Welcome to the Fondy knowledge hub

We are a bit geeky when it comes to payment technology, but the thing that excites us the most is helping to grow your business – so are some useful tips from us to you.

If there’s a topic we’ve missed, let us know, and we will be happy to dive into it.

What are cross-border payments?

Cross-border transactions involve individuals such as family remittances, business-to-business (b2b), banks-to-banks, banks to businesses, business-to-banks transactions, and remittance companies in at least two different countries or territories.

Traditionally, moving money across borders has been problematic due to high costs, low speeds, limited access, minimal security, and processes and services with a lack of transparency. But thanks to technological advancements, a host of challenger brands and services, and more competition, cross-border payments are becoming more accessible.

Cross-border payments usually involve multiple banks or companies in multiple countries. As the money moves from one country to another, the transfer starts accumulating fees at each payment gateway. In addition, you have to factor in exchange rates, local fees, and taxes when transacting with different currencies and systems.

While the most common cross-border payment processes include bank transfers, bank credit and debit cards, eWallets, and mobile payments, most of them fall under one of four types of transaction categories. These are business-to-business (b2b), consumer-to-business (c2b), business-to-consumer (b2c) and consumer-to-consumer (c2c) transactions.

Cross-border payments companies

There are many types of companies that can process and manage cross-border payments or transactions through different payment schemes, such as SWIFT, card schemes, remittance companies, and more.

The challenge and opportunity for the new companies are to introduce better schemes, in terms of speed, cost, and efficiency, for cross-border payments to move funds from one country to another. At Fondy, we are currently building a payment scheme that will be based on local bank accounts.

Fondy is the one-stop solution for friction-free cross-border payments. Fondy’s platform supports local online banking payments and local digital wallets across 36 countries. Cross-border shoppers will automatically see familiar payment choices, including local cards, internet banking, eWallets, and global bank cards. What’s more, cross-border payments can be made on websites, online stores, Android and iOS, and mobile apps.

As a one-stop payment platform, Fondy understands the need for businesses to offer cross-border payments in a variety of currencies. Want to know more about us? Great! Check out the About Fondy page to discover what inspires us and how that can benefit your business, no matter the size.

Business-to-business (b2b) cross-border payments

Cross-border business-to-business payments or transactions occur when one business sends money to another one, and the transfer involves two different countries and currencies. One notable exception is when money is sent from one European Union (EU) nation that uses the euro (€) to another.

According to Ernst & Young, global cross-border payments are expected to rise in the future to $156 trillion in 2022. Of this mammoth figure, b2b cross-border payments or transactions account for around US$150 trillion.

Companies use cross-border business payments or transactions so that they can take part in the global economy. From sourcing and buying materials from overseas to hiring the services of a freelancer, most businesses need to make cross-border payments to “seal the deal”. Participating in the global economy is often advantageous for many business owners who have the capacity to fulfil cross-border payments.

Some of the best reasons to seek business overseas include:

  • The cost of labour is often more cost-effective when you look beyond your country’s borders in the global marketplace and system.
  • Going overseas means that you instantly expand the pool of service or goods providers for a particular skill or commodity.
  • Being part of the global economy also means that you can gain a competitive advantage over competitors and services that don’t.
  • There’s a wider business network globally and, therefore, more opportunities for future growth.

Generally speaking, there are two main types of cross-border business-to-business payments or transactions. These are:

  1. Cross-border business-to-business retail payments – these payments are usually made between businesses and their consumers. Although they’re called business-to-business payments, they can also include remittances sent from migrants to loved ones back to their home countries. That’s because the funds are often sent via a business rather than directly to a family member.
  2. Cross-border business-to-business wholesale payments – these payments or transactions usually occur between banks and financial institutions or vice versa. These payments tend to include borrowing, lending, forex, and debt trading payments. Global governments and businesses also use cross-border payments or transactions for importing and exporting goods and services.

Top cross-border payment countries

If you’re wondering which countries take part in the highest-value cross-payments or transactions, you’re in the right place. Discover which countries they were from and where that money came from. You support more than just your loved ones whenever you send global transfers back home.

Cross-border payments and transactions also help combat social issues like gender inequality and illiteracy. For many countries, remittances and cross-border payments also boost the economy, helping reduce hardships like poverty and unemployment. In fact, remittances now exceed foreign aid and investments in many developing nations. Over half of the $700 billion global total sent back home last year went to just ten countries.

India – 83 billion dollars

The largest source of remittances to India (30.8%) is West Asian countries like the United Arab Emirates. Next up is North America (29.4%) and Europe (19.5%). The Indian state of Tamil Nadu has the most diverse mix of remittance sources due to extended Tamil communities overseas. The most significant remittances to Tamil Nadu originate from Malaysia, Singapore, and the United States (US).

