Cross‑Border Payment: Business Models, Process Flow, and Technical Implementation

Cross‑border payment refers to the transfer of funds between two or more countries or regions resulting from international trade, requiring specific payment methods and settlement tools to convert currencies and complete transactions.

Domestic common methods include bank wire transfers, specialized remittance companies, and third‑party payment platforms; bank wires are secure but slow and costly, so small‑value transactions often use third‑party services for speed and lower fees.

The complete cross‑border payment process involves order placement, payment, collection, and settlement, with three‑party payment institutions forwarding transaction information to issuing banks or international card networks, which then issue debit instructions, settle funds, and transfer money to merchants' overseas accounts before converting and distributing the funds to domestic sellers.

1. Business Introduction

1.1 What is Cross‑Border Payment

With the rise of e‑commerce, consumers can purchase overseas goods online via personal agents, overseas shopping, or cross‑border e‑commerce platforms; the core step is payment, which faces new challenges such as currency conversion and regulatory compliance.

Cross‑border scenarios are divided into import (buyer domestic, seller overseas) and export (buyer overseas, seller domestic) models, each requiring different currency handling and settlement processes.

In the import model, overseas consumers use platforms like PayPal to pay, funds flow to the overseas e‑commerce settlement account, are converted to foreign currency, transferred to domestic payment institutions, exchanged, and finally reach the domestic merchant’s bank account.

In the export model, domestic buyers pay in RMB, the third‑party payment company purchases foreign currency, transfers it to its overseas account, and settles with the overseas merchant.

The revenue of cross‑border payment providers comes mainly from transaction fees, foreign‑exchange spreads, and value‑added services such as customs filing, bonded‑warehouse services, and cross‑border marketing.

1.2 Development History of Cross‑Border Payment

Key milestones include SWIFT (1973), Visa (1977), MasterCard (1970), Western Union (1851), and PayPal (1998). Recent entrants like WorldFirst, Payoneer, Airwallex, and domestic players such as UnionPay International, Alipay International, and others have expanded the ecosystem.

Major payment modes are wire transfer, international card networks, UnionPay International, and third‑party payment platforms.

2. Technical Implementation

2.1 Business Process

Cross‑border payments are divided into foreign‑currency and RMB‑settled types. RMB‑settled payments avoid currency conversion, shorten cycles, and reduce exchange losses. The flow involves domestic consumers paying in RMB, the payment company converting to foreign currency, transferring to overseas accounts, and settling with merchants.

(1) Domestic consumer pays via a third‑party payment company in RMB.

(2) The payment company purchases foreign currency during settlement.

(3) The partner bank transfers the foreign currency to the payment company’s overseas account.

(4) Funds are settled to the overseas merchant’s account.

For overseas consumers buying from domestic merchants, the reverse flow applies, with foreign currency converted to RMB and settled to the domestic merchant’s account.

Customs require four documents (payment slip, order, logistics slip, declaration) to release goods; payment companies must provide payment data for customs clearance.

2.2 Interaction Design

Merchants must complete three steps to enable cross‑border payment: onboarding with a payment company’s partner bank, activation of a cross‑border settlement account, and execution of transactions.

During settlement, domestic and overseas goods are routed to separate pending accounts; domestic goods follow the usual RMB settlement, while overseas goods undergo foreign‑currency purchase, remittance, and final settlement to the merchant’s overseas account.

Overall, cross‑border payment shares the same flow as domestic payment but adds a cross‑border flag to transaction records, influencing fee structures and settlement procedures.

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