Cross Border Payments

The UK money movement you cannot ignore

The UK is a global payments hub. In 2025, digital payments in Britain are set to reach roughly $447.9 billion, while UK-linked cross-border business turnover has surged to around $3.2 trillion per day. With RTGS and CHAPS renewed and ISO 20022 in play, the rails beneath your transactions are changing fast.

Understanding fees, speed, and compliance turns cross-border payments from a cost centre into a competitive edge.

Who benefits from getting this right

If you sell to overseas customers, pay international suppliers, run a marketplace, manage payroll across borders, or send remittances for family and staff, this guide is for you. UK consumers and SMEs can reduce costs and delays, while larger firms can scale confidently by aligning payment methods to use case, currency, and regulation.

The essentials - terms that matter

Cross-border payments combine messaging, settlement, and compliance across multiple jurisdictions.

• Payment rails: The networks that move funds. UK options include CHAPS, BACS, Faster Payments (FPS), plus global systems like SWIFT and SEPA. High-value payments often settle in the Bank of England’s RTGS.
• ISO 20022: A rich data messaging standard now live on UK RTGS/CHAPS. Better data means clearer references, fewer errors, and smoother reconciliation.
• Correspondent banking: Banks maintain accounts with each other to move money internationally, typically using SWIFT messages.
• FX spread: The difference between market and customer exchange rates. Often the largest hidden cost for SMEs.
• Balance of payments: The UK’s official record of cross-border flows in trade, income, and investment. Shifts signal currency demand and potential volatility.
• Turnover vs volume: Turnover measures value transacted each day across markets. UK daily cross-border business turnover has climbed markedly since 2022, reflecting deep market liquidity.
• Compliance stack: KYC, AML, sanctions screening, and travel rule requirements. Faster payments are only useful if they are also compliant.

A growing UK market matters. More than 48 billion UK payments were made in 2023, with digital methods rising. As volumes grow, resilient infrastructure - like the Bank of England’s renewed RTGS and CHAPS - keeps high-value traffic moving reliably and transparently.

Choosing your route - rails and providers

Different purposes demand different rails and partners. Consider payment value, urgency, currency, and counterpart location.

Provider options include:

• High-street banks - deep compliance, broad access, familiar service.
• Specialist PSPs and fintechs - sharper FX, modern APIs, faster onboarding.
• Marketplaces/platforms - embedded payouts, mass disbursements, split payments.
• Multi-currency accounts - hold, convert, and pay from local currency balances.

Shortlist partners based on licensing, safeguarding of funds, FX execution, API quality, reconciliation tools, and coverage of destination corridors.

Pounds and pence - costs, impact, and risk

Cross-border costs typically include:

• Transfer fees - fixed or tiered, sometimes waived for larger volumes.
• FX spread - often the biggest driver of total cost for SMEs.
• Intermediary charges - deducted by correspondent banks en route.
• Receiving fees - the beneficiary bank may charge on arrival.

Returns on getting it right:

• Faster cash conversion cycles - fewer days trapped between invoice and settlement.
• Better acceptance - local rails and clear data reduce rejections.
• Lower disputes - ISO 20022 references cut reconciliation friction.

Key risks to manage:

• Compliance failures - sanctions or AML mismatches cause delays and account reviews.
• Operational errors - wrong IBANs or references create chargebacks and rework.
• Market volatility - FX swings can erode margins without hedging.
• Cut-off times - miss them and settlement rolls to the next day.

Who can qualify - practical eligibility checks

Before opening cross-border capabilities, providers will assess:

• Business profile - incorporation in the UK, directors, and ownership structure.
• Use case - goods, services, payroll, remittances, or marketplace flows.
• Geography - sending and receiving countries, especially higher-risk jurisdictions.
• Volumes and values - expected monthly turnover and average ticket size.
• Compliance posture - KYC processes, AML policies, sanctions screening, and record-keeping.
• Technical setup - ability to integrate APIs, map ISO 20022 fields, and reconcile data.

Consumers sending remittances will need identity verification and, in some cases, proof of funds or purpose. Businesses with complex flows may require enhanced due diligence.

From intent to settlement - your action plan

1. Define corridors, currencies, and payment urgency clearly.
2. Map rails to use cases and beneficiary needs.
3. Compare FX pricing, fees, and execution guarantees.
4. Validate compliance controls and screening workflows.
5. Pilot with limited volumes across priority corridors.
6. Integrate APIs and enrich ISO 20022 data fields.
7. Monitor speed, failure rates, and reconciliation accuracy.
8. Scale volumes and add hedging for key currencies.

Upsides and trade-offs to weigh

Pros:

• Faster settlements using CHAPS, FPS, and SEPA where applicable.
• Improved transparency with ISO 20022 data and renewed RTGS.
• Competitive FX from specialist providers and multi-currency accounts.
• Greater reach via SWIFT for less common corridors.

Cons:

• Fees can stack across intermediaries on longer routes.
• Compliance reviews add lead times, especially for new corridors.
• Post-trade investigations can delay funds during sanctions checks.
• Cut-off times and bank holidays vary by currency and country.

Red flags and smart precautions

• Do not ignore the balance of payments context - shifting UK inflows and outflows can affect GBP liquidity and FX pricing.
• Use payment purpose codes where required - they reduce compliance queries.
• Confirm beneficiary details with test payments before large transfers.
• Plan for public holiday calendars across both origin and destination.
• Document costs line by line - spread, transfer, intermediary, and receiving fees.

Small errors compound at scale - treat references, names, and account formats as mission critical.

If not this, then what

Alternatives and complements include:

• Virtual IBANs - collect locally in multiple markets before consolidating.
• Cards and wallets - faster consumer checkout and recurring billing.
• Request to Pay and open banking - lower-cost account-to-account options.
• Hedging - forwards or options to manage FX exposure on future flows.

A blended approach is common: local collection, pooled liquidity, then scheduled cross-border conversion using the most efficient rail.

What UK readers ask most

• How fast can I move funds today? CHAPS and FPS are near real-time domestically. Cross-border via SWIFT depends on corridor - hours to days. SEPA offers same day or instant in euros.
• Are cross-border payments getting cheaper? Policy progress is steady, but end-user gains vary. The G20 roadmap calls for practical steps to reduce costs and improve transparency.
• Is the UK still a major hub? Yes. Daily cross-border business turnover has risen strongly since 2022, and renewed RTGS and CHAPS settle over £800 billion on average each day.
• What drives my final price? FX spread plus fees across the chain. Negotiated pricing and clear payment data can materially reduce total cost.
• Will volumes keep growing? UK digital payments are expanding and total payment counts are at record highs, pointing to sustained demand across consumer and business flows.

Make your next move with confidence

Start by prioritising your top three corridors, then choose rails that fit urgency and value. Tighten compliance, enrich payment data, and test with small runs. As volumes grow, layer in hedging and automation. The goal is simple - faster funds, lower costs, fewer surprises.

Important information

This content is for general information only and does not constitute financial, legal, or tax advice. Always check requirements for your specific corridor and seek professional guidance before executing material cross-border transactions.