Cross-border Payments: Types, Costs and Challenges in Canada

Every Canadian business that pays a US supplier, collects revenue from international customers, or subscribes to global SaaS tools faces the same reality: cross-border payments are more expensive and complicated than they need to be.

Money moving between countries involves multiple banks, currency conversions, compliance checks, and often unpredictable fees. A simple USD invoice payment can trigger wire fees, intermediary charges, FX markups, and reconciliation headaches that eat into margins and waste operational time.

The good news? Most of this complexity is avoidable. Modern cross-border payments work best when your banking layer supports local currency accounts and local payment rails. Instead of routing everything through expensive SWIFT wires, Canadian businesses can use ACH for US payments, SEPA for European vendors, and Faster Payments for UK contractors. Platforms like Venn provide this infrastructure, giving Canadian businesses local account capabilities in CAD, USD, GBP, and EUR alongside FX, payables controls, and accounting integrations in one place.

This guide covers the payment rails available to you, what they actually cost, why payments fail or get delayed, and a practical framework for choosing the right method for each scenario.

What Are Cross-Border Payments (And Why They're More Complex Than Domestic Transfers)

How Cross-Border Payments Work (A Simple Flow)

When you send money internationally, it rarely travels directly from your account to the recipient. Most cross-border payments follow one of these pathways:

Bank-to-bank via SWIFT/correspondent banking: Your bank sends instructions through the SWIFT network to intermediary banks, which then route funds to the recipient's bank. Each bank in the chain may deduct fees and add processing time.

Local-to-local payouts: When both parties have accounts in the same currency and country, payments can move through domestic rails like ACH (US), EFT (Canada), SEPA (Europe), or Faster Payments (UK). This bypasses the correspondent banking chain entirely.

Card networks: Business cards process international purchases through Visa or Mastercard networks, converting currency at the point of sale.

Complexity increases because each intermediary adds cut-off times, compliance screening, FX conversion points, and inconsistent data formats. A payment that settles in hours domestically might take days internationally, with fees deducted at multiple points along the way.

Common Business Use Cases In Canada

Canadian businesses encounter cross-border payments in predictable scenarios:

• Paying US suppliers: USD invoices for inventory, materials, or services

• Paying global contractors: GBP or EUR payments to freelancers and agencies

• Collecting USD revenue: Ecommerce sales, marketplace payouts, US client invoices

• SaaS subscriptions and ad spend: Monthly charges to US-based software and advertising platforms

• International refunds: Processing returns and chargebacks for global customers

Each scenario has different priorities. Supplier payments need reliability and cost efficiency. Contractor payments need speed. Revenue collection needs minimal conversion friction. Understanding these distinctions helps you choose the right payment rail.

Types Of Cross-Border Payments (Rails And When To Use Each)

1) International Wire Transfers (SWIFT)

SWIFT wires remain the default for high-value, urgent, one-off payments where bank-level traceability matters. When you need to send $50,000 for equipment or close a time-sensitive deal, wires provide the reliability and documentation that banks and large vendors expect.

The pain points are significant. Outbound wire fees typically range from $25 to $50. Intermediary banks may deduct additional "lifting fees" of $15 to $30. The recipient's bank often charges incoming wire fees. FX spreads on bank wires frequently exceed 1.5% to 2.5% above mid-market rates. Settlement can take one to five business days depending on intermediaries and time zones. Payments get returned when beneficiary details don't match exactly.

2) Local Bank Transfers Via Local Rails

The most cost-effective approach for recurring payments uses local account details to send and receive like a domestic payment. This requires having actual local accounts in the relevant currencies.

US ACH: Automated Clearing House transfers between US bank accounts typically cost $0 to $3 and settle in one to two business days. For Canadian businesses paying US suppliers regularly, having a US account with ACH capabilities eliminates wire fees entirely.

