Navigating the complexities of cross-border payouts

Cross-border payouts are becoming increasingly common as enterprises expand their reach and scale globally. Whether you’re paying international sellers, gig economy workers, or consumer compensations and rewards, cross-border payouts can be essential to business growth and success.

The rising importance of cross-border payouts

Cross-border payouts are growing in popularity as businesses expand across the globe. As Allied Market Research reported, the global cross-border payouts market is expected to reach $356.5 trillion by 2032, growing at a compound annual growth rate of 7.3% from 2023.¹ This growth will largely be attributed to a rise in e-commerce transactions, international trade, and advancements in financial technology.¹

By tapping into international markets, companies can reach new customer bases and suppliers — generating fresh opportunities for revenue growth. They can also access a global pool of remote talent and gig economy workers. According to World Bank, the number of global online gig workers increased 41% between 2016 and 2023, amounting to as much as 435 million people.² Online gig work also now accounts for up to 12% of the global labor force.²

Businesses need the right solutions to help them effectively process cross-border payouts and fuel this international growth.

Common global payout methods

Enterprises should be able to pay recipients across the globe with their preferred, local payment methods — making it easy and convenient for payees to receive their funds. They should also harness current payment trends like digital wallets and mobile payments to help reduce friction and improve payee experiences.

To that end, today’s businesses have several cross-border payment methods to choose from, including:

Traditional bank transfers

Businesses can set up traditional bank transfers, powered by the Society for Worldwide Interbank Financial Telecommunications (SWIFT) network, to easily send funds from their bank account to a recipient’s bank account in another country. This cross-border payment method is widely available and accessible to most businesses. It also offers a high degree of security, backed by established banking protocols.

Still, traditional bank transfers have notable drawbacks, such as:

• Long lead times. Slowed down by compliance checks, SWIFT cross-border payouts can take several days to process and clear.
• High costs. Payees can incur international transfer fees, intermediary bank charges, and currency conversion fees, eating up a portion of their payouts.
• Limited transparency. Traditional bank transfers can be difficult to track as they move through the SWIFT system.

Payments through local bank rails

Businesses can partner with local banks in other countries to directly credit their recipients' accounts using local payment rails. With this payment method, global payees can receive their funds quickly and in their local currencies, without incurring high transfer fees in many cases.

To use this payment method, however, businesses will need to go through the complex and time-consuming process of establishing relationships with local banks in each payee’s country. This can be particularly difficult for companies that work with sellers in multiple locations. By handing over the responsibility to a foreign bank, businesses also relinquish some visibility and control over the payout process.

Push-to-card and local payment methods

Businesses can use prepaid cards or local mobile wallets to quickly send funds directly to payees across the globe. This can be a helpful option for recipients in locations with few traditional banking options or financial institutions.

While prepaid cards and digital wallets offer greater visibility and control over the payout process, they may come with fees for currency transfers and international payments.

Payout providers

A specialized global payout provider can streamline and automate the payout process for businesses, saving them valuable time and resources. The right payout solution should support multiple payout methods and currencies at competitive exchange rates. It should also help businesses meet global and local compliance regulations while providing security features to reduce the risk of fraud.

With the right payout provider, businesses can have more control over their cross-border payment experiences and gain full visibility into the payout process.

Navigating the challenges of global payouts

There are many obstacles to making fast and successful cross-border payouts, including strict regulations, high costs, and risk of fraud. Here’s a closer look at the complexities and challenges of sending global payments:

Regulations and compliance

Cross-border payments can be subject to various global and local regulations, which are constantly evolving. If businesses fail to comply with these cross-border payment regulations, they risk legal and financial repercussions.

Time consumption

Sending cross-border payments can be a complex and time-consuming process. There are many parties involved, including the paying business, banks, global and local financial institutions, regulatory organizations, and payees. For each recipient, there will have to be an onboarding process and Know Your Customer (KYC) check to verify their identity. Currency conversions and security processes can also delay payments up to several days.

Operational burden

Managing numerous global payouts can strain internal resources. To ensure successful transactions, businesses might need dedicated personnel for various processes, including manual data entry and reconciliation, addressing inquiries and troubleshooting issues, and maintaining compliance across various jurisdictions.

Financial risk

There are potential financial risks associated with cross-border payments. For example, transactions may be vulnerable to fraudulent activities, such as identity theft and scamming. Businesses can also incur added costs for each payout, such as exchange rates and hidden fees.

Customer dissatisfaction

Slow, expensive, or inconvenient payout processes can negatively impact customer experiences. Recipients may grow frustrated if they have to wait too long for their payments or can’t receive timely updates about their transactions. This dissatisfaction can lead to potential churn and loss of valuable customers or partners.

How PayPal Hyperwallet works

PayPal Hyperwallet is a comprehensive and secure end-to-end payment solution that gives businesses tools to make cross-border payouts and improve payee experiences.

Hyperwallet supports more than 50 currencies and local payment types in more than 200 countries. Recipients simply choose their preferred method to gain access to their funds. Hyperwallet can help businesses scale globally remain compliant with complex regulations.

The benefits of using an end-to-end solution to streamline payouts

With an end-to-end payment solution like Hyperwallet, making global payments can be easy. One platform gives you the power to manage and monitor payments across countries, currencies, and payment methods.

Further, the biggest benefits of using a comprehensive payout solution include the following:

Streamlined operations

Hyperwallet helps streamline the global payout process by:

• Automating tasks like beneficiary onboarding, currency conversions, and compliance checks.
• Providing a centralized platform for managing all payouts in one place.
• Integrating seamlessly with existing business systems and applications.
• Offering real-time tracking so businesses can monitor payout statuses and generate detailed reports for better financial management and reconciliation.

Cost savings

Hyperwallet can help businesses reduce cross-border payout costs with:

• Competitive exchange rates and transparent fee structures.
• Reduced operational overhead by eliminating manual tasks.
• Increased efficiency and productivity.

Compliance management

Hyperwallet helps businesses navigate complex cross-border payment regulations, helping to reduce the risk of non-compliance penalties and legal issues. With Hyperwallet, businesses will have a team of experts who are dedicated to staying updated on global regulations and adhering to local regulations in each payout destination. This way, businesses can deliver seamless and compliance-friendly payout experiences no matter where and how they send payments.

Reduced risk

PayPal’s payout solutions can help businesses reduce the financial risks of cross-border payments with fraud management and prevention capabilities. By managing and monitoring payouts in real time, Hyperwallet helps create secure payment processing across the globe.

Improved experience

Hyperwallet helps businesses deliver fast and cost-effective payouts to recipients in their preferred local currencies. Hyperwallet also supports a range of payout methods — including bank transfers, virtual cards, and local mobile wallets — so payees can receive funds in the way that makes most sense for them.

The Hyperwallet service has successfully facilitated multi-million dollar payouts, for major companies like, Southwest Airlines. After an operating challenge during the winter holiday season, Southwest Airlines used Hyperwallet to distribute $250 million to approximately 200,000 customers within six weeks³— demonstrating the service and hospitality for which the company is known.

Send and manage cross-border payouts with ease

Cross-border payouts are essential to business growth in a global economy. However, they can burden companies with high fees, complex regulations, and slow processes. Today’s enterprises need an end-to-end payment solution that can handle all these challenges and more.

Learn more about PayPal Hyperwallet and how it can transform your cross-border payout solutions.