Crypto solutions for cross-border card payments

As an internet business owner operating a global profit-making venture, you’ve probably experienced problems in offering appropriate payment options to all your clients. Your business model may encounter complications due to the strict regulations placed on financial operations for particular online goods and services in some nations. This might pose a risk to the health of your business. It is not rare for clients to encounter hurdles when trying to access certain online services because of the absence of secure and effective payment systems. This is especially problematic when their home country forbids standard credit card transactions for these services.

Overcoming cross-border payment complications is a real problem for online businesses, especially those which may be considered part of high-risk industries and are therefore regulated strictly.

Payment problems online businesses face

Cryptocurrency has been rapidly gaining popularity in recent years due to its potential to revolutionize the traditional financial system. One of the areas where cryptocurrency is increasingly being used is cross-border payments. This article explores the benefits and challenges of using cryptocurrency for cross-border transactions and the latest developments in the crypto industry related to cross-border payments.

What are cross-border payments?

Cross-border payments are financial transactions made by people, businesses or other institutions, which are located in different countries. Thanks to this form of payment, it has become possible for business owners to provide their products and services globally. But there are still many downsides to the international transactions like:

  • transaction denial due to governmental restrictions;
  • high transaction fees;
  • time inefficiency – takes longer for the payment to be verified and received;
  • complications with the payment method result in money and time loss.

It is a work in progress to make cross-border payments efficient for all parties in the transaction and to create a more secure and inclusive global market.

Online payment participants

In order to understand how an online payment is conducted – from the customer’s bank account to the institution, which has to acquire the assets, one must know how many and which are the parties participating in the deal.

  • The online business owner / merchant provides their customers with a specific service or sells certain types of products. 
  • the customer or the cardholder is the one who will potentially buy what the merchant offers with their own debit or credit card. 
  • The issuing bank is the institution which has provided the customer with a bank account and a debit or credit card on behalf of card schemes such as Mastercard or Visa
  • And the final participant is the acquirer or the bank, which is used by the business owner in question and receives their profits and stores them in their personal bank account.
  • Of course, as we have already mentioned, it would be impossible for any of these parties to cooperate smoothly without the payment processor, which makes sure that only valid cards are accepted and that everyone involved in the provision-payment procedure is treated fairly. Without the help of such technologies, online based businesses wouldn’t be able to navigate all stages of the transactions.

What is a payment gateway and how does it work?

A payment gateway is a technology used by the merchant that authorizes and processes the card payments made by the customer.

Briefly explained, the payment gateway process involves the following steps:

  • The client states that they are ready to submit their order and make it clear to the website’s algorithm. 
  • Then the gateway takes note of that order and sends data to the acquiring bank, which examines the given information and, based on it, approves the transaction. 
  • The issuing bank then checks the provided data it received and if it approves the transaction, a message is sent to the acquiring bank. 
  • At the end of that procedure the client is informed about the status of their order.

Check out our complete guide about Crypto payment gateways and how do they work for more information.

Challenges of Cross Border Payments

Traditional cross border payments, or international money transfers, have long been a complex and costly process. Several challenges arise when sending money across borders, which can hinder global commerce and hinder financial inclusion. Some of the most significant challenges include:

High Costs

International transactions often involve multiple intermediaries, such as correspondent banks, which charge fees at each step of the process. These fees can quickly add up, making the overall cost of cross border payments expensive for both senders and recipients.

Slow Transaction Speeds

Traditional cross border payments can take several days, if not weeks, to process. The involvement of multiple financial institutions in the transaction chain, as well as time-consuming manual processes and regulatory checks, contribute to these slow speeds.

Limited Access

Access to global financial markets is not universally available, especially for people in developing countries. The absence of reliable banking infrastructure and services makes it difficult for individuals and businesses to participate in the global economy.

Regulatory Compliance

Cross border transactions are subject to strict regulatory oversight, including anti-money laundering (AML) and know your customer (KYC) regulations. Compliance with these regulations can be time-consuming and expensive, further complicating the international money transfer process.

Lack of Transparency

Traditional cross border payment systems often lack transparency, making it difficult for users to track the status of their transactions and the fees being charged. This lack of visibility can lead to disputes and a lack of trust between parties.