Canadian EFT: Electronic Funds Transfer between Canadian accounts costs pennies and settles same-day or next-day. Essential for domestic operations but relevant when collecting CAD from Canadian customers.

UK Faster Payments: Near-instant transfers between UK accounts, typically free or very low cost. Ideal for paying UK contractors or suppliers in GBP.

SEPA: Single Euro Payments Area transfers reach 36 European countries, usually settling within one business day for minimal fees. Far cheaper than wiring EUR to European vendors.

Venn provides Canadian businesses with local account capabilities in USD, GBP, and EUR, enabling ACH, Faster Payments, and SEPA transfers. This infrastructure transforms what would be expensive international wires into routine local payments.

3) Card Payments (Business Cards)

Business cards excel for online purchases, travel expenses, SaaS subscriptions, and controllable mid-value spend. The convenience of instant authorization and built-in expense tracking makes cards the practical choice for most operational spending.

Cost factors include FX markups (typically 2.5% to 3% on standard cards), card program rules, and whether your card uses the local currency balance first. Venn's multi-currency card draws from your USD, GBP, or EUR balance when making purchases in those currencies, reducing unnecessary conversions. The 1% unlimited cashback on all spend also offsets some cross-border costs while centralizing expense management with controls and receipt capture.

4) Digital Wallets And Payment Platforms

Specialized transfer providers offer ease of setup, transparent pricing, and sometimes better FX rates than traditional banks. These platforms serve specific use cases well, particularly for businesses without sophisticated treasury needs.

The limitations matter for growing businesses. Many platforms lack true local rails, meaning they still use wires behind the scenes. Settlement timing varies. Reconciliation often requires manual work. Business-grade payables workflows, approval chains, and accounting integrations may be missing or limited.

5) Cheques And Cash

Physical payment methods remain slow, high-risk, and provide poor audit trails. International cheques can take weeks to clear and often incur significant fees. Avoid these methods except where absolutely required by a counterparty.

Cross-Border Payment Costs: What You Actually Pay

The True Cost Breakdown

Cross-border payment costs extend far beyond the stated transfer fee. Understanding each component helps you identify where money leaks from your operations:

Transfer fee: The explicit charge for initiating the payment. Wire fees, platform fees, or per-transfer charges.

FX spread/markup: The difference between the mid-market exchange rate and the rate you receive. Banks often mark up rates by 1.5% to 3%. A $10,000 USD payment at a 2% markup costs you $200 in hidden FX fees.

Intermediary/correspondent fees: Banks in the SWIFT chain may deduct fees as funds pass through. These "lifting fees" are often unpredictable.

Recipient bank fees: Many banks charge $15 to $25 for incoming international wires, reducing what your vendor actually receives.

Card-related FX fees: Standard business cards add 2.5% to 3% on foreign currency transactions.

Operational costs: Staff time spent tracking payments, reconciling transactions, fixing failed transfers, and managing multiple banking relationships.

Typical Cost Components By Payment Method

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Venn's pricing illustrates what modern infrastructure can offer: ACH and EFT transfers cost $0 to $2 depending on plan, global wires run $6 to $10 depending on plan, and FX pricing ranges from 0.25% to 0.45% depending on plan. Free, unlimited Interac e-Transfer® comes standard on all plans.

OUR vs SHA vs BEN (Who Pays Wire Fees)

Wire transfer instructions include a fee allocation code that determines who absorbs costs:

OUR: You pay all fees, including intermediary and recipient bank charges. The recipient receives the exact amount specified. Most expensive for the sender but ensures full payment delivery.

SHA (Shared): You pay your bank's outbound fee. The recipient pays their bank's incoming fee. Intermediary fees get deducted from the transfer amount. Most common default setting.

BEN (Beneficiary): All fees get deducted from the transfer amount. The recipient receives less than invoiced. Rarely appropriate for supplier payments.

Always confirm fee allocation in supplier payment instructions. Sending $10,000 SHA when the invoice specifies OUR can result in underpayment and relationship friction.

