Understanding International Payments

In today’s globalised economic landscape, sending and receiving international payments is becoming increasingly critical to the success of individuals and institutions worldwide. Whether payments are for personal purposes, such as remittance, or operational purposes, such as payroll, understanding and identifying the quickest and cheapest rails is becoming increasingly paramount.

International payments and the key players

Unlike domestic transactions, international payments are layered with regulatory mandates, currency conversion requirements, and collaboration between intermediaries. The combination of which makes international payments a complex, inefficient, and costly process. Key role players in the process include local banks, payment service providers, regulatory bodies, and forex traders - each of whom charge a small fee on the value of the funds being transferred.

In light of the inefficiencies of traditional cross-border rails, more and more institutions are turning to alternate solutions, such as blockchain rails, for their global payments. Employing the services of fully-licensed Financial Service Providers, such as FiveWest, is advised.

Blockchain technology and international payments

As blockchain technology gains recognition and legitimacy, more and more institutions are making the shift to these rails in order to optimize their cross-border payments. At FiveWest, we facilitate international transfers through decentralised blockchain networks - reducing the number of participants in the flow of funds. Executing transfers via decentralised blockchain networks offers significant cost- and time-efficiencies, while enabling same-day settlement for international payments. The inherent transparency and robust security mechanisms underpinning blockchain technology add an additional layer of safety for each transaction.

Factors to consider when choosing your payment services provider

Given the high demand for international payment rails, there is a broad selection of payment service providers from which to choose. Choosing the right provider is paramount, as these decisions may prove costly. Three major factors to consider are:

Security and compliance

To execute cross-border transactions, it is mandatory for service providers to be equipped with the necessary licensing to ensure alignment with international regulatory standards.

Settlement flexibility

Evaluate prospective service providers in terms of their speed of settlement, as well as, their selection of currencies available. Licensing and liquidity factors may prove to hinder, or enhance, the speed and variety of fiat that service providers may offer.

Fee structure

To optimise your international payment flows, it is important to have a full understanding as to the fee structuring of various service providers. Drawing comparisons between traditional fiat-rails and modern crypto-rails may prove effective for determining which service would suit you best. It is important to be aware of additional fees, such as service or withdrawal, as these may inform your decision best.

Accelerated technological developments, in combination with mass-globalisation, have revolutionised the needs and rails of international payments around the world. It is important to be aware of the value proposition posed by blockchain-based international rails, as well as the key factors to consider when selecting your payments service provider.