An Introductory Guide to Cross-Border Payouts
Global payouts are essential for businesses operating in international markets. To manage these payments effectively, businesses need reliable methods for both receiving and sending money worldwide.
Modern payment solutions must support a variety of payout options, including banks, cards, and mobile wallets. However, each method comes with varying processing costs, settlement times, and fees, making it challenging for businesses using multiple payment channels.
That’s where cross-border payment platforms like Thunes come in. We offer comprehensive solutions that enable businesses to send payments across 130+ countries and 80+ currencies to over 4 billion bank accounts, 3 billion mobile wallets, and 15 billion cards through a single API.
This article explores how cross-border payouts work, the benefits of these payment railways, the challenges involved and critical cases.
Table of Contents
What are cross-border payouts?
In the simplest sense, cross-border payouts are part of cross-border payments. They are transactions where a company, business or organisation sends money to a recipient in another country.
These transactions typically involve making payments in different currencies to merchants, freelancers, or other businesses who are located in different countries.
The method of payment can vary – payouts can be made directly to a credit card, a bank account, or even a digital wallet – dictated by the recipient’s needs and preferences.
Cross-Border Payment vs. Payout: Key Differences
While they might seem identical, there is a difference between cross-border payments and cross-border payouts.
A cross-border payment involves two parties in two different countries engaging in a transaction. For example, a buyer in the UK sends money to a seller in Europe to complete the exchange of goods or services.
A cross-border payout refers to payments made by a business to a party in another country. These transactions typically involve sending money to a company, subcontractor, freelancer, or merchant, usually as compensation for services provided or to fulfill financial obligations.
Popular Cross-Border Payout Methods
Cross-border payouts can be sent to various payment options. Here is a more detailed overview of the most popular cross-border payment options:
- Payouts to Credit and Debit Cards: Businesses can make cross-border and domestic payments using credit and debit cards. This is the most familiar method of payment and offers currency conversion capabilities. Thunes enables payouts to 15B+ cards including the major networks Mastercard, Visa and Union pay.
- Pay to Banks: The most traditional way to make international payments in different countries is to use bank transfers between two bank accounts. They boast high-level security, making them ideal for large payments. Thunes provides rapid pay-to-bank transactions, offering access to over 4 million bank accounts.
- Pay to Wallets: Transactions initiated by mobile wallets, including Apple Pay, Google Pay, Gcash and Mpesa are an alternative payment method that offers customers accessibility and convenience. At Thunes, we enable instant mobile wallet transactions between over 120+ mobile wallets. There are also digital payment platforms, such as AliPay and PayPal, that offer e-wallets.
Who are the parties involved in cross-border payouts?
In addition to the payment options, multiple parties, including payers, recipients, banks and payment service providers, are involved in making cross-border payouts work.
- Payers: Businesses that send cross-border payouts
- Recipients: Companies, merchants and individuals that receive cross-border payments
- Banks and Financial Institutions: These entities facilitate cross-border payment methods, handle currency conversion and ensure payments adhere to regulatory frameworks
- Payment Service Providers: These include payment networks like Thunes that offer efficient cross-border payments. We allow businesses and customers to access an extensive network of cross-border payment services that are immediate, transparent and cost-effective, delivering an efficient payout experience.
Key Benefits of Using a Payment Network
Using a payment network like Thunes – which was created to improve cross-border payments – comes with many benefits. These include;
- Reduced cost of sending and receiving funds
- Improved speed and efficiency of payouts
- Increased visibility of the payment process
- Expanded global reach and market accessibility
Cost savings
Most payment systems – debit and credit card payments and wire transfers – charge high currency conversion fees and transaction fees when making cross-border payments. Multiple parties are often involved in the process, which adds layers of complexity and, therefore, costs (like bank fees) to each payout.
A payments platform like Thunes removes intermediaries and hidden fees. We offer full visibility on transaction prices, currency conversions and FX fees for payouts so businesses can easily understand the amount they will pay in the designated local currency.
