How Do Cross Border Payments Work In The Ecommerce Business?

The e-commerce world of today has a worldwide presence. Payments, remittances, and purchases all frequently necessitate the exchanging of money across borders. Cross-border payments are classified as funds paid to or received from different countries, where the merchant’s location differs from the country where the customer’s card was given. In 2022, global cross-border payment flows are expected to reach US$156 trillion. A flood of new players promising to solve long-standing pain points is shaking up this trillion-dollar cross-border payments market.

How do cross-border payments work?

Currency transactions between individuals or companies in different countries are known as cross-border transfers. To facilitate the payment, the money sender will usually choose a front-end provider, such as a bank or a money transfer operator. The payment is then sent to the recipient using the medium specified by the sender.

Payment processing involves the same seven steps whether the transaction is domestic or international. However, there are several additional considerations regarding cross-border payments.

1.The customer purchase

To ensure the success of cross-border eCommerce, this step requires additional attention referred to as a “localized” checkout experience. The checkout page should always be displayed in the shopper’s native language. This not only makes the user feel more at ease when browsing the website, but it also feels more like a local retail experience, increasing the likelihood that they will go ahead with the process.

2.Routing and processing

To conduct cross-border eCommerce transactions more effectively, a payment solutions provider should work in collaboration with a large number of acquiring banks worldwide.

A one-bank partnership sets the stage for global payments to fail. If the purchasing bank is in the United States and the shopper’s bank is in another country, the transaction is far more likely to be flagged as fraudulent.


When transfers are routed to the banks most likely to accept them—banks that are a good match geographically and that match the currency and card type of the transaction—the approval phase runs more smoothly.

4.Shopper results and confirmation

When the issuing bank makes a decision, it notifies the authorizing bank, which then notifies the customer through the checkout page as well as the business. 

5.Order fulfillment

This is the entire process behind getting an order delivered to a customer after they order it online. 

6.Settlement and payout

Conversion fees (also known as FX fees) are usually charged to merchants who wish to receive payments in their local currency. Some providers, on the other hand, deliver like-for-like payout options, which means they will deposit funds into the merchant account in the same currency as the original transaction.


For businesses that receive funds in several currencies, reconciliation may be particularly difficult. To save time and ensure accuracy, it is advantageous if your payment processor sends easy-to-read processing statements that clearly summarize the transaction activity associated with each form of disbursement.

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