Guide on international payment processing

International trade is a cornerstone of our economy. In 2025, Australian businesses collectively sold $665 billion worth of goods and services to overseas customers.¹

Whether you’re a mining magnet or an e-commerce entrepreneur, effective international payment processing is fundamental to success. In today’s post, we’re covering everything you need to know about collecting offshore payments, from definitions to processes, networks, best practices, and fees.

With the right international payment procedures in place, you can streamline billing and slash cross-currency transaction costs.

What is international payment processing?

International payment processing is a catch-all term for cross-currency transactions of all forms. The term spans multiple payment types, including SWIFT transfers, card payments, payment gateways, digital wallets, and money transfer services.

Australian businesses process incoming and outgoing international payments for various purposes, including procurement, sales, trade, payroll, and remittances.

International payment processing services are inherently more complex and costly than domestic ones. Multiple parties may be required, with funds being routed through various financial networks and intermediaries, many of whom charge fees. Currency conversion and compliance obligations add to transaction costs, further increasing fees and processing times.

What’s the difference between international and domestic payment processing?

A domestic payment is when the account holder of an Australian-based financial institution pays another Australian account in AUD. It doesn’t matter if one or both account holders are overseas at the time. Domestic transaction fees tend to be low, or even free, and payments settle quickly as compliance is simpler and fewer intermediaries are involved.

International payment processing is required when the financial institution of the payer or seller is based overseas, and at least one party uses a foreign currency other than AUD. Higher transaction fees and currency conversion charges may apply, and settlements can take longer due to routing and compliance complexities.

How can Australian businesses process international payments efficiently?

When receiving international payments, businesses use a payment network, also known as a payment rail.

The payment rail is the infrastructure that processes transactions, securely moving money between payer and payee. Think of it like a railway line for money. Payment providers, such as payment processors (Stripe, Square), money transfer services (Wise), and digital wallets (PayPal), are like the locomotives moving the funds.

International payment processing steps

Each payment rail follows different routes. Some send funds between multiple intermediaries, taking a scenic route that may end up more costly. Others handle currency conversions in-house, or don’t actually send trains across borders at all.

Generally, however, the international payment process looks something like the following:

1. Initiation and Authorisation: The payer’s bank receives the transaction request. The payment rail confirms sufficient funds and performs compliance and security checks before authorising the transaction.

2. Currency Conversion: The payment is converted to a foreign currency using an exchange rate set by the payment rail, which typically includes a 2-5% margin over the mid-market rate.

3. Clearing: Funds are frozen during the clearing phase, when the payment is validated and reconciled, and the payment rail calculates fees to prepare for settlement. Intermediary banks assist when there is no direct sender-receiver relationship.

4. Settlement: The rail network sends the funds through the relevant network towards the recipient’s account. After approving the settled funds, the receiving bank credits the money into the recipient’s account.

Parties involved in international marketplace payment processing

Numerous parties can play a role in processing international payments, depending on your chosen method. Here’s a quick glossary of the key players.

• Payer: The person or business making the payment

• Payee (beneficiary): The person or business receiving the payment

• Issuing bank: The financial institution holding the account of the payer (verifies sufficient funds and authorises the initial transaction)

• Acquiring bank: The financial institution holding the account of the payee (receives funds on behalf of the payee)

• Intermediary (correspondent) bank: Third-party bank acting as a go-between when the issuing and acquiring banks don’t have a direct relationship.

• Payment rails: Payment infrastructure networks, such as card schemes or the SWIFT bank transfer system

• Payment Service Providers (PSPs): Third-party companies helping businesses accept international payments (payment processors, money transfer services, digital wallets, etc.).

International payment rails for Australian businesses

The ideal payment rail can vary by payment type. For example, an Aussie business might find it advantageous to bill customers via a money transfer service and pay suppliers by credit card.

When selecting a payment rail, businesses should consider fees, settlement timeframes, security, compliance, and convenience for both the payer and payee.

Card schemes

Debit and credit cards from global card schemes – Visa, Mastercard, American Express, Diners Club – are among the most popular cross-currency payment options worldwide, largely thanks to their convenience and widespread availability.

Some companies prefer paying with business cards for the perks, which range from everyday rewards to frequent flyer points and low interest rates for managing cash flow.

Card schemes communicate between the relevant accounts, handling the bulk of the work involved with authorisations, clearances, and settlements. Funds are debited from the payer’s account instantly, but may take 1 to 3 business days to reach the merchant account.

Although convenient, accepting international card payments can be expensive, especially for high-volume purchases.

SWIFT bank transfers

Australian banks use the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system for international transfers. This global relay system uses a secure messaging service to inform banks on how to perform each step of the transaction process, from authorisation to currency conversion, clearance, and settlement³.

