What are Cross-Border Payments?
Cross-border payments refer to the movement of funds from one country to another—typically involving multiple currencies, banking systems, and regulatory jurisdictions. For global employers, these payments span a wide spectrum: salary disbursements, contractor fees, social security contributions, tax withholdings, and intercompany transfers.
Explanation:
Such payments are essential for global trade and business operations, but they can be complex due to differences in currency, banking systems, and regulatory environments. Efficient handling of cross-border payments is crucial for businesses operating internationally.
Practical Example of Compliance Risk Management:
A U.S.-based software company pays its remote developers in India. The payments are sent from a U.S. bank account to Indian bank accounts, requiring currency conversion from USD to INR and adherence to international banking regulations.