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Introduction to international payments

A coffee shop owner uses a laptop to send payments to her international suppliers.
Adi Trudler
Published at | Updated:

Imagine you finally find the perfect vendor. A vendor that meets your standards and budget. Most importantly, one you also have a great working relationship with. The only problem? They happen to be located across the border in Canada, which makes it difficult when the bill comes. 

In this guide, we’ll cover some of the advantages and disadvantages of international payments, how they work, and how you can use Melio to make them.

International payments: What and why

What are international or cross-border payments?

An international payment is a transaction between banks, financial institutions, businesses, or individuals operating in different countries. Most businesses in the U.S. do business with companies outside the U.S. And when you close a deal with a vendor in another country, they need to know you’re able to send payment.

An international transfer may or may not include a currency exchange. That means, unlike in money transfers inside the U.S., a third party is almost always involved.

5 ways to send cross-border payments

If you want to send money across borders, there are multiple methods to choose from: 

  1. International wire transfers: This is a secure way to send funds between banks. It usually takes 1-2 days to process but carries quite a heavy fee. Additionally, your vendor’s bank details are required. It must be noted that they are not the most efficient way to send payments for business-to-business purposes.  
  2. Global ACH: Global ACHACHACH is a type of electronic bank-to-bank transfer that goes through the Automated Clearing House network (hence its name). payments can be made through various entities, but are not carried out via a card network. The downside is they take several days to process. 
  3. Third-party payment platform: International transfers via platforms like PayPal carry a high fee and there is no clear policy around them. When choosing a platform to make the payment, make sure it’s one that has low fees and can be used for your other business-related payments. 
  4. Prepaid debit card: Prepaid debit cards are processed over a card network and provide real-time payment immediacy, which is great when you need to make a quick payment to a global supplier. However, the transactions often come with a fee for both the customer and vendor, and it has a confusing reconciliation process.
  5. Paper checks: This payment method doesn’t always come with a transaction fee–depending on the financial institution. However, it may be weeks before the check is received in the mail and cashed, which can negatively impact your cash flow management. Paper checks are also prone to fraud.

What is the journey of an international payment?

International transactions entail a currency change, foreign transaction fees, and exchange rates. To navigate these channels, banks and different domestic entities work together to transfer funds. 

Let’s review how a transaction looks when performed by a customer:

An illustration demonstrating how an international payment works from point a (Sofia from Argentina) to point b (merchant in Canada)

Because the merchant’s website is offering international services, all Sofia has to do is enter her details. Banks and merchants will do the rest.

The same applies to B2BB2BB2B (business to business) refers to operations done between businesses. B2B payments are transactions made between two businesses or companies. payments. Let’s say you’re buying marketing services from a studio in the UK. If they have a system in place to accept and process payments from abroad–it should be relatively easy. 

However, if they usually work with local customers and accept payments via bank transfers or checks only, you might need to carry the full cost of the transaction. Plus, you’ll need to manage it all yourself. 

Let’s say you choose to send an international wire transfer. You’ll have to go to the bank, pay for the transaction upfront, and provide the following information: 

  • The recipient’s name, address, and contact number.
  • The recipient’s banking information, including their account number, and sometimes the branch number as well.
  • The receiving bank’s information–the institution’s name, address, and bank identifier.

Once your payment is submitted, the information is communicated to your vendor’s bank. Their bank deposits its own reserve funds into the correct account. Along the way, there may be an intermediary bank that acts as a liaison in communication from the ordering institution to the recipient’s bank.

What is the problem with global payments?

Unfortunately, there is no easy solution to sending payments to other countries. Because there are many factors involved in making such a transaction, there are some disadvantages. These include: 

  • High fees: Many small businesses find it difficult to afford the high cost of international payments that are the result of both the complexity of the transfer and the foreign exchange rates. 
  • Slow processing times: Vendors often won’t deliver a product until they get paid–and by that we mean have the money in their hands (or bank account). International transfers often take a long time to process, which can lead to shipment delays.
  • Compromised security: Where money goes, fraud follows. Many banks and other payment processors struggle to adapt their national security operations to cross-border transactions. 

Additionally, some practices used for international payments often lead to reduced productivity, increased labor, and difficulties in relationships with suppliers.

Why use international vendors in the first place?

Regardless of this, there are a few reasons to choose international vendors. For one, freelancers in countries outside the U.S. may charge less, which can come in handy if you’re short on cash.

