Globalisation has revolutionised our world. As migration, tourism, education abroad, and global connected businesses increased in this process, global payment reached an unprecedented level of intensity. Today, we will introduce you to two major types of global transaction: cross-border payment and money remittance.
Cross-border payment refers to transactions involving individuals, companies, banks or settlement institutions operating in at least two different countries. According to PYMNTS’ report, Cross-border payment revenues currently account for approximately $200 billion. The biggest challenge of cross-border payment is the differing regulations between sending and receiving countries. Some cross-border transactions can take up to several days to complete as they are routed through intermediary banks.
However, technology substantially advanced cross-border payment methods. WeChat Pay allows Chinese customers to use RMB to make purchases when shopping abroad. International Alipay is third-party payment-guarantee service designed to protect the security of transactions between buyers and sellers in international online or offline transactions. Online platforms such as International Alipay, WeChat Pay are fast, secure, and convenient payment methods.
A money remittance refers to money that is sent or transferred to another party (normally to a foreign country). If you ever traveled or worked in another country, you probably already encountered the usage of remittances. You may transfer money to family and friends, you may make business payments to your clients, or you may pay your tuition in an overseas country.
Remittances can be sent via a wire transfer, electronic payment system, mail, or cheque. We listed the pros and cons of the most common options below:
Wire transfer: Paying through banks or credit unions is a good option for infrequent payments. However, the transfer can be limited by the policies at different banks. Transaction fees can also be undesirable sometimes.
Electronic payment system: There are numerous money transfer services that provide you a fast and convenient way to transfer money overseas. However, be careful that some funding methods such as credit cards are subject to a high interest rate.
Cheques and money orders: If you want a non-electronic option, this might be ideal. However, paper payments are much slower than online payment. And keep in mind the risks of transfering large amounts if there’s no bank account available for safekeeping.