China – 60 billion dollars

Surprisingly, the world’s most populous country doesn’t receive the most in remittances. That’s because India boasts a larger diaspora population. Nonetheless, China gets most of its money from anglophone countries like the US, Australia, and Canada. In addition, the Chinese economy receives a large chunk of remittances from other Asian nations, such as Japan and South Korea.

Mexico – 43 billion dollars

Although Mexico also shares a border with Belize and Guatemala, it’s the border with America that’s most crucial to Mexico’s economy. That’s because most of the country’s remittances are sent by Mexican family members living in the US. So, in addition to supporting loved ones, remittance transactions have helped Mexico become Latin America’s second-largest economy.

The Philippines – 35 billion dollars

Filipino migrants who send money home are regarded as modern-day heroes. Like Filipino National Heroes, remittances have “contributed to the quality of life and destiny of the nation”. If you’re looking for evidence, look no further than the coronavirus outbreak. Contrary to popular belief, overseas workers often send more money home during economic hardship. While the World Bank predicted a 20% dip in remittances in 2020, they only fell by 1.6%. Remittances to the Philippines only fell by 0.8%. Interestingly, of the tens of billions sent to the Philippines yearly, nearly half of this statistic comes from the US.

Egypt – 30 billion dollars

Remittances to many countries remained surprisingly stable in 2020 – but Egypt bucked the trend. That’s because remittances to the country increased by a record-setting 11% statistic. One explanation could be ex-pats living in the Gulf Cooperation Council (GCC) region. Comprising countries like Saudi Arabia and Kuwait, the GCC is the primary source of remittances to Egypt. Home to several million Egyptians, sending remittances from the GCC is significantly cheaper than from the Western world.

Pakistan – 26 billion dollars

Since the start of the pandemic, remittance payments to Pakistan have continued to rise. Proactive measures by the government, like increased interest rates on savings, have encouraged ex-pats to send more home. According to the State Bank of Pakistan, the closure of international borders combined with Eid al-Fitr contributions has led to record remittance numbers. These statistics have been so impressive that even prime minister Imran Khan tweeted his thanks to the Pakistani diaspora.

France – 25 billion dollars

France is a major remittance-sending country, especially to Africa. However, it’s also a big recipient of money from overseas. But how come? Let’s have a closer look. London is often spoken of as “the sixth biggest city in France”. That might seem nonsensical, but it makes sense when you consider that more French people (around 350,000) live in England’s capital than in Nice. Indeed, many French people leave their home country for pastures new. That includes other EU countries, the UK, and North America. Perhaps in anticipation of returning to France or helping loved ones, ex-pats continue sending remittances home.

Bangladesh – 22 billion dollars

Only India, Mexico and China have more citizens working overseas than Bangladesh. Remittances from over 10 million ex-pats and money from the garment industry are the key sources of inbound capital to Bangladesh. However, unlike money from exports, remittance systems are more evenly circulated across the country. Whereas most business profits get taxed and then reinvested, remittances are usually spent straight away.

Germany – 18 billion dollars

Despite being a popular destination for immigration, about 4-5 million Germans (roughly the population of Berlin) live outside Germany. Consequently, it’s one of the largest sources of the diaspora in the Organisation for Economic Cooperation (OECD). Germans predominantly live in the US, France, the UK, the Netherlands, Switzerland, Italy, and Spain. But why? Primarily, most emigrants are well-educated and earn more abroad. A study by the University of Duisburg revealed that Germans overseas make, on average, €12,000 more than they do back home. While around 180,000 Germans emigrate every year, another 130,000 return. This annual repatriation could explain Germany’s high remittance transaction statistics.

Nigeria – 17 billion dollars

Nigeria accounts for over a third of remittances to Sub-Saharan Africa. And since many transfers to Nigeria occur through informal channels, the actual statistic is probably higher. While most money originates from Nigerians in the UK and the US, neighbouring Cameroon is an often overlooked source. According to analysts, 70% of remittances are spent on consumables such as food and energy. The rest goes towards investments like housing and education.

* Numbers based on figures from 2020

Grow sales with a better payment solution

Fondy helps expand your business locally and internationally, allowing you to collect payments, split payments, bank transfers, and make payouts, payments, and more through a single API. Get started on your frictionless payments journey with Fondy today.

The Cross-Border Payments Regulation

The Cross-Border Payments Regulation (CBPR) is an EU regulation that requires a bank to give customers more transparency on foreign exchange charges, rates, and fees for certain card transactions and services in the European Economic Area (EEA).