Aussie banks use a SWIFT code, also known as a BIC to identify and authenticate accounts. Once funds leave Australia, they are routed through domestic payment rails, such as the Automated Clearing House (ACH) in the USA⁴ or the Single Euro Payments Area (SEPA) in Europe⁵.

International bank transfers take between 1 and 5 business days to settle. Fees can be high, as the issuing bank, acquiring bank, and intermediary bank may take a cut, in addition to a FOREX margin.

Digital Wallets

Mobile operating system wallets, such as Apple Wallet⁶, Google Wallet⁷, and Samsung Wallet⁸, serve as secure digital containers for storing and sharing card details.

Businesses can integrate mobile wallets into their payment gateways to accept international payments. Fees and processing times are often similar or identical to standard card payments,

Online e-wallets, such as PayPal, work a little differently. This app-based e-wallet securely stores banking information, allowing customers to pay online without disclosing any card details⁹. Fees are comparatively high². However, many customers like PayPal for its brand recognition and buyer protection.

Money Transfer Services

Money transfer services like Wise don’t actually move funds across borders. Instead, they use a ‘local-in, local-out’ system, receiving AUD into an Australian account and paying in foreign currency from a local account in the relevant foreign country¹⁰.

This approach allows a money transfer service to offer instant or near-instant transfers and significantly lower international transfer fees. Importantly, businesses send funds at the mid-market exchange rate, potentially saving an extra 2-5% on every transfer. To execute this approach, the money transfer service needs to hold accounts with large sums of liquid cash in various markets worldwide.

Costs and fees with international payment processing

The fees involved with processing international payments vary considerably depending on the payment rail or type.

Best practices for optimising international payment processing

Businesses that frequently deal with offshore customers can incorporate international payment best practices to boost sales, streamline processes, and reduce fees.

• Multi-currency flexibilitys: Holding balances in multiple key trading currencies helps businesses move money across between those currencies with ease. This gives flexibility to pay suppliers and receive payments from clients in their local currency without losing much on cross-border fees.
• Localised acquiring: Opening an account in the currency of your biggest market and accepting domestic payments can drastically reduce transaction fees.
• Familiar payment methods: Customers prefer using well-established payment methods in their region, such as SEPA in Europe or AliPay in China.
• Compliance: Adhere to requirements such as AML (Anti-Money Laundering) screening and Payment Card Industry Data Security Standard (PCI DSS)¹¹ for card schemes.
• Smart Payment Routing: Look for a payment gateway that uses smart routing to direct transactions through acquiring banks with the lowest fees.

Wise Business: Receive business payments like a local

Expanding a business globally opens up exciting opportunities, but also new challenges like receiving payments across borders. Hidden foreign transaction fees and hefty currency conversions involved with international payments can eat into your profits and time.

Wise Business serves as a cost-effective solution where you can receive money from around the world at the speed and price of local payments.

Transform the way you receive payments with Wise Business:

• One-time fee of 65 AUD for local account details in 8+ currencies, including AUD, NZD, USD, and more—no recurring fees
• One account to hold, send, and convert money with no hidden fees or exchange rate markups
• Create and send professional invoices directly to your customers through Wise Business
• Create payment links to request money in specific currencies
• Seamlessly receive payments from customers, online sales, or PSPs like Stripe and Amazon.
• Wise is safe and secure - Trusted by 13 million people and counting

Sign up for the Wise Business account! 🚀

This general advice does not take into account your objectives, financial circumstances or needs and you should consider if it is appropriate for you.

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FAQS

1. How long does international payment processing typically take?
International payments typically take 1-5 days to process. However, some money transfer services can offer instant or near-instant international transfers using the ‘local-in, local-out’ method.

2. What is the mid-market exchange rate, and why does it matter?
Mid-market refers to the midpoint between the buying and selling prices of two currencies. Therefore, the mid-market exchange rate is the ‘real’ value of a currency, without any markups or margins.

3. How can businesses avoid hidden intermediary bank fees when paying international suppliers?
Businesses can avoid hidden intermediary bank fees by using a money transfer service like Wise instead of a traditional bank transfer.

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Sources

1. ABS: International trade supplementary information
2. PayPal: PayPal Merchant fees
3. Swift: About Page
4. Bureau of the Fiscal Service: Automated Clearing House
5. European Central Bank: Single Euro Payments Area (SEPA)
6. Apple: Apple Wallet
7. Google Wallet: Help Page
8. Samsung: Samsung Wallet
9. PayPal: Is PayPal Safe?
10. Wise: About Wise
11. PCI Security Standards Council: PCI Security Standards Overview