By reducing transfer fees and leveraging favourable exchange rates, businesses can make significant cost savings on every transaction. It also enables businesses to build trust with recipients, reduce costly errors and prevent payment disputes.
Speed and efficiency
When paying to a bank account or credit/debit card in another country, it can take up to five days to process and settle. This lack of efficiency can disrupt trade, disrupt cash flow and lead to payment disputes.
Settlement time is almost instant with a payment network like Thunes. By eliminating third-party intermediaries and processing platforms, Thunes streamlines the process.
Our real-time payment processing technology minimises the manual involvement required and reduces the layers of complexity involved in each transaction, regardless of their size or complexity.
Increased payment visibility
Thunes provides real-time reporting, including instant payment confirmation and transaction information. This means the payment process is transparent for the business and the recipient—all parties know where the money is and when it’s arrived.
Moreover, if a transaction goes wrong, Thunes offers insight into what went wrong, making it easier for its businesses to communicate reasons why the payment failed and offer remedial action.
Expanded global reach
Using a platform that enables instant cross-border payouts allows businesses to participate in international trade and access markets, contractors and services in different countries.
Organisations can develop cross-country partnerships with suppliers, vendors, and manufacturers. This advantage allows them to access goods and services that are unavailable otherwise or provide more value.
With a simple connection to Thunes’ APIs, a business can send payouts to every corner of the world. Our network encompasses 130+ payout countries, 550+ payment methods and 85 currencies and offers access to the fastest-growing markets across the world – from Andorra, Argentina and Brazil to Kenya, Pakistan, the Philippines, Vietnam, and Zimbabwe.
Challenges in cross-border payouts
While cross-border transactions have been revolutionary for the payments industry, they do come with challenges.
Cross-border payments are not standardised between countries and, as a result, come with regulatory hurdles. A business must also consider exchange risks to avoid making a financial loss on each payment, and depending on the payment method used, there can be a lack of transparency in processing funds.
Let’s explore these in more detail.
Navigating regulatory hurdles
A critical challenge in cross-border payments is navigating regulatory hurdles. Banks and financial institutions often operate under differing regulations for processing and validating international transactions.
These discrepancies result in varying compliance requirements across jurisdictions, complicating efforts to understand the total costs of cross-border payouts. Additional layers, such as currency exchange fees and intermediary bank charges, can further obscure cost transparency.
To address these challenges, organizations must engage compliance experts to interpret local laws and align with global standards such as AML and GDPR. Leveraging a partner with a robust payment network like Thunes can significantly ease this burden. We hold global licenses, enabling businesses to rely on our compliance infrastructure for seamless operations across major markets like the USA, EU, UK, Singapore, and Hong Kong.
Currency exchange risks
Fluctuations in currency exchange rates make it challenging for businesses to forecast their fees when making a cross-border payment. A sudden change in exchange rates can lead to unforeseen business losses and it can make accurate financial planning and budgeting difficult.
To mitigate the impact of this risk, payment platforms like Thunes deliver transparent upfront costs, automated conversions and fully traceable payment status. With the ability to lock in flexible FX rates and the option to convert payments to over 85 currencies, businesses can make financial operations easier and more efficient.
Limited transparency in traditional payment methods
Many financial institutions and banks can’t provide complete visibility into cross-border payment tracking. This disadvantage can make sending funds complicated for businesses – especially when there are issues with the payment.
Thunes focuses on enhancing cross-border payments through instant settlements and total visibility. Our network ensures businesses have control over international and domestic payments and peace of mind, knowing these funds will reach the correct recipient within seconds.
Cross-border payouts with Thunes
Cross-border payouts are the key to businesses who want to access a truly global market and the services, merchants, trade and contractors it offers.
Thunes is an extensive cross-border payments network to over 130 countries – and we’re constantly adding new partners and payment methods – that allow businesses to send real-time payments that are received within seconds, all with complete control and visibility. No more hidden fees, no more intermediaries and no more delays.
Contact Thunes and learn how we can help you send cross-border payouts.
