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Payments | Zoya Lieberman, CTP |
17 February 2023

Written by Zoya Lieberman, CTP, Mark Lulic, and Monica Velez

Historically, sending or receiving money internationally has been a complicated process—not to mention inefficient, costly, and time-consuming. Despite these challenges, the business and commercial use of cross-border payments has grown as economies have become more global.

As world economies have become intertwined, there has been a strong surge in cross-border transactions in all business segments, including business to business, business to consumer, and consumer to consumer. This trend naturally led to exponential organic growth in the payments space.

While not a new concept, cross-border payments are typically not a priority for the average business in North America. After all, US-based businesses rarely need to worry about currency exchange rates, as they generally conduct business in USD. Financial institutions in the region have also done a tremendous job creating attractive service bundles geared toward businesses of various sizes. So, there is little demand to go to another provider to send out an internal payment—even if that transaction can be done cheaper and faster.

The reality, however, is not that simple. The financial services space has been much more dynamic, and business practices in the US market are slowly starting to change. Energized by recent global events, the borderless economy and seamless international payments are here—and they are here to stay. In fact, the payments industry is anticipating a continued surge in growth in the cross-border space over the next decade.

Below, we’ll explore the current state of cross-border payments and the top considerations for companies entering the space.


To keep up with increased demand, financial institutions are evaluating new ways to make cross-border payments more efficient and seamless. The goal is to achieve the same speed and efficiency of more recent deployments of fast domestic payments, making cross-border payments feel more like a domestic or “borderless” payment.

Evaluating the possibility of borderless payments in this complex payment vertical is challenging, as there are many impacts to consider, including:

  • Effects on existing banking relationships
  • International laws related to payment settlement
  • Wholesale transaction settlement and rules
  • Different consumer privacy regulations
  • Compensations
  • Implications of global regulations such as Basel III

Additionally, the consumer payments space has been in the spotlight, while the wholesale payments space has lacked the resources and creative drive to match its consumer version. One could argue that security and efficiency are critical to any type of cross-border transaction, yet in the business universe, they are paramount, and losses related to fraudulent activity are significant.


While cross-border payments have become less expensive, more reliable, and more efficient, the most common challenges are due to outdated payment systems. These legacy systems have processing limitations, are costly to maintain and upgrade, and lack data visibility.

For example, in some cases, the data simply drops off when it crosses international banks, leading to a manual process deployment for funds recovery. Any reconciliation process can be time-consuming with limited integration. In a variety of cases, the intended recipient might not receive their funds, even days after the transaction has been executed.

For commercial receivables, this lack of data visibility can create even longer delays in posting payments, which has a direct impact on organizations’ DSO (days sales outstanding). At the same time, this can impair immediate cash flow, mid- to long-term liquidity, and cash forecasting processes.

Fortunately, there are new solutions, standards, and methodologies that financial institutions and their technology partners can deploy to address these operational deficiencies. To stay relevant in the modern cross-border space, organizations must consider not only the new industry trends but also new banking standards and the practical application of current and upcoming developments.

Here are three top considerations that financial services providers must consider when tackling the cross-border payments space:

1. Updating Operations to Support New Open Banking Standards

ISO 20022 is an open global standard for financial information. It provides consistent, rich, and structured data that can be used for every financial business transaction.

Some of the benefits of ISO 20022 for cross-border payments include:

  • Enriched data can be used to improve passing through required remittance data for international payments, with a direct positive impact on DSO
  • Common open protocol rails improve efficiency and interoperability between disparate payments systems and interfaces
  • Cost improvement when compared to traditional cross-border money movement options such as wire and ACH (Automated Clearing House)
  • Enhanced reconciliation, which leads to faster payments settlement and minimized information flow ambiguity when sending international payments

2. Open Banking Standards, Adoption Rates, and Implications for the US Payment Rails and Networks

Open banking is a trendy term and can mean a variety of things to each country. So, in addition to the financial institutions that are looking at open standards, the major international networks are also enhancing their platforms to support ISO 20022 for both domestic and cross-border payments. For example:

  • SWIFT is phasing in ISO 20022 for cross-border payments and cash reporting in 2023. This enhancement to SWIFT will give some financial institutions the means to support more data-enriched, faster payment transactions for cross-border payments.
  • TCH (The Clearing House) is piloting a solution with EBA Clearing and SWIFT to test cross-border payments utilizing ISO 20022 between 25 financial institutions in the United States and Europe. This pilot phase will lead to a commercial rollout sometime in 2023.