Moreover, some products like certain fruits, vegetables, or liquor are just better in other places around the world. Tapping into another country’s products allows you to improve the quality of your own products.

It is important to be aware of things that could risk the relationship with international vendors like high taxes, political instability, and shipping costs. We recommend reading our guide to choosing vendors to learn more.

What are some best practices for international payments?

As you can see, this process can be a lot to handle. So what are some things to consider? Let’s break it down. 

To make a payment to an international vendor you may need:

  • Their account name.
  • Their IBAN or account number.
  • Their bank SWIFT/BIC, domestic routing code, or bank address.

Get the payment instructions right: Use correct payment information to avoid returns, delays, and extra costs. 

Understand local rules: Be sure you have the required documentation for international payment in countries with controlled currencies and central bank reporting, including China, India, and Brazil.

Avoid cross-border checks: Electronic payments can reduce fraud risk and be processed much faster.

Verify compliance with global payment rules: Make sure you are sending the payment according to all applicable global payment rules.

How to pay international vendors with Melio

To make everything a lot easier, you can use your bill pay tool to send international payments. In this section, we’ll cover how it works and what some of the benefits are.

How do international payments work at Melio?

Once you get a bill from your international vendor, you can send it in U.S. dollars, from the same dashboard you use to send payments inside the U.S. You can send the payment from anywhere (including your phone), and you don’t need to rely on bank hours. Your vendor doesn’t even need a Melio account.

Every country has a different banking network system regulating and verifying transactions between countries. For example, Canada uses a SWIFT code network to verify transaction details whereas the UK uses the IBAN network. 

Depending on the country you send payments to, you’ll need different information. Usually, you’ll find the code on the invoice sent by your vendor. Otherwise, ask your vendor for their number.

How to make international payments with Melio?

  1. Make sure you have the payment instructions received from your vendor.
  2. Sign in to and add your bill. 
  3. Choose Bank transfer or Credit card (2.9% fee) as your payment method. (Note: International payments can only be made via ACH bank transfer or with a Mastercard credit card.)
  4. In the delivery method, choose “International payment”. 
  5. Add their country’s bank details as well as the payee details. (Requires SWIFT code or IBAN number, bank name and account number).  
  6. Choose the payment purpose. 
  7. Schedule the payment ($20 flat fee per payment). 

To learn more, visit our Help Center.

FAQ about international payments

What countries are open to international payments through Melio?

You can pay vendors in over 70 countries, including China, Canada, Vietnam, and many more. Check out the full list here.

How long does it take?

International payments of up to $100,000 are delivered within 4 days. Payments of over $100K are sent in 5 days.

How much does it cost?

There is a flat $20 fee for international payments–no matter how much money you’re sending. When paying with a Mastercard credit card, there’s an additional 2.9% fee.

Can my vendor have an international and local delivery method?

A contact can’t have both domestic and international delivery methods. To pay a vendor who requested payment to their international office, you’ll need to have two separate vendor contacts – one for domestic payments and one for international payments.

What is an IBAN?

IBAN stands for International Bank Account Number, which you use when making or receiving international payments. It’s commonly used for international transfers in the UK and Europe.

​​An IBAN number is used when sending bank transfers or wiring money from one bank to another across international borders. It’s a code of up to 34 letters and numbers that help banks verify and process transactions between customers in different countries.

Each set of characters represents a different bank account detail. For example, a UK Bank Account IBAN number looks like this: GB29BUKB60161131926819.

What’s a SWIFT code?

SWIFT codes, also known as bank identifier codes (BICs), allow member institutions to easily and safely communicate, share information, and transfer money across borders.

You can think of a SWIFT code as a bank’s ID number, allowing all parties to know they are in touch with the right institution.

A SWIFT code is composed of eight or 11 digits or letters and contains the bank code, country code, location code, and branch code.

Just to give you an idea, a JP Morgan Chase SWIFT code looks like this: CHASUS33XXX, with the Xs representing the branch information.

Payments without borders

Working with vendors around the world has its ups and downs, but don’t let the complexity of payments deter you from doing it. When you use the right practices and tools, the transfer can be easy and cost-effective. There’s no need for you to compromise on products any longer.

Pay international vendors online with Melio.Start now

*This guide is intended for informational purposes only and is not intended as financial advice.
**Melio does not provide legal, tax or accounting advice, and you should consult with a professional advisor before making any financial decisions.