Common Cross-Border Payment Challenges (And How To Prevent Them)

1) Delays And Cut-Off Times

International payments move through multiple time zones and banking systems. A payment initiated Friday afternoon in Vancouver might not begin processing in London until Monday. Intermediary banks add their own cut-off times and processing windows.

Mitigation: Build three to five business days into payment timelines. Send earlier in the week. Use local rails when possible to bypass intermediary delays.

2) Failed And Returned Payments

Incorrect banking details cause most payment failures. Common errors include wrong SWIFT/BIC codes, IBAN format mistakes, routing number confusion, and beneficiary name mismatches. Returns typically incur fees and delay payment by weeks.

Mitigation: Verify details directly with recipients. Use standardized vendor onboarding forms. Double-check character counts on IBANs. Confirm whether US accounts need routing numbers or ABA numbers.

3) Poor Transparency

Tracking international payments through correspondent banking chains often proves impossible. Inconsistent reference fields mean your invoice number may not appear on the recipient's bank statement.

Mitigation: Use consistent, short reference formats. Maintain internal payment logs with dates, amounts, and confirmation numbers. Choose payment methods with better tracking, like ACH or card transactions.

4) FX Volatility And Budget Uncertainty

Currency fluctuations directly impact margins on international projects and purchases. A 3% CAD/USD swing on a $100,000 contract represents $3,000 in unexpected cost variance.

Mitigation: Hold balances in currencies you spend regularly. Convert strategically during favorable rate periods rather than at payment time. Venn offers 2% interest on USD and CAD balances, making it practical to hold foreign currency until needed.

5) Compliance And AML Screening

New counterparties, high-risk jurisdictions, unusual amounts, and irregular payment patterns trigger compliance reviews. These reviews can delay payments by days.

Mitigation: Maintain documentation for every payment: invoices, contracts, proof of business purpose. Provide beneficial owner details proactively when requested. Establish payment patterns with regular vendors to reduce friction over time.

How To Choose The Right Cross-Border Payment Method

Decision Matrix By Scenario

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What To Standardize Internally

Building operational consistency around cross-border payments prevents errors and reduces costs:

Vendor onboarding checklist: Collect complete banking details upfront. For US vendors: routing number, account number, account type, beneficiary name and address. For international wires: SWIFT/BIC, IBAN where applicable, beneficiary bank details, intermediary instructions if required.

Payment approval workflow: Define who can approve payments at different thresholds. Role-based controls prevent unauthorized transfers.

Reconciliation rules: Standardize invoice reference formats so payments match automatically in your accounting system.

FX policy: Document when to convert currency, who approves conversions, and acceptable spread thresholds.

Building A Modern Cross-Border Payments Stack

The Core Stack Layers

Effective cross-border operations require integration across five layers:

Banking/accounts: Where money lives and moves. Multi-currency accounts reduce conversion friction.

Payments: The rails you use. Local rails beat wires for recurring payments.

FX: Conversion timing and rates. Transparent, competitive FX preserves margins.

Spend management: Cards, controls, and expense tracking. Centralized visibility prevents surprises.

Accounting: QuickBooks and Xero workflows. Automated reconciliation saves hours weekly.

How Venn Supports Cross-Border Operations

Venn provides Canadian businesses with the infrastructure to operate efficiently across borders. As a business banking platform, Venn consolidates multi-currency accounts, payments, FX, spend management, and accounting integrations into one system.

The local currency account capabilities matter most for cross-border efficiency. Venn provides a real local US account that can send and receive ACH, eliminating wire fees for USD payments. Local GBP account capabilities enable Faster Payments to UK vendors. Local EUR account capabilities support SEPA transfers across Europe. Combined, these rails let Canadian businesses send to 180 countries in 36+ currencies.

