What are cross border transactions?

Panna Kemenes

Cross border transactions involve the movement of funds between national borders. Specifically, when the merchant’s business is registered in one country, and the customer’s card was issued in another.

The 2022 Visa GME study shows that 87% of global merchant executives view cross-border sales as the biggest area for potential growth.¹

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📝 In this article:

What are cross border transactions?

A cross border transaction refers to when funds move between countries. It can be either individual consumers or businesses.

🔍 What is considered a cross border transaction?
If a customer that lives in Germany buys goods from an e-commerce store registered in Italy, it’s a cross border transaction. But if that customer was using a card issued in Italy, it would no longer be a cross border payment.

Cross border transactions don’t refer to the customer or merchant’s location, but where the business is registered and the card used to pay is issued.

Cross border payments can include a variety of payment methods, such as:

  • Bank transfers
  • Credit card payments
  • eWallets
  • Mobile payments

Types of cross border payments

There are wholesale cross border payments and retail cross-border payments. The former payments are usually between financial institutions whereas the latter payments take place between consumers and businesses.

The four main types of cross border payments are based on who is in the transaction:

  • B2B (Business to Business) - B2B is the most common payment type, and includes business-only transactions.

  • B2C (Business to Consumer) - B2C payments include interest payments and employee payroll.

  • C2B (Consumer to Business) - C2B payments include international eCommerce purchases.

  • C2C (Consumer to Consumer) - C2C is the least common payment type. It includes transactions on sites such as eBay where consumers buy from consumers.

🔍 Did you know?
In 2022, the value of these four types of cross border payments could grow to 155.9 trillion dollars.²

What is the problem with cross-border payments?

Cross-border payments can present several challenges in these four key areas:

  • Speed - Cross border payments go through several entities which slows down the process.
  • Cost - International payments often incur many fees.
  • Access - Few payment systems allow users to make cross border payments.
  • Visibility - Many cross border payments include hidden costs.

Why are cross border payments so expensive?

Cross border payments are expensive primarily because of how many entities they must pass through. Intermediary banks are common for these types of payments, and they often pass a charge onto the end user.

There are other fees along the way too, such as credit card fees, cross border fees, and payment processor fees.

Fees will vary according to the payment method you use, your payment service provider, and other factors.

🔍 Read more about cross border fees

Wise Business - here to make cross border transactions stress-free

With Wise Business, you can use local account details to pay and get paid like a local. You don’t have to worry about expensive cross border and currency conversion fees.

You could save on average nearly 19x when you make a business payment with Wise compared to PayPal.

The true cost of sending USD to GBP

Once you receive the payment, you can also exchange between currencies at the real mid-market rate - all within one account.

When you pay with Wise, your recipients get paid in their home currency — so pay no recipient fees. They also don’t need a Wise account to get paid.


  1. Cross-border Payments Outlook 2022: Trends, Challenges, and Opportunities
  2. Cross-border payments by type 2022 | Statista

All sources checked September 8, 2022.

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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