International business has grown rapidly, but the systems used to move money across borders have struggled to keep pace. The global cross-border payments market was valued at about $195 trillion in 2024 and is expected to reach $320 trillion by 2032. Yet, this growth is constrained by several challenges, including high foreign exchange markups, inadequate trust systems, and slow transaction speeds. This article explores these challenges and outlines best practices for reducing their impact.
What cross-border payments really cost
Cross-border payments can cost between 3% and 7% of the total amount sent once all fees are included. These expenses may include transfer fees, currency conversion markups, and charges from intermediary banks.
Currency conversion markups are also among the largest hidden expenses in international payments. For instance, a 2% markup on a $100,000 transaction would mean losing $2,000 to conversion costs alone.
In addition, there are reports that unnecessary fees and delays cost the global payment system around $120 billion every year. This illustrates how sending money internationally can be far more expensive than expected, especially when hidden fees and inefficient processes are involved.
The five biggest challenges
Let's take a look at the five biggest challenges we've identified.
- Foreign exchange markups and hidden fees: Banks often add extra hidden charges through exchange rate and transaction fees. This makes it difficult for businesses to know the true cost of a payment before sending it.
- Different payment methods: There are several ways to make international payments, such as ACH, SEPA, RTGS, wire transfers, and crypto. However, choosing the right option can be difficult due to differences in protocols, costs, speeds, and currencies; each option also has its own advantages and disadvantages.
- Lack of visibility: Another challenge is limited visibility into where money is after it has been sent, which often causes issues between business partners. For instance, a payment can remain within the international banking system for days, and there may be no reliable way to track its progress in real time.
- Regulatory and fraud risks: There are different rules for businesses that handle cross-border payments. These include KYC, AML, and OECD Common Reporting Standard obligations. However, the growing level of payment fraud makes these transactions even more challenging.
- Slow settlement: International payments take a few business days to be fully completed. This can create cash-flow and operational challenges for businesses, especially when they need the money for their services or to manage their cash flow quickly.
Matching the method to the payment
Not every cross-border payment works the same way. While around 90% of cross-border payments can reach the beneficiary bank within an hour, the final delivery time, cost, and risk can vary depending on the payment corridor and local processing requirements.
| Method | Speed | Best For | Cost level | FX Markup / Variable Costs |
|---|---|---|---|---|
| SWIFT wire | 1-5 business days | Large B2B, trade settlement | Highest | 1.5% – 4.0% |
| International ACH | 2-5 business days | Recurring payroll, vendors | Low | 1.0% – 3.0% |
| Digital wallets | Minutes to hours | E-commerce, contractors | Low-moderate | 1.2% – 4.0% |
| Blockchain / stablecoin | Minutes, 24/7 | Specific corridors, creators | Low | 0.5% – 1.5% (On/Off Ramp) |
FX markup ranges above are drawn from Sphere's breakdown of international wire costs (SWIFT), Slash's guide to stablecoin and cross-border fees (ACH and stablecoin), and Dodo Payments' breakdown of Payoneer's fees (digital wallets).
Best practices for reducing cost and risk
Businesses can take several practical steps to reduce costs and risk associated with cross-border payments.
Choose the right payment method: Not every payment needs to be made via wire transfer. If a transfer is not urgent, using a cheaper option can help businesses avoid unnecessary fees.
Manage currency risk: Exchange rates fluctuate, so businesses need to be careful about when and how they convert their money. Keeping money in different currencies can help reduce losses when currencies are converted.
Combine payments: Instead of sending small payments separately, businesses can bundle them to reduce transaction fees. FX costs are often lower as the transfer amount increases. Look for transparent pricing: Businesses should understand exactly what a payment provider charges. This helps businesses plan their expenses better than a method that hides an extra margin in the exchange rate.
Choose based on the payment corridor: Local market conditions can influence which payment provider is the best fit. Merchants should therefore carefully evaluate their payment options when they are considering a new gateway.
How Talentir removes the friction
The challenges businesses face when paying a large number of people across multiple countries, rather than just a few suppliers, are significant. This is where Talentir can help. As a merchant of record for payouts, it allows businesses to pay creators, sellers, and freelancers in more than 180 countries within seconds, instead of waiting days.
Talentir also takes on much of the tax and compliance burden reducing the operational burden on businesses. For companies whose growth depends on paying people across multiple countries, this can significantly reduce operational complexity. As Talentir puts it: "All you need is email and a payout amount. You click approve and we take care of the rest. The invoice is generated automatically, and the payee chooses their preferred payment method and currency at no extra cost to you."
In addition, Talentir's infrastructure is designed to simplify the entire process. Payments don't need to be held until monthly batch runs, and stablecoin payment options can also reduce some of the foreign-exchange friction that comes with cross-border payments.
In conclusion, the core problems, lack of transparency, high costs, and delays, remain regardless of which direction money is moving. Businesses that treat payment infrastructure as a strategic priority can overcome these challenges rather than relying on inefficient default systems.