Failing of transactions

Failing transactions can lead to potential loss of revenue and decrease in overall customer satisfaction. We look at some common examples why they may occur.

No global banking format

When you try to purchase something from a foreign website, there are certain steps that need to be concluded in order for the transaction to be successfully completed.

It requires the acquiring bank and the issuing one to interact together. As of this moment there isn’t a standard setup to be followed for these interactions which means that the payment request made by the acquiring bank in the seller’s country may not be recognized by the issuing bank in another country, which creates a significant risk of the payment being declined in the end.

Wrong payment information

As it’s difficult for banks to communicate with each other, it is evident that the information that needs to be presented varies depending on the market and the payment option selected to make the transaction.

Some credit card numbers can be up to 19 digits and in order to complete the transactions in the UK and EU you may need to gather extra information for 3d security.

Different payment methods need different payment information generally. For example some require account number, sort-code, email address or even a phone number. Collecting all of the right and necessary information can be tiresome and easily result in a failed transaction.

Currency conversion

If there are clients from numerous markets and the accepted payments are available in one currency only, it adds another stage in the payment chain. In some cases the banks may not accept payments that are in other currencies differentiating from which the card was issued in. Some smaller banks frequently use a mediator to handle currency conversion. A third party bank being involved in the majority of cases leads to extra fees, more regulations and rules to follow to prevent the transaction from failing.

False declines

Transactions tend to fail when the banks are not able to differentiate between the genuine and fraudulent activity of the bank account owner. Often due to the fact that the transaction appears as “international”, which is a red flag. Banks also usually have system default settings that prevent purchases from bank accounts located outside your country of residency.

Which businesses are most likely to experience failing online payments?

One of the most renowned payment processors, Stripe has provided its users with accurate information about why online payment transactions may fail and which online merchants are affected the most by foreign policies. As of today Stripe declines processing transactions regarding the following online businesses:

  • Any online Gambling services – betting sites, online casinos, lotteries etc.
  • Firearms of all types – from regular guns to ammunition, explosives and even fireworks.
  • Adult entertainment content
  • Alcoholic beverages and tobacco products
  • Specific legal services
  • Get rich quick schemes requiring investments
  • Unauthorized proprietary products – like counterfeit fashion pieces, music, and software products.
  • CBD products, including substances which are illegal in some countries, like cannabis.
  • Any other products or services that are in violation of law in the jurisdictions where your business is located or targeted to.

It is clear that every government’s policies have a different take on either just regulating or even prohibiting the selling and provision of such services and commodities – each local jurisdiction has stated different requirements under which cross-border transactions can be made. However, every merchant should always take into consideration how much these regulations will have an impact on their sales. Regardless of the different jurisdictions people will continue to find ways to pay for and take advantage of all kinds of services. It is up to the salesman who provides them to make sure that their website can allow clients to buy whatever they’re offering without dealing with legal issues.

Even if your business does not operate in any of the above-mentioned industries, you still may experience failing transactions due to being considered as a High Risk Merchant.

Big card networks like Visa and Mastercard accumulate information about credit cards which have been denied by payment processors due to suspicious activities and violation of bank rules of conduct. Therefore there has been created a list of merchants and other individuals, who will be denied payment services because their accounts aren’t considered eligible. Processors analyze such data, which is apparently crucial for the completion or dismissal of the transaction.

Learn more about why payment processors avoid high-risk industries.

How Cryptocurrency Can Improve Cross Border Payments?

Cryptocurrencies have the potential to revolutionize the way we conduct cross border payments, addressing many of the challenges associated with traditional international money transfers. Here’s how cryptocurrencies can help improve cross border payments:

Lower Transaction Costs

Cryptocurrencies, such as Bitcoin and Ethereum, operate on decentralized networks, eliminating the need for intermediaries like banks and other financial institutions. This streamlined process reduces the number of parties involved, leading to lower transaction fees and more cost-effective cross border payments.

Faster Processing Times

Blockchain technology, the backbone of cryptocurrencies, enables faster transaction processing compared to conventional systems. Cryptocurrency transactions can be confirmed within minutes or even seconds, significantly reducing the time required to settle cross border payments.

