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International Payment Transfer

International Payment Transfer

The world has fast become a global hub– in the past few decades, more people have been moving between countries for study and work opportunities. The number of migrant workers has also increased, leading to a rise in goods and cross-border money movements.

As such, International payment transfers are an important aspect of economic globalization. International wire transfers can either be one-off transactions, for example, a person moving to a foreign country and sending money home, or regular transactions to make payments on a mortgage or other bank loan.

Many international wire transfers are carried out by large companies that need to send money from one country to another daily. In 2011, the volume of SWIFT payments in Europe exceeded 3 billion!

In addition, governments are also encouraging their citizens to open foreign bank accounts while monitoring any suspicious transactions. However, with the rise of electronic payment methods, it has become easier for criminals and tax evaders to transfer money across borders undetected. 

Making international payments is becoming more convenient as technology progresses, and the number of money transfers conducted by smartphones has also increased significantly in recent years.

Why Do Companies Need To Pay In Different Currencies?

In international trade exchanges, one party may have to pay in a currency different from their own in certain transactions.

For instance, suppose if a Mexican company (MEXICO) wants to buy paper and pencils from an American company (called the USA), it has to make sure that the total price of all the materials is paid in Mexican Pesos. On the other hand, even though the American company would like to receive payment for its products in United States Dollars (USD), it might not be able to do so as MEXICO might not want to take on any foreign currency risk. 

In this case, both companies would need to find another way to convert their respective currencies into a single unit of account: they might agree upon using the USD as an intermediary currency for this transaction.

Paper notes are usually not used; instead, non-bank financial institutions issue normal bank deposits (checking accounts) against which the seller can withdraw money from their bank account while the customer receives a receipt that will be redeemed by his/her own institution to obtain dollars.

Smaller amounts of USD bills are used directly and without any mediating mechanism, typically as pocket change.

How Does The International Payment Transfer Process Work?

The process of international payment transfer works through an online network that is made up of large banks, central banks, and smaller financial institutions. 

SWIFT (Society for Worldwide Interbank Financial Telecommunications) provides the infrastructure for these networks to communicate. When one bank wants to send money to another bank, they only need to establish a relationship with its SWIFT code. All financial institutions are then able to communicate with each other via the SWIFT system.

For everyday consumers, there are money transfer providers like Western Union or MoneyGram that already have relationships with most major banks worldwide and provide convenient ways of transferring money internationally at very low costs.

Several companies are offering non-traditional methods of sending international money transfers. One of them is TransferWise, which offers users a cheaper alternative method of international money transfer— an ‘Advanced Currency Trade’ step which they can do manually.

Advantages And Disadvantages of International Payment Transfer Services

There are a variety of payment transfer services available for international payments. Some advantages and disadvantages exist with each other.

For example, some cash transfer services require recipients to go to a local bank or cash office to receive the money, making it difficult for those who don’t have transportation access.

Credit transfers can fix this problem by allowing people to withdraw money from an ATM machine at a higher fee since they involve foreign exchange conversions and distribution fees. In addition, wire transfers often take longer than other methods because they must first clear through the banking systems before being distributed from a different country.

Another advantage is that credit transfers offer reliable tracking because transactions are recorded electronically. Moreover, many services offer 24-hour availability and the ability to transfer large amounts of money. Since incoming wire transfers are considered a cash advance or purchase by credit card companies, recipients may also be able to avoid paying interest on the transaction if they pay off their credit card balance within a certain amount of time.

Furthermore, cash transfers can require recipients to go through extra steps like dealing with banks and converting currencies to receive funds. But, there is no way for senders to track these transactions once they have left the country. Lastly, sending money this way often comes with high fees and exchange rate conversions without guaranteed rates.

Yet another advantage of cash transfers is that it is difficult for scammers or criminals to steal personal information as they would have to physically be at the transfer location.

However, while cash transfers are immediate, recipients may not receive the full value as fees can come out of their transaction without notice. 

It is easy for criminals to steal personal information if they are present during these types of transactions. 

Lastly, many countries charge a flat fee rather than percentage-based rates, making it more expensive in some scenarios.


When choosing a payment transfer service, it’s important to consider what needs you have from that service and how long you need that money before being used by your recipient or deposited into an account. Knowing the pros and cons of each will help you choose a service that best suits your needs while still ensuring a safe, cheap, and efficient way to transfer money internationally.

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