What are cross-border payments?

With economic integration, cross-border payments are expanding quickly in both the financial and trade sectors. Additionally, as a result of economic globalization, many people are looking for simpler ways to transfer money between continents and countries.

An estimated 1.7 billion people are active on e-commerce platforms, with over 3 billion people utilizing the Internet every day. Hence the constant requirement for international trade.

Cross-border payments are, however, fraught with difficulties, including high costs, sluggish transactions, and a lack of transparency on the part of the major participants, to name a few.

This post will cover everything you need to know about cross-border payments, as well as how to use Transfy to overcome their difficulties.

Transfy is a pan-African fintech platform that offers an alternate mode of payment for international transfers and money transfers. On the Transfy Platform, it's simple to send, receive, and make cross-border payments to people and businesses in Africa and elsewhere.


So, what's cross-border payment all about?

Cross-border payments, also referred to as international payments, are exchanges made by people, companies, or institutions between nations. Several techniques, including bank draughts, electronic bill payments, and money transfers, can be used to accomplish this.

It's also important to keep in mind that cross-border payments can occasionally be expensive and include a number of middlemen in the payment chain, including banks, providers of currency rates, and payment processors.

Therefore, it's crucial that you pick a cross-border payments platform that is trusted all over the world.


How Do Cross-Border Payments Work?

When you make a cross-border payment, you're essentially requesting that your bank send money to a foreign bank on your behalf. This process involves the following three steps:

  • Pre-funding
  • Clearing
  • Settlement


The sender (a business or person) opens and funds their local bank account during the pre-funding phase.

The money is then sent through a clearing bank (also known as a correspondent bank) in the nation where the beneficiary is based during the clearing phase.

The receiving bank finally credits the recipient's account with the funds as part of the settlement.

Similar to this, depending on the amount of money being sent and the banks involved, a cross-border payment may include one or more banks for each step of this process.


Four Major Components of a Cross-Border Payment

Currency: The form of payment a buyer prefers to use, such as US dollars, Nigerian naira, euros, etc.

Exchange rate: The price a bank charges for translating one currency into another during a transaction involving foreign exchange.

Payment method: Credit cards and wire transfers are the two most popular payment methods, however, for international transactions, direct debit and the Automated Clearing House (ACH) also have a significant impact.

Information about the person, business, or organization to whom the funds are being sent.


Related Blog Posts:- 

What You Need To Know Before Choosing A Money Transfer Company

How to Cut Costs on International Money Transfers?



Transfer money through a secure and trusted system within Africa. Send Money In Minutes. 24/7 hour of service available. Online Money Transfer Africa. Transfy is a Fintech startup on a mission to connect individuals and businesses across Africa financially. This is by building a financial infrastructure which enables them to seamlessly and securely send money within Africa and out of Africa at rates that are highly competitive.

Comments

Post a Comment

Popular posts from this blog

How Transfy Can Help You Grow Your Business

Running a business is anything but an easy task, especially when you're a one-man team. You have to wear so many coats, trying to handle all aspects of your business simultaneously. From marketing to sales, down to accounting, and lots more. Imagine having to rush to the bank each time you need a supply from your partners. Or deal with delayed transactions and excessive charges while paying partners across the border. What about missing out on a sales opportunity because an international customer couldn’t pay in your local currency? These are one of the many problems Transfy solves for businesses. you Aside from making cross-border payments seamless and cost-effective, Transfy offers innovative enterprise solutions to help your business grow with easy payments. This post will outline 5 ways Transfy can help your business grow. Keep reading to learn more. But first, let's talk about Transfy's business solution. What Is Transfy? Transfy is a revolutionary payment solution th
Read more

5 Tips To Combat Inflation And Safeguard Your Financial Future

  Meanwhile, the percentage of the inflation rate in each country differs. For example, the  current inflation rate   in Nigeria is 20.77%, compared to South Africa, whose current inflation rate is 7.5%.    For a very long time, countries worldwide have struggled with inflation. And this trend doesn't appear to be changing anytime soon. It seems more likely that things will become worse before they get better.   But how does inflation affect you personally, especially when the rate keeps increasing over time?    You see, when the cost of everyday goods like food, gas, housing, and other necessities rises quickly, it can or will have a major effect on your ability to provide for yourself and your family and save for the future.   In this article, I will give you 5 powerful tips to combat inflation and safeguard your financial future. But first, it is important you understand the basics of inflation and its possible causes. This will guide you in your fight against this trending and
Read more

What are Virtual Cards?

  Virtual cards are a relatively new addition to payments, and they're quickly gaining all the popularity and acceptance they deserve. From the convenience they provide to the   safety and security of your funds   and card details. Virtual cards are the new future of payments, and we just can’t get over it. This article explores all you need to know about virtual cards, how they work, their features and benefits, and why you should feel left out. So, let’s dive in.    What is a Virtual Card, And How Does It Work? A virtual card is a  digital  version of the traditional plastic credit or debit card. It works by creating a unique 16-digit account number for each transaction stored electronically, with an expiration date and security code. They can be used only once or for a limited time, and they mask the actual card numbers to provide extra security.     Purchases made using virtual cards are processed like any other credit card transaction, but there's no physical card to swipe
Read more