How Do We Modernize International Payments?

Working to modernize international payments is essential as cross-border payments are more common than ever. However, numerous hurdles reduce the efficiency of these payments. With the increased demand for faster international payments, new solutions have been created and used to ensure these payments work for the modern economy. 

Importance of International Payments

With financial services becoming more accessible and widespread thanks to new technologies, there is widespread demand to modernize international payments. In addition, new technologies and systems of finance can operate uninterrupted without downtime. With these systems used worldwide, it does not make sense to rely on international payment methods that may be unavailable at certain hours of the day or certain days of the week.

It is essential to modernize international payments so they work seamlessly at all times, allowing cross-border payments to keep up with modern business. Fortunately, new technologies enable financial institutions to create the infrastructure to conduct real-time international payments

Challenges for International Payments

Many barriers make it challenging to modernize international payments. The need to conduct payment in multiple currencies can introduce a high cost for financial institutions. 

Many financial institutions operate with deeply integrated legacy technology that struggles to integrate with new technologies. As a result, financial institutions may have to completely shut down or replace their systems to add new technologies, which adds another cost when working to modernize international payments.

This presents a unique opportunity for new financial service providers that are more adaptable and not burdened with legacy technology. 

There are also concerns about the need for more redundancy in cloud computing. A disruption to a handful of cloud service providers could upend the international payment system. Financial institutions and banks can strengthen their cross-border payments infrastructure by adopting multi-cloud solutions. 

Types of International Payments

Four broad types of international payments occur. Business-to-business is the largest of the four. Consumer-to-business is typically related to the rise of online retail and commerce. 

While the smallest two types, business-to-consumer and consumer-to-consumer, typically take the form of wages or remittances. To properly modernize international payments, each of these types of payments needs solutions that work specifically for their unique needs

Ongoing Trends in International Payments

More than ever, consumers have a choice about whom they work with when it comes to financial services. The rise of smartphones and alternate payment methods allows consumers to choose the payment provider that works best for them. In addition, cross-border payments have exploded as emerging markets such as Asia, Africa, and Latin America become more closely integrated with the rest of the world economically.

Today consumers and businesses expect to fulfill tasks instantly. Waiting on clunky legacy systems for international payments no longer makes sense in the modern economy. If international payments take too long, the consumer or business may abandon the transaction altogether. 

Tools to Modernize International Payments

Virtual Accounts

Virtual accounts with banks allow businesses to streamline their banking within a given market easily. Banks no longer need to have many different local accounts in a market. With centralized virtual accounts, companies can move funds more securely and efficiently. They can change the currency more easily if necessary


API has enabled banks and financial institutions to modernize international payments. With API’s ability to be easily customized, they can be easily integrated into existing systems. API also enables central banks and other financial institutions to have access to real-time exchange rates. 

This enables them to make better-informed decisions and helps to reduce risks with international payments. API also enables a much higher degree of transparency, allowing all parties involved in a transaction to see and track each payment process step. 

With API, developers that work with banks can efficiently innovate. This enables banks and financial institutions to future-proof their international payment system by dramatically reducing the cost of difficulty of innovation. In addition, API allows financial institutions to be adaptable. There are also plenty of third-party developers that financial institutions can hire to implement and improve their API-based system, saving more time and costs for financial institutions. 

The final benefit of the API is that it is straightforward to scale. Banks can easily add new features and services to their international payments system to attract new customers and to make their existing ones more likely to stay


Blockchain is another valuable tool for working to modernize international payments. Traditional channels for cross-border payments require the involvement of centralized financial institutions. 

While the blockchain network enables the connection to be directly between the sender and the receiver, this has resulted in lower costs and faster transaction speeds. Blockchain has been used extensively for remittance payments, allowing users to send money to relatives abroad easily. 

Like many other forms of international payments, remittances struggle using older networks. This is due to slow transaction speeds, high costs, and the need for more standardization. Blockchain addresses these problems by getting rid of the middleman and providing a network that users all over the world can access

Next Steps to Modernize International Payments

A massive challenge for cross-border transactions is the lack of coordination between actors and financial institutions. This adds significant inefficiencies and costs to the entire process. Multiple countries and central banks are working to alleviate some of these problems by creating more standardized criteria for international payments. 

Such standardization will benefit consumers and businesses by dramatically reducing compliance costs. Standardized criteria will also allow new technologies to modernize international payments. For example, API, blockchain, and virtual accounts can all be adapted to conform with new international standards and make cross-border payments more accessible. 

Continued innovation is critical to modernizing international payments, as each innovation provides new tools and solutions. Whether a small Fintech start-up or prominent players such as JP Morgan, they all play an essential role in getting innovations to modernize international payments


Attempting to modernize international payments is incredibly complicated. However, solutions such as virtual accounts, API, and blockchain all work to make international payments faster, cheaper, and less risky. Investing in these solutions and other innovations is the key to modernizing international payments into the real-time system consumers and businesses are demanding globally. 

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