The cross-border payment industry is arguably one of the most important components of the global economy. It facilitates the movement of funds across international borders, enabling the exchange of goods and services, supporting international trade, and fostering global economic integration. Imagine a scenario where all cross-border payment systems were shut down for a month – the impact on the global economy would be catastrophic, halting trade, disrupting businesses, and affecting millions of lives. In this article, we will explore the cross-border payments industry, examining how it is set up and identifying the key players involved in ensuring the smooth flow of funds across the globe.
Making International Payments?
Get competitive exchange rates, no payment fees, and most of our SWIFT GPI payments arrive within an hour.
The Remitter
The first component of the cross-border payments industry is, of course, the remitter—the actual person or business that initiates the transfer of funds. Much like in any business transaction where there must be a willing buyer and a willing seller, the same principle applies to international payments: there must be someone who wants to initiate a payment and someone who wants to receive it. The remitter approaches a financial institution or a payment service provider to transfer funds internationally. The motivations for such transfers include personal remittances, business transactions, investment transfers, and more.
Payment Service Providers (PSPs)
Payment Service Providers (PSPs) are entities that offer various financial services to facilitate payments. Some PSPs specialise in moving money for cash collection, like Western Union, while others specialise in transferring funds from one bank account to another without involving physical cash. The different types of PSPs play important roles depending on the services a remitter or receiver requires.
Key types of PSPs include:
- Banks: Traditional banks are among the most prominent players in cross-border payments. They have the largest market share and offer a range of services, including wire transfers, international cheques, and electronic funds transfers.
- Money Transfer Operators (MTOs): Companies like Western Union and MoneyGram specialise in remittances that focus on physical cash collection, providing a network that enables quick and reliable money transfers to even the most remote locations.
- Fintech Companies: Innovative fintech companies like Rutland FX and CurrencyCloud focus on bank-to-bank international payments, offering digital platforms with lower fees and faster transaction times compared to traditional banks.
Clearing and Settlement Systems
Still not sure?
If you are still unsure or have any further questions, please call us on 0203 026 0112 or request a callback to discuss your requirements.