handles the messaging between them and coordinates authorisation, clearing, and settlement. Funds move from the issuer to the acquirer and, ultimately, to the merchant.

Instant payment systems, (like Faster Payments in the UK or India’s UPI) bring near-real-time payments to domestic markets. While they make domestic transfers fast and cheap, most IPS schemes are domestic or regional.

So, when a payment crosses a border, it often drops back onto older rails, losing the speed and cost benefits that users now expect.

How it works: Funds move instantly between banks within the same country via centralized or API-based networks. Settlement takes seconds.

Blockchain technology allows value to move directly between parties, which cuts out intermediaries and reduces costs. This emerging infrastructure is redefining global payments by combining speed, transparency, and accessibility.

How it works: Transactions are executed on a blockchain, with digital assets moving peer-to-peer. On/off-ramps convert fiat to crypto and back, which enables end-to-end cross border settlement.

This is a new frontier in cross border payment services. It links domestic instant payment systems across countries to enable fast, low-cost international transactions without relying on blockchain.

How it works: Participating instant payment networks are connected through agreements or APIs. This allows cross border transactions to clear almost as quickly as domestic payments.

Global payments are critical to business growth, yet sending money internationally is far from frictionless.

High costs, delays, and inconsistent standards create headaches for financial institutions. Here are some of the most pressing challenges.

Cross-border payments remain far more expensive than domestic transfers because every step in the chain adds cost.

Exchange rates, correspondent bank charges, and hidden intermediary fees can make it difficult for individuals and businesses to predict the total cost of a payment, particularly for smaller transactions or high-frequency transfers.

For example, research done by the World Bank shows that the average cost of sending money to Sub-Saharan Africa reached 8.47% in Q3 2024.

This is the highest of any region globally. A $100 remittance might lose over $8 to fees before reaching the recipient. And smaller payments, which matter most to low-income families, often face even higher rates.

For businesses moving money at scale, these unpredictable costs can complicate cash-flow management, inflate operational overhead, and limit the viability of global expansion.

Despite advancements in domestic real-time payments, cross-border transfers still take days to settle.

Time-zone misalignment and weekend or holiday closures add further delays.

For businesses, these multi-day settlement cycles can limit liquidity, delay payouts, and increase operational uncertainty.

For individuals, slow remittances or salary payments can create real financial strain, which makes it harder to cover everyday expenses, support family, or pay time-sensitive bills.

One of the biggest pain points in cross-border payments is visibility. Senders often have no clear line of sight into where a payment is in the chain, which institutions are handling it, or how much will ultimately be deducted in fees and FX.

Because legacy systems pass messages asynchronously and often truncate essential fields, information degrades as the payment moves.

Even with initiatives like SWIFT GPI have improved tracking in some corridors, coverage is inconsistent.

When something goes wrong — a hold, a failed compliance check, a missing field — institutions often need to initiate manual investigations across multiple banks, which adds days to a process that’s already slow.

This lack of transparency has real commercial impact. Businesses can’t predict settlement timelines, finance teams struggle with reconciliation, and consumers lose trust in digital cross-border channels. Greater visibility is now an industry expectation, not a value-add.

Cross-border payments operate across a patchwork of networks, formats, and regulatory frameworks.

Each country and payment system has different data requirements and messaging structures, which forces banks to manually re-enter information at every step.

Legacy message type (MT) formats are especially limiting because they often strip out key remittance or compliance fields.

But there is some good news here. ISO 20022 promises richer data and better standardization, but adoption timelines vary widely across regions, so a solution isn’t around the corner.

Even when the data is formatted correctly, moving a payment from one rail to another is far from seamless.

Different networks, regulators, and technology stacks still struggle to «speak» to each other, which creates barriers that slow transactions down.

Fast-payment systems, card networks, ACH schemes, and digital wallets all use their own protocols, and most are not interoperable.

For example, a mobile wallet approved in Kenya might be blocked in Uganda. In some countries, users can receive crypto but can’t legally convert it into local currency.

As a result, connecting one system to another often requires bespoke integrations or a fallback to slower correspondent routes. This fragmentation drives cost, introduces operational risk, and makes true automation difficult.

Without shared technical and regulatory frameworks, cross-border payments cannot match the speed or predictability of domestic instant rails — which is exactly why interoperability is one of the G20’s top priorities.

Cross-border payments carry high regulatory risk, and each jurisdiction applies its own AML, KYC, CFT, sanctions, and tax requirements. A single transaction may be screened multiple times by different intermediaries.

