What is a potential downside of cross-border payments?

High processing fees are a notable downside of cross-border payments, primarily due to the complexity and various factors involved in these transactions. When funds are transferred internationally, they often navigate through multiple financial institutions and currencies, each of which may impose its own fees. This layered approach can lead to significant costs for the sender and recipient, making cross-border transactions more expensive compared to domestic transfers.

Additionally, the infrastructure required for cross-border payments is often not as efficient as domestic systems, resulting in higher operational costs that can be passed on to consumers. Factors such as regulatory compliance, currency conversion, and potential risks associated with international transactions contribute to these elevated fees. Thus, while cross-border payments can offer access to global markets, the financial burden due to high processing fees is a crucial consideration for individuals and businesses engaging in international trade or remittances.