Under the regulation, a bank is required to send holders of debit cards or credit cards a notification when the cardholder uses it for certain transactions and processes involving a currency exchange in a non-euro EEA currency.

The regulation also aims to ensure that cross-border euro (€) transactions aren’t more costly than national transactions in the national currency of a non-euro Member State country. The Cross-Border Payments Regulation also aims to provide greater transparency regarding the sharing and storage of customer information and data.

Some additional advantages of the Cross-Border Payment Regulation (CBPR) include:

  • Increased consumer and business confidence.
  • An uptick in business growth and opportunities.
  • More clients in different countries globally.
  • Increased visibility and services in the global market.

Globally, all cross-border payments must adhere to global payment rules. As there are hundreds of requirements, making use of a verified cross-border payments solution is essential. No business, small or large, has the time to check every global payment. That’s what banks, payment processors, and remittance services do best.

Cross-border payment fees

Unless you travel overseas with cash in your pocket to conduct business abroad, you’ll have to pay a fee when making a cross-border payment. Unfortunately, there is usually more than one set of costs to pay for both businesses and families. These fees include:

  • Bank fees – these bank fees are calculated based on what currency the transaction is in and where the bank or banking institution is registered.
  • Transfer fees – sometimes called processing fees, this is the cost of using the technology on offer by the cross-border payment company. With traditional transfer banking institutions, the older technology is the reason why such transfers take so long to process.
  • Exchange rates – although they’re not an actual fee, exchange rates are always changing so a bad exchange rate could end up costing you more.
  • International credit card fees – this fee is a percentage that applies to purchases made with an international credit or debit card. This rate can vary between bank credit and bank debit card networks.
  • International taxes – if you’re paying for goods from overseas, you’ll have to pay sales tax, Value Added Tax (VAT), and customs duty rates applied to shipments.

You should also pay attention to currency conversions and settlements. By allowing your clients to pay in the currency of their choice, i.e. the same held in their account or card. If not, the customer risks paying in a different currency and thus, having to use an unfavourable currency conversion from the issuing bank (bank which holds the account or card) plus charges from the Visa or Mastercard.

You can avoid high fees for international card schemes if your bank supports the local scheme of the currency you’re paying. At Fondy, we automatically recognise your customer’s currency and display it as the primary option. That also means that we can route the payment through a local scheme so you end up paying less in costs.

The role of fintech in cross-border global payments

As many businesses and families rely on crucial cross-border payments or transactions to survive, improving the flow of money is a great opportunity for financial technology. Those fintech companies that can solve the pain points around cross-border such as cost, speed, security, and transparency gain a major advantage over their competition.

As a result, consumers (both businesses and individuals) tend to choose fintech companies over traditional corporations like banks and high street money transfer services.

Here’s how fintech is changing the shape of cross-border payments and services:

Fairer exchange rates

As many fintech companies don’t have the overheads that traditional cross-border payment services do, like commercial rent, they can afford to offer fairer exchange rates to consumers. For example, many fintech businesses offer the mid-market bank exchange rate which is set and used by the World Bank. More old-fashioned companies make their profits by giving their customers exchange rates that aren’t a true reflection of the mid-market rate system.

Faster cross-border transfers

Fintech relies on faster payment networks and systems to complete cross-border payments. What’s more, fintech benefits from more advanced technology that allows them to connect directly to major of the world’s major banks and banking institutions. All this results in cross-border payments that can be completed in a matter of seconds compared with the past when bank transfers could take up to ten days.

Flexible payment options

Due to emerging technologies, fintech companies are able to offer more payment methods and systems to consumers. This helps with keeping costs down and having flexibility as users can choose which method is the cheapest, fastest, or safest. Additionally, fintech offers an all-around better user experience (UX) on desktops, tablets, or smartphone systems. And like most modern technology systems, fintech benefits from real-time updates, meaning users don’t need to lift a finger when better methods become available.

More targeted marketing

Fintech’s use of multiple data points means that they are privy to a whole system of analytics to discover. This customer data can be turned into useful insights that reveal how consumers engage with fintech companies, buying patterns, location-based processes, device preferences, and more. All this means that fintech providers can offer more relevant content, discounts, and promotional marketing systems.

Fondy is the perfect payment solution for businesses of all sizes

Benefit from payments in 150 currencies across more than 200 countries and territories. What’s more, choose from multiple payment methods, including Open Banking across 300+ banks in the UK and EU, and give your customers complete flexibility. Create a Fondy account and start enjoying friction-free, cross-border payment solutions today.


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