Enhanced Accessibility

Cryptocurrencies can be accessed and used by anyone with a smartphone or internet connection. This feature allows individuals and businesses in underbanked or unbanked regions to participate in global commerce and easily conduct cross border transactions without relying on traditional banking infrastructure.

Reduced Exchange Rate Risk

Many cryptocurrencies, such as stablecoins, are designed to maintain a stable value relative to a specific asset, like the US dollar. Using stablecoins for cross border payments can help mitigate the risks associated with fluctuating exchange rates, ensuring a more predictable transaction value.

Simplified Regulatory Compliance

Blockchain technology enables greater transparency and traceability, simplifying the process of complying with AML and KYC regulations. Smart contracts can be utilized to automate compliance checks, streamlining the cross border payment process and reducing the burden on users.

Increased Transparency

Cryptocurrency transactions are recorded on a public, tamper-proof ledger, allowing users to track the status of their transactions in real-time. This transparency can help build trust between parties and resolve disputes more efficiently.

In summary, cryptocurrencies offer a powerful solution for overcoming the challenges of traditional cross border payments. By leveraging blockchain technology, digital assets can enable faster, cheaper, and more transparent international transactions, fostering greater financial inclusion and global economic growth.

Drawbacks of Using Crypto for Cross Border Payments

While cryptocurrencies offer numerous advantages for cross border payments, there are also several drawbacks that need to be considered. Some of the most notable challenges include:

Price Volatility

Many cryptocurrencies, such as Bitcoin and Ethereum, experience significant price fluctuations, which can introduce risk and uncertainty in cross border transactions. This volatility can lead to substantial losses if the value of the cryptocurrency declines between the time of initiating and settling the transaction.

Regulatory Uncertainty

Cryptocurrencies are still a relatively new technology, and their legal status varies across different jurisdictions. In some countries, cryptocurrencies are heavily regulated or even banned, which can create challenges for individuals and businesses looking to use them for cross border payments. Navigating the complex regulatory landscape can be time-consuming and costly.

Scalability and Network Congestion

Some popular blockchain networks, like Ethereum and Bitcoin, can experience congestion due to a high volume of transactions, leading to increased transaction fees and slower processing times. Scalability remains a significant challenge for these networks, and while several solutions are being developed, their adoption and effectiveness are yet to be fully realized.

Limited Acceptance and Adoption

Although cryptocurrencies are gaining traction, they are still not universally accepted as a means of payment. Many businesses and individuals still prefer traditional methods of payment, which can limit the practicality of using cryptocurrencies for cross border transactions.

Security Concerns

The use of cryptocurrencies and blockchain technology exposes users to potential security risks, such as hacking and theft. While blockchain networks are generally secure, user wallets and exchanges can be vulnerable to cyberattacks, resulting in the loss of funds.

Environmental Impact

Some cryptocurrencies, like Bitcoin, rely on energy-intensive mining processes, which contribute to a substantial carbon footprint. This environmental impact has led to increased scrutiny and criticism, with some users and investors opting for more sustainable alternatives.

In conclusion, while cryptocurrencies offer several benefits for cross border payments, it is crucial to weigh these advantages against the potential drawbacks. As the technology evolves and matures, it is likely that many of these challenges will be addressed, further enhancing the appeal of cryptocurrencies for international transactions.

Use cases of Cryptocurrency in Cross-Border Payments

Here are a few case studies of cryptocurrency used in cross-border payments and what we can learn from them.

Ripple (XRP)

One notable example of cryptocurrency being used for cross-border payments is Ripple. This payment system uses a digital currency called XRP to facilitate cross-border transactions between financial institutions. By using blockchain technology, Ripple is able to offer fast, secure, and cost-effective payments across borders, with transactions taking just seconds to complete.

In November 2021, Ripple announced a new partnership with the Republic of Palau working on developing strategies for cross-border payments. The country focused its efforts to transform its economy and position to a highly desirable country to do business with. This partnership will allow its citizens to access financial services and enable efficient cross-border remittances. Using XRP would provide financial institutions and government bodies such as Palau the ability to complete transactions with lower fees only in a matter of seconds.

