Disclaimer
Understanding international payment methods is vital for any business looking to thrive in the global marketplace.
Navigating cross-border transactions can seem daunting, but the opportunities for growth and expansion are immense. It unlocks access to new customer bases and enables international selling.
Learn more about how to overcome the challenges of global expansion and improve sales with a global payments solution that can help streamline the payment process.
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International payments are any transactions that cross country borders, subjecting them to currency exchanges and different regulations based on where users send and receive funds. These payments are common, as online marketplaces have made global trade easy for small businesses.
Some of the common international payment types include wire and international Automated Clearing House (ACH) transfers. With global and online payment solutions, there are many ways to participate in borderless commerce.
With international payments, funds transfer between two or more countries. Domestic payments just occur within one country.
There are some key differences to know for global expansion, which can help businesses with international payments:
Currency exchange
Regulatory issues
Transaction speed
Fees
Third-party involvement
Businesses can use international payments for any activities that occur across borders, including:
Alternative payment methods may be becoming more popular as customers seek convenient and efficient ways to pay both online and in person. In fact, alternative payment methods are expected to grow faster than credit and debit card payments between 2022 and 2027.1
Here are the most common types.
Online payment service providers facilitate transactions between buyers and sellers. They often offer features like multi-currency support, fraud protection, and simplified checkout processes. These platforms can streamline international payments, making them fast and accessible.
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Wire transfers involve electronically transferring funds directly from one bank account to another. Due to their security and reliability, businesses often use them for large international transactions. However, they can typically be slower and more expensive than other methods.
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Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a network that enables financial institutions to send and receive information about financial transactions securely. SWIFT isn't a type of payment, but a network institutions use to send payments. International wire transfers commonly use SWIFT to facilitate communication between banks globally.
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International checks are paper checks drawn on a foreign bank. While it may be less common today, many businesses use checks for certain transactions. However, they can be slow to process and subject to various fees and delays.
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International Automated Clearing House (ACH) allows electronic transfers between bank accounts in different countries. Domestic ACH transfers use the ACH network, while international ACH payments use another region's version of the ACH network, such as Single Euro Payments Area (SEPA) for European transfers. It's often a cost-effective option for recurring payments or smaller transactions.
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Foreign exchange (forex) brokers are firms or individuals that act as intermediaries between buyers and sellers of foreign currencies. They specialize in currency exchange and can facilitate international payments by converting funds into the desired currency. They may offer competitive exchange rates and additional services like hedging.
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International money orders are prepaid certificates that payers can send internationally and the recipient can cash in their local currency. They provide a secure and traceable way to send funds.
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Debit or credit cards are widely accepted for international payments, especially online. They typically offer convenience and purchase protection but may involve foreign transaction fees and currency conversion costs.
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Cross-border payments are on the rise as more consumers shop from international merchants. Looking ahead, they could account for one-third of all e-commerce spend by 2028.2
Before setting up shop around the world, it’s important for businesses to be aware of certain challenges when expanding globally and to develop a solid cross-border strategy.
The global payment landscape can be increasingly complex because countries operate under their own unique regulations. As a result, businesses may face regulatory issues as they begin to expand and accept foreign currencies.
EU merchants, for example, take guidance from the Payment Services Directive 2 (PSD2)3, while retailers in China are beholden to the Payment and Settlement Systems Act.
Businesses can incur costs for processing global payments, especially if customers pay with credit or debit cards. For example, banks may charge international transaction fees, and merchants may also have to pay cross-border fees when they convert currencies from international shoppers.
Businesses looking to expand globally may not have access to the local payment methods shoppers use to make quick and convenient transactions in their home country.
For example, customers in other parts of the world may rely on specific localized payment methods to make instant payments from mobile devices. If growing businesses can’t offer these local payment methods, they may risk frustrating customers at checkout and losing revenue.
Expanding globally opens the door to a much larger customer base, but it also means navigating the complexities of international payments. Here are some key steps to consider when setting up businesses to receive payments from customers worldwide:
PayPal supports a global network of 400+ million users across over 200 markets. Through PayPal’s scalable platform, large enterprises can easily accept and make payments, streamline solutions, and accelerate international growth.
PayPal offers a range of global and local payment methods, including card payments, Venmo, digital wallets, bank transfers, and buy now, pay later offers. That means businesses can reach shoppers across the globe with their preferred payment options, and it may help to increase checkout conversions and improve customer experiences.
Expanding into international markets can help businesses increase sales and fuel exponential growth. However, businesses often face obstacles like complex regulations, transaction fees, and varying user experiences.
To navigate these challenges, merchants need the right global payment solution. PayPal Open offers a key advantage — For enterprises based in the U.S., card processing authorization rates for cross-border transactions through PayPal Checkout are up to 7% higher than the market average.4
Explore how PayPal can power your global expansion with international payment acceptance today.
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