How do businesses accept international payments – Explained 

Accepting international payments is the fuel that powers companies expanding beyond their local borders. Shipping your products or services abroad is one challenge—but getting paid from overseas is a whole different game. Whether you’re collecting funds from customers across continents, paying suppliers in distant markets, or disbursing salaries to global teams, mastering international payments transforms your global operations. This guide explains what international payments are, outlines how to accept them, and shares best practices to make every transaction count.

Digital transformation is reshaping the global payments landscape, and businesses that adapt quickly will capture significant competitive advantage in a borderless world.
— McKinsey & Company, Global Payments Report

What are international payments?

International payments are financial transactions where the sender and the recipient are located in different countries. These transactions typically involve currency conversion, regulatory checks, and fees that don’t exist when you’re making domestic transactions.

For example, imagine you run an e-commerce store in paying in United States and start receiving payments in euros from your customers in Germany. Or picture a UK-based company paying its contractors in India, or a multinational corporation distributing dividends to shareholders around the globe. Sometimes you might even be handling investment transfers or charitable donations across borders. These transactions drive market expansion and help businesses tap into emerging economies.

In 2024, international money transfers by businesses reached significant levels, with the global money transfer services market valued at $36.34 billion—underscoring the massive scale of international transfers.

How to accept international payments

To successfully accept international payments, businesses must consider several factors that influence the process:

Local payment methods

Different countries and regions have preferred payment methods. For example:

• In Europe, businesses often use SEPA (Single Euro Payments Area) transfers or local direct debit systems. (Learn more: European Payments Council)
• In Asia, popular methods include digital wallets such as Alipay and WeChat, as well as local bank transfers.
• In Latin America, mobile money platforms and cash-based systems remain prevalent.

Offering local payment methods increases convenience for customers and suppliers while reducing processing times and fees.

Currencies to accept

Accepting multiple currencies is key to making international transactions smoother. Businesses should consider:

• Major global currencies like USD, EUR, GBP, and JPY.
• Regional currencies reflective of target markets.
• Emerging digital currencies in certain markets.

Providing currency options helps minimize conversion losses and appeals to a broader audience.

Currency conversion

Currency conversion is an inherent part of international payments. Businesses must monitor exchange rates and may partner with providers that offer competitive FX rates. Online tools like XE.com provide real-time conversion data, which is essential for mitigating exchange rate risks.

Transaction costs

International payment costs can include:

• Bank fees for processing the transfer.
• Intermediary fees if multiple banks are involved.
• FX markups that add hidden costs.

For example, a European company might face low fees for SEPA transfers domestically but higher costs when receiving USD via a wire transfer. According to a report by McKinsey, international transactions can incur fees that are up to three times higher than domestic ones.

How international payments are different from domestic payments

International payments differ from domestic transactions in several ways:

Currency exchange

Domestic payments are processed in a single currency, eliminating conversion needs. International payments, however, require currency conversion, which can incur additional fees and exchange rate risks.
Example: A German business receiving USD payments must convert them to euros, potentially incurring conversion fees and rate fluctuations.

Regulatory compliance

International payments must adhere to the regulations of both the sending and receiving countries. This includes compliance with anti-money laundering (AML) standards, Know Your Customer (KYC) processes, and diverse tax reporting obligations.
Example: A UK company processing payments from Eastern Europe must navigate both UK financial regulations and those in the sender’s country, ensuring all AML and KYC requirements are met.

Transaction costs

Domestic payments are generally simpler and cheaper. In contrast, international transactions often incur higher fees due to currency conversion, intermediary bank charges, and additional processing costs.
Example: A French business paying a supplier in Italy might enjoy low SEPA fees, whereas paying a contractor in Brazil via wire transfer could involve significantly higher costs.

In a borderless economy, your payment system is your gateway to global growth—if you’re not set up to accept international payments, you’re leaving a world of opportunity on the table.

What are international payments used for?

International payments serve a wide range of business purposes, including:

• Paying dividends or interest: Distributing earnings to international shareholders.
• Investment activities: Funding overseas projects or acquiring assets.
• Purchasing goods and services: Importing inventory or outsourcing services.
• Paying salaries: Disbursing wages to international employees or contractors.
• Acquiring assets: Procuring equipment or property from abroad.
• Charitable donations: Supporting global non-profit initiatives.
• Payment for travel and expenses: Reimbursing international business travel costs.
• Financial market transactions: Engaging in global trading activities.

According to the International Monetary Fund, global financial market transactions have grown substantially over the past decade, driven by increased cross-border investments.

International payment systems

Several established systems facilitate international payments:

• SEPA: Streamlines euro-denominated payments across Europe (European Payments Council).
• SWIFT: A global messaging network that connects banks worldwide (SWIFT).
• CHAPS: Primarily used for high-value transactions in the United Kingdom (Bank of England – CHAPS).
• Federal Reserve Wire Network: Critical for processing large-dollar transactions in the United States (Federal Reserve).

Each system varies in speed, cost, and geographic focus, so choosing the right one depends on your transaction needs.

Types of international payments

There are multiple methods to process international payments, including:

• Online payment platforms: Services like PayPal, PapayaGlobal, Stripe, and Wise offer fast, secure digital transfers.
• International money orders: A traditional method for lower-value transfers.
• Foreign exchange (forex) brokers: Offer competitive rates for large or frequent transactions.
• International checks: Less common today due to processing delays.
• Wire transfers: A reliable option for large sums, though often with higher fees.
• Cryptocurrency transfers: An emerging method that can offer speed and lower fees, though they carry their own risks.
• TARGET2: A real-time gross settlement system used in the Eurozone (European Central Bank – TARGET2).

Choosing the right payment provider type depends on factors like transaction size, speed requirements, and cost considerations.

Best practices for sending and receiving international payments

To ensure your international payments are efficient and secure, consider these best practices:

• Understand the costs: Analyze all fees, including conversion, intermediary, and transaction fees.
• Keep abreast of exchange rates: Use real-time tools (e.g., XE.com) and consider locking in favorable rates.
• Ensure regulatory compliance: Stay updated on AML, KYC, and other regulatory requirements in both your country and your recipient’s country ( ).
• Maintain accurate records: Detailed documentation simplifies audits and financial management.
• Verify recipient details: Double-check bank account numbers and other critical information.
• Use secure and reliable payment methods: Choose providers with robust security protocols and strong reputations.
• Establish clear payment terms in contracts: Define payment schedules, amounts, and currency details upfront.
• Be aware of potential fraud: Implement multi-factor authentication and real-time transaction monitoring.

Businesses operating between the US and Europe, for example, must be particularly vigilant about fee structures and regulatory differences to optimize their international payments strategy.

Papaya international workforce payment

Papaya Global offers a comprehensive solution for managing international payments for a global workforce. With support for multi-currency transactions, automated compliance checks, and real-time tracking, Papaya Global helps businesses:

• Accept international payments from diverse markets.
• Streamline payroll processes for international employees and contractors.
• Minimize costs and ensure timely, accurate payments.

By leveraging Papaya’s technology, companies can overcome common challenges in international payments and focus on scaling their operations.

Learn more about Papaya Global’s solution here.

By understanding the key components of international payments—from systems and methods to best practices and compliance requirements—businesses can optimize their global financial operations. Whether you’re expanding into new markets or streamlining payroll for a multinational workforce, the right approach to international payments is a strategic advantage in today’s competitive global marketplace.