Cross-border payments complexity pushes merchants toward localised systems

Cross-border payments complexity is becoming a competitive issue for companies selling internationally, according to Svetlio Todorov, managing director at emerchantpay. In a Finextra opinion piece, Todorov said businesses face slower processing, varied regulation and fragmented payment preferences even as customers expect the speed and clarity they receive in domestic digital payments.

Todorov argued that international payments now affect more than treasury operations. For merchants, the way funds are accepted, authenticated, settled and reconciled can influence customer experience, operating costs and expansion plans.

Why are cross-border payments complex?

International transactions can pass through several institutions, markets and compliance checks before money reaches the recipient, while domestic payments often follow more standardised routes. Todorov said requirements for authentication, anti-money laundering controls, sanctions screening and customer verification vary by jurisdiction, adding operational work for companies that sell in multiple countries.

The author said the challenge grows when businesses rely on separate providers in different regions. Fragmented systems can make it harder to see payment status, settlement timing and foreign exchange exposure across markets, limiting the information finance teams need to manage cash flow.

Local payment methods shape checkout performance

Todorov said merchants often misread global acceptance as the ability to take major international card schemes alone. Consumer habits differ sharply by market, and shoppers often prefer payment methods they already use locally.

He cited Pix in Brazil, SEPA in Europe and BLIK in Poland as examples of payment options embedded in local purchasing behaviour. Supporting familiar methods can help customers complete purchases with greater confidence, while a checkout built only around international cards may add friction in some markets, according to Todorov.

Payment acceptance is also affected by issuer risk models, fraud controls and authentication rules. Todorov said merchants entering new markets may see lower authorisation rates than in their home markets, making routing, local acquiring relationships and payment-method coverage part of commercial performance rather than back-office plumbing.

Unified infrastructure and compliance

Todorov said companies are shifting from multiple disconnected payment arrangements toward unified platforms that centralise acceptance, reporting and reconciliation across markets. A unified platform can give businesses one view of transactions and reduce manual work when volumes increase.

Reconciliation is the process of matching incoming and outgoing payments with invoices and internal records. Todorov said automation can improve accuracy and free finance teams from repetitive matching and reporting tasks.

He also said compliance should be built into payment infrastructure rather than handled only through manual checks. That includes customer verification, transaction monitoring, sanctions screening and responses to changing regional rules.

Looking ahead, Todorov pointed to wider real-time payment networks, the ISO 20022 messaging standard and investment in interoperability between domestic payment schemes as forces shaping the sector. ISO 20022 is a financial messaging standard designed to carry richer payment data, which can help institutions process and screen transactions with more consistent information.

Todorov concluded that companies expanding across borders will need payment systems that combine localisation, transparency, automation and compliance. He framed cross-border payments as infrastructure that supports revenue protection and international growth, rather than a narrow processing function.

This story draws on original reporting from Finextra Research.