What Are International Payment Systems? The Basic Approach


Conducting cross-border transactions is an important component of international trade and business in the connected global economy of today. International payment systems are essential for enabling smooth money transfers between various countries. These systems make it possible for people, companies, and financial institutions to transmit and receive money securely and quickly across international borders.

International payment systems are complex networks of financial institutions, processors of payments, clearinghouses, and other middlemen who work together to guarantee the efficient transfer of funds worldwide. For processing different kinds of international payments, such as trade settlements, remittances, and foreign direct investments,  offer a standardized framework.

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is one of the most popular international payment systems. Financial organizations can conduct international payments and share information securely thanks to the worldwide messaging network run by SWIFT. Bank Identifier Codes (BICs), which SWIFT issues to participating institutions, assist identify the sender and recipient of funds in cross-border transactions.

The Clearing House Interbank Payments System (CHIPS), which is mostly utilized for high-value payments in US dollars, is another prominent international payment system. CHIPS ensures the quick transmission of funds across borders through real-time settling payments between participating institutions.

Additionally, the European Union’s Single Euro Payments Area (SEPA) is a program for financial integration that makes it easier for people to send and receive money in the euro inside the zone. SEPA eliminates variations in payment methods, costs, and processing times by harmonizing payment standards and procedures across member countries.

Digital platforms that have become more well-known in recent years are also included in international payment systems. These platforms take advantage of technological improvements to provide simple and affordable alternatives for international payments. Examples include cryptocurrency-based platforms like Bitcoin, PayPal, and TransferWise.

It is impossible to exaggerate the significance of global payment systems. They give companies a safe and effective way to transfer money across borders, allowing them to expand their operations abroad. Additionally, they are essential in helping migrant employees send remittances back to their home countries, which promotes economic development.

How Do International Payment Systems Affect Businesses

When we hear “international payment systems,” it can only translate to online payment services which are often carried out by Fintech companies. Below, we have detailed, in a very concise manner how international payment systems affect businesses.

  1. Accessibility

The fact that most businesses are located in remote areas where most of the residents are unbanked makes it hard, sometimes impossible for businesses to deal without cash transactions. Statistically, there are currently 1.4 billion unbanked people on Earth. But things seem to be changing lately, as more efforts are being put in place to get more people involved. According to European Central Bank, none cash payments rose by 3.7% to hit 101.6 billion, while the total value increased by 8.7% to €167.3 trillion.

So, even when international payment companies have succeeded in penetrating some of the rural areas, there is still more work to do in that aspect. So, it is reasonable enough to say that international payment systems have helped businesses penetrate more mainstream locations that are often not within the reach of traditional banking services.

  1. Inter-bank Acceptance

Today, businesses can conveniently transfer funds to their counterparts anywhere in the world without much documentation thus, using various Fintech services that have products specifically designed for that purpose. Banks, on their side, through a secured channel, seamlessly move funds among themselves anywhere in the world without hitches. To further prove this fact, statistics from European Central Bank show that the number of credits transferred within the European space in 2020 had increased by 3.2%, representing 23.1 billion. This was followed by its total value, which also had an increase of 10.3%, representing €155.8 trillion.

  1. Fast Payment Transactions

International payment systems, especially the ones we use today have fastened the amount of time it takes for businesses to transact. This development has also hastened the speed at which businesses are being carried out hence, increased the ease of doing business globally.


International payment systems are an essential component of the infrastructure that supports international trade. They promote economic integration and ease global trade by ensuring the seamless transfer of funds across national borders. We may anticipate more advancements in international payment systems as technology develops, making cross-border transactions even easier and more available.