Solutions like FedNow should also be considered. Mid-size and smaller community financial services providers generally tend to be followers and may be less willing to give business to the clearing house, as it is perceived to be no different than any big bank. Hence, the thought is to engage in the “wait and see” strategy. In this case, that means waiting for FedNow to execute.

3. Enhanced Risk & Liquidity Management

As cross-border transactions continue to grow, so do the financial and fraud risks. Financial transactions’ origination, execution, settlement, and governance are even more complex in the international money movement space. Most players in this space are among the largest global financial institutions—companies that are too important to fail—and require the strictest risk mitigation policies.

Cross-border payments risk falls into the following categories:

  • Liquidity Risk – International banks are required to hold liquidity and collateral in different currencies across multiple countries and jurisdictions. If defaults occur with poor liquidity management with one of those parties, it will create shortages of cash and securities for those transactions.
  • Credit Risk – This occurs when financial institutions are unable to commit to settlement within a specific period despite agreeing to the initial payment request. This use case becomes even a higher risk when performing transactions internationally in countries that lack local government enforcement of the proper settlement of international transactions.
  • Transaction Time Risk – Settlement of funds may lack time-zone synchronization, leading to failure. This problem is exacerbated when countries are in different geographic regions with significant differences in time zones, driven by different banking operation hours. The delays lead to declines and manual intervention to resolve those issues.


Once you are familiar with the risks and standards of cross-border payments, it’s time to discuss the typical use cases.

Cross-border payment types that could benefit from a frictionless and faster payment experience include:

  • Wholesale (correspondent bank relationships) – Interbank settlements or the transfer of funds between the bank of the originator and the bank of the beneficiary in relation to a payment transaction.
  • Business to Business (B2B) – A way of doing commerce, specifically companies doing business with other companies across multiple countries. A typical business case that falls into this category includes buyer and supplier payments.
  • Business to Consumer (B2C) – Consists of selling retail products and services directly between a business and consumers or end-users of its products or services. Most companies that sell directly to consumers can be referred to as B2C companies.
  • Consumer to Business (C2B) – Consumers or end users make a product or service that an organization uses to complete a business process or gain competitive advantage. Examples of this are blog posts, videos, paid advertising, or podcasts.
  • Consumer to Consumer (C2C) – Customers can trade with each other, typically in an online environment like auctions and classified advertisements.


Conversations about global economies, borderless payments, seamless payments settlement, and data transparency are not new. So, the real question is, why would a financial services provider invest time and technology in improving the cross-border payment experience?

North American companies are not engaged and are very much set in their ways. Why, despite all the risks, investments, and competitors, would a bank or a fintech decide to not only enter the cross-border payments market but to become a leader? The answer is simple: Staying behind and focusing on the domestic space is like being a dinosaur in the modern world of payments.

If you are not thinking about your global payments strategy, the impact on your organization’s growth, liquidity management, risk mitigation, and ability to stay relevant, you could be limiting success. Similarly, if you can’t support your business and client base with a modern payments model, you may become another casualty of the new world of borderless transactions.

It’s important to note, however, that new technology in a vacuum will not address business strategy and ways of working challenges that now transcend a single jurisdiction or a country.

To find the right path forward, you’ll need to consider the following:

  • All relevant use cases
  • Product offerings
  • International payment rails and networks
  • Applicable risk and compliance policies
  • Prudent technology investments

This is a challenging—but not impossible—task, and the right mix of strategy and technology will lead to success.


Endava has helped financial institutions and tech partners build next-generation technologies to support complexities associated with modern payment methods for all business verticals, including cross-border payments.

To learn more about cross-border payments and our latest research in the payments space, download our Global Payments Report.

Zoya Lieberman, CTP


Zoya has 20+ years of experience in the business and commercial banking space. Zoya’s responsibilities are focused on strategic initiatives and knowledge deepening within payments ecosystems, treasury management, global trade, merchant services, credit & stored value cards, and commercial liquidity space. Zoya has deep subject matter expertise in both traditional and alternative banking solutions, including payables, receivable, digital banking, user experiences and competitive market intelligence. Zoya has dedicated her professional time to public speaking at industry events, forum & panel discussion moderating, and thought leadership.


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