Conflicting regulations add another layer of complexity. For example, strict data-protection rules in one country may restrict what information can be shared with an intermediary in another country that requires full transparency for AML screening. Institutions must navigate these contradictions carefully to avoid violations on either side.

The combination of these factors makes compliance one of the largest operational costs in cross-border payments. At scale, it becomes a major barrier to global expansion, particularly for fintechs and smaller institutions without large compliance teams.

Crypto infrastructure is rebuilding cross-border payments from the ground up. Instead of routing money through layers of correspondent banks, value now moves over always-on blockchain rails, using stablecoins (or other crypto assets in some corridors).

The result is faster settlement, lower costs, and much more control over where and when funds are available.

Here are four ways that shift is transforming how people and businesses move money across borders in practice.

On traditional rails, cross-border transfers can take 3–5 business days. When payments move over blockchain rails — typically using stablecoins like USDT or USDC — settlement drops to minutes because value moves directly between wallets on a shared ledger.

Research shows that stablecoin transaction volumes were around $9 trillion in 2025, and in many corridors total costs now fall below common in legacy systems.

The biggest leap forward is the maturation of on- and off-ramp infrastructure. Platforms like Mercuryo make it possible to fund payments from traditional accounts and settle them over crypto rails.

Users and businesses don’t need to manage keys or hold volatile assets; they pay in local fiat, the payment is routed over digital assets (most often stablecoins for price stability), and the recipient cashes out in their own currency.

Across regions with high inflation, capital controls, or weak banking access, stablecoins have become a lifeline.

In Venezuela, families increasingly rely on USDT for remittances because legacy routes are slow, expensive, and unpredictable.

With crypto wallets connected to payment providers, someone working abroad can send funds in seconds; the recipient can off-ramp into local currency without needing a bank account or submitting extensive paperwork.

Because these assets live on programmable infrastructure, businesses can automate settlement logic in ways legacy rails can’t support.

For instance, businesses can set up smart contracts that automatically release funds when goods are delivered, split a single payment between multiple partners, or log every transaction in a way that’s instantly auditable.

Instead of finance teams chasing paperwork and matching records by hand, much of the payout and reconciliation process can run in the background.

This means clearer visibility over cash flows, fewer surprises, and less time spent on manual admin.

The early perception that «crypto = risky» is fading as regulated infrastructure providers enter the stack.

Platforms like Mercuryo offer institutional-grade custody, Travel Rule support, AML/KYC monitoring, and traceability across blockchains.

That lets businesses tap into crypto rails without holding them on their own balance sheet, while still benefiting from instant settlement, lower fees, and a more resilient cross-border payments stack.

As cross border payments move onto faster, crypto-powered rails, compliance remains one of the biggest friction points.

In 2025, many payment providers are looking into the rise of AI agents in crypto and how they may reshape on-chain economies to automate tasks like ID checks and fraud detection.

These systems could help reduce manual workload and catch risks that might go unnoticed in traditional reviews.

On/off-ramp services benefit directly. Faster KYC processes and real-time screening make it easier to comply with local regulations without slowing users down.

For example, in India, banks and financial institutions are using AI-based video KYC to onboard new users in minutes, even in areas with limited access to physical infrastructure.

Paired with blockchain, which offers a clear, traceable record of each transaction, these technologies help reduce overhead and simplify compliance.

Real-world tokenized assets such as tokenized securities, commodities, or fiat-backed stablecoins can be seamlessly tracked and verified on-chain, which adds another layer of transparency and security.

The end result is that cross-border payments can be processed more quickly and with fewer delays, without sacrificing control, oversight, or regulatory compliance.

The next challenge is making sure those gains in speed and automation translate into real-world inclusion, not just better infrastructure for institutions.titutions.

If you want to explore this in more detail, read our guide on why 2025 is the year of RWAs tokenization.

Cross border payments are shifting toward a world where borders matter less and access matters more. Faster, more adaptable infrastructure means money can reach the people and businesses who need it, when they need it.

From families receiving remittances in minutes to small businesses paying global suppliers without cash-flow anxiety, modern payment rails are already creating real-world impact at scale. The challenge now is making those experiences the norm, not the exception.

Mercuryo helps bridge that gap. With compliant, secure on/off-ramp infrastructure and flexible APIs, fintechs, businesses, and developers can plug into crypto-powered rails without the complexity.

On the consumer side, individuals can also use Mercuryo to buy crypto directly with familiar payment methods that give them simple access to digital assets for saving, spending, or making cross-border transfers.

As cross border payments continue to evolve, Mercuryo does not just make payments faster. It also expands access, closes financial gaps and enables more people to participate fully in the global economy.