What is a cross-border payment?

A cross-border payment refers specifically to a transaction that is initiated in one country and received in another. This type of payment often involves different currencies, as it may need to convert the sending currency into the receiving currency. However, the defining characteristic of a cross-border payment is the crossing of national boundaries during the payment process.

Understanding cross-border payments is crucial in the realm of international finance, as they can be influenced by various factors, including currency exchange rates, international regulations, and different banking systems. This type of payment is increasingly relevant in our globalized economy, where businesses and individuals need to transact across different countries.

While multiple currencies might be involved in cross-border payments, the ability for the payment to be initiated in one country and settled in another is what distinctly qualifies it as a cross-border transaction. The involvement of international regulatory bodies could apply in certain contexts, but it is not a defining feature of all cross-border payments. Thus, emphasizing the movement across borders captures the essential nature of these transactions.