In May 2022, Nium, a Singaporean-based fintech company, through partnering with Ripple, managed to successfully expand and strengthen its presence into Southeast Asia. Now being able to offer corridors from the Americas to many locations in Southeast Asia. Nium started using Ripple’s advanced blockchain technology to process real-time transactions faster and more reliable for its customers, while also substantially increasing total remittance volume momentary.

PayPal’s entry into cryptocurrency

PayPal’s entry into the cryptocurrency market is widely seen as a significant step forward for the wider adoption of cryptocurrencies. By allowing its users to buy, hold, and sell cryptocurrencies directly from their PayPal account, the company is helping to bring these technologies to a wider audience.

However, critics argue that PayPal’s involvement could potentially undermine the decentralized nature of cryptocurrencies, as it centralizes control over these systems in the hands of a single company.

In June 2022, PayPal announced that users can now transfer their cryptocurrencies purchased on PayPal to other digital wallets, including their own non-PayPal wallets. PayPal’s initial crypto approach was more like a cryptocurrency exchange than a cryptocurrency wallet, where once users bought crypto on PayPal, PayPal held onto it for them until they sold it . However, PayPal’s Checkout with Crypto feature makes it quick and easy to pay for online purchases with cryptocurrency, and PayPal users can use digital currency to make purchases at all 29 million merchants that accept PayPal.

Visa’s and Crypto Cross-Border Payments

Visa has actively embraced cryptocurrencies by incorporating digital assets into its ecosystem. Key developments include issuing crypto-linked debit cards in partnership with platforms like and Coinbase, settling transactions using the USDC stablecoin, supporting crypto-native companies through the Fintech Fast Track program, exploring Central Bank Digital Currencies, and investing in crypto startups. These efforts signify Visa’s commitment to innovation in digital finance and its role in fostering mainstream cryptocurrency adoption.


Another example is BitPesa, a Kenyan-based startup that uses Bitcoin to facilitate cross-border payments between Africa and the rest of the world. By leveraging the fast and secure nature of the Bitcoin network, BitPesa aims to reduce the cost and complexity of cross-border transactions.

Future of Cryptocurrency in Cross Border Payments

The increasing adoption of cryptocurrencies and their potential to overcome the challenges of traditional cross border payments point to a promising future for digital assets in the international transaction landscape. Some key trends and factors that will shape the future of cryptocurrency in cross border payments include:

Wider Adoption of Stablecoins

Stablecoins, which are pegged to stable assets such as fiat currencies or commodities, offer a solution to the volatility issue associated with cryptocurrencies like Bitcoin and Ethereum. As stablecoins gain more acceptance, their use in cross border payments is expected to grow, providing a stable and efficient medium of exchange for global transactions.

Advances in Blockchain Technology

Ongoing developments in blockchain technology will address existing limitations such as scalability and network congestion. Innovations like layer 2 scaling solutions and new consensus mechanisms can enhance the efficiency of cryptocurrency networks, making them more suitable for high-volume, global transactions.

Regulatory Clarity and Harmonization

As regulatory frameworks around cryptocurrencies continue to evolve, increased clarity and harmonization across jurisdictions will likely promote the growth of digital assets in cross border payments. A more consistent regulatory environment will reduce barriers to entry and encourage more businesses and individuals to adopt cryptocurrencies for international transactions.

Integration with Traditional Financial Systems

The increasing collaboration between traditional financial institutions and cryptocurrency platforms, as seen with Visa’s entry into the crypto space, will further facilitate the adoption of digital assets in cross border payments. This integration will enable seamless transactions between fiat and cryptocurrencies, making it easier for users to leverage the benefits of digital assets in international transactions.

Growth of Decentralized Finance (DeFi)

The rapid growth of the decentralized finance (DeFi) sector has the potential to revolutionize cross border payments. DeFi platforms can offer innovative financial products and services, such as decentralized exchanges and lending platforms, which can streamline international transactions and reduce the reliance on traditional financial intermediaries.[/vc_column_text]

cross-border blockchain payment

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