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A Closer Look: The Four Main Challenges of Cross-Border Payments

Cost, speed, access, and transparency are the obstacles hindering cross-border payments. But breaking them down one by one reveals the way to address them. Which might include revolutionizing it all

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Key Takeaways

  1. Making cross-border payments is too difficult, many experts agree.
  2. Cost, speed, access, and transparency combine for a mix of incredibly challenging obstacles.
  3. The way to make them cheaper, faster, more accessible, and with better control goes through technology.
  4. And the answer is here, courtesy of a unified global payroll and payments platform.

Over the past thirty years, access to digital financial services has made domestic payments efficient, inexpensive, and inclusive. Unfortunately, the same cannot be said for cross-border payments. “Progress on cross-border payments has been much slower,” lamented Bo Li, Deputy Managing Director at the International Monetary Fund (IMF). “Moving money from one country to another can still be slow, expensive, and inconvenient. Why can’t the progress made for domestic transactions be replicated for international transactions?”

Global companies are asking themselves the same question. In a recent PYMNTS survey of 250 US and UK firms, four out of five companies reported experiencing challenges affecting their ability to pay international workers. These challenges were outlined in 2020 when the G20 endorsed a roadmap to enhance cross-border payments. The roadmap, developed by the Financial Stability Board (FSB), described four main challenges: cost, speed, access, and transparency. Here’s a breakdown of each challenge and how it affects payroll payments.


Cross-border payments come at a high cost. That’s mainly because of the complicated structure of correspondent banking relationships. Correspondent banks act as the middleman between two financial institutions from different jurisdictions that don’t have a direct relationship with each other. Typically, multiple correspondent banks are involved in every cross-border transaction, each charging a fee for their service.

In payroll transactions, these fees are usually deducted from the employee’s salary, resulting in inaccurate payments. Overcoming this challenge requires using payroll-dedicated rails, like the ones Papaya Global built. Papaya’s rails rely on partnerships with tier-1 banks, such as JPMorgan Chase and Citibank, ensuring that all transaction fees are known in advance. This allows us to guarantee full value transfer, which means your employees receive every cent they are entitled to.


The speed of cross-border payments varies depending on several factors, including time zone differences, the number of intermediaries in the payment chain, and compliance checks such as Know Your Customer (KYC), Anti Money Laundering (AML), and Combating the Financing of Terrorism (CFT). Payroll payments add another layer of complexity; unlike other payments, where the key date is the date the money enters the payment rails, payroll payments require calculations to be done in the opposite direction – from the date the money needs to land in the employee’s account backward.

Papaya Global, the only payroll platform with embedded payments, shifts the focus from “send date” to “land date,” and takes care of the reverse calculations. In addition, our dedicated team and existing infrastructure allow us to complete KYC and AML checks for each new client and each worker who is being paid via our system within hours of receiving all required documents.


Access to reliable banking infrastructure is crucial for facilitating cross-border payments. Here, too, correspondent banks play a huge role. The number of correspondent banks fell by 22% between 2011-2019, and banks providing these services are constantly reducing the number of relationships they maintain. As one would expect, the decline in correspondent banking relationships mainly impacts emerging markets and developing economies.

According to the Bank of International Settlements (BIS), “some correspondent banks are increasingly reluctant to provide correspondent banking services in certain foreign currencies in which the perceived risk of economic sanctions, the regulatory burden related to AML/CFT or the uncertainties related to the implementation of these requirements and the potential reputational risk in case of non-compliance seem to be higher.”

For companies with a global workforce, the reluctance of correspondent banks to hold relationships in certain geographies spells trouble. That’s why many companies turn to Papaya Global, which holds money transfer licenses around the globe, allowing its clients to pay their employees compliantly everywhere, including in countries correspondent banks shy away from.


“Those who send and receive funds across borders,” writes Rasika Raina, Senior Vice President of Cross-border Payments at Mastercard, “are often subjected to hugely uncertain and opaque processes.” Limited transparency includes banks not being straightforward about transactions’ terms and, just as important, their progress once underway. In other words, transparency involves the three challenges of access, speed, and cost.

In terms of cost, the challenge of transparency is most evident in inflated exchange rates. Research conducted by payment company Wise, which analyzed money transfer flows in 25 European banks, found that 92% of the banks are not transparent about their currency conversion fees. “The lack of transparency, “writes Raina, “causes unnecessary admin and worry for both people and business owners. Rather than focusing on growing their business and doing their job, too many entrepreneurs are spending valuable time trying to stay on top of disparate and vague payment processes.”

Papaya’s payment process, on the other hand, is anything but vague. Payment data can be tracked from start to finish on our self-serve, user-friendly interface. On Papaya’s rails, all fees are known in advance, and our technology accounts for exchange rate fluctuations as late as possible in the payment process, reducing currency conversion fees to a minimum.

Efficient, inexpensive, inclusive, transparent. Cross-border payroll payments can now finally catch up to domestic payments. Schedule a demo to learn more.