For spend management, Venn's multi-currency card uses your transaction currency balance first. Pay a US vendor in USD from your USD balance without triggering conversion. The 1% unlimited cashback applies to all spend, offsetting costs while centralizing expense tracking with controls and OCR receipt capture.

The accounting workflow integration connects directly to QuickBooks and Xero, automating reconciliation and reducing manual data entry. Invoice matching and receipt capture streamline month-end close.

Funds held with Venn are covered under CDIC insurance protection. Pricing works per account rather than per user, making the platform cost-effective as teams grow.

Comparison: Venn vs Common Alternatives

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Practical Checklists

Details You Need To Pay A Supplier Correctly

US payments: Routing number (9 digits), account number, account type (checking/savings), beneficiary name, beneficiary address

International wire: SWIFT/BIC code (8 or 11 characters), IBAN (where applicable), beneficiary bank name and address, intermediary bank details if specified, beneficiary name and address

UK local (Faster Payments): Sort code, account number, beneficiary name

EU local (SEPA): IBAN, BIC (sometimes optional), beneficiary name

How To Reduce Cross-Border Payment Costs

• Use local rails (ACH/EFT/SEPA/Faster Payments) instead of wires for recurring payments

• Hold balances in currencies you spend to avoid double conversion

• Standardize payment references for faster reconciliation

• Confirm OUR/SHA/BEN allocation before sending wires

• Use cards strategically for controllable spend and cashback rewards

• Consolidate banking, payments, FX, and accounting in one platform to reduce errors and admin time

Conclusion

Cross-border payment costs add up in three places: explicit fees, hidden FX markups, and operational time spent tracking and fixing problems. Canadian businesses that default to wire transfers for everything pay significantly more than those who match payment rails to use cases.

The practical path forward involves auditing your current payment mix, identifying recurring payments that could move to cheaper local rails, and standardizing your internal processes around vendor onboarding and reconciliation. Modern business banking platforms make this transition straightforward by providing local currency accounts, competitive FX, spend controls, and accounting integrations in one place.

Ready to simplify your cross-border payments? Sign up for a Venn account to access local USD, GBP, and EUR account capabilities, competitive FX rates, and the tools Canadian businesses need to pay and collect globally.

Frequently Asked Questions

Q: What's the cheapest way to pay a US supplier from Canada?

A: Use a USD account with ACH capabilities to pay US suppliers directly. ACH transfers typically cost $0 to $3 compared to $25 to $50+ for wire transfers. Venn provides Canadian businesses with local USD accounts that can send and receive ACH, eliminating wire fees for regular US payments.

Q: What's the difference between a wire transfer and ACH?

A: Wire transfers move through the SWIFT network via correspondent banks, costing $25 to $50+ and taking one to five business days. ACH transfers move directly between US bank accounts, costing $0 to $3 and settling in one to two business days. ACH requires both parties to have US bank accounts.

Q: Why did my international payment get returned?

A: Common causes include incorrect SWIFT/BIC codes, IBAN format errors, beneficiary name mismatches, or missing intermediary bank details. Returns typically incur fees and add weeks of delay. Always verify banking details directly with recipients before sending.

Q: What do OUR, SHA, and BEN mean on a wire transfer?

A: These codes determine who pays fees. OUR means you pay all fees and the recipient gets the full amount. SHA (shared) means you pay your bank's fee and the recipient pays theirs. BEN means all fees are deducted from the transfer amount.

Q: What is an IBAN and do Canadians need one?

A: An IBAN (International Bank Account Number) is a standardized account identifier used in Europe and many other countries. Canadian bank accounts do not use IBANs. When paying to countries that use IBANs, you will need the recipient's IBAN. When receiving from those countries, provide your account details in the format your bank specifies.

Q: How can I reduce FX costs on cross-border payments?

A: Hold balances in currencies you spend regularly to avoid converting at payment time. Compare FX rates across providers. Venn offers FX rates of 0.25% to 0.45% depending on plan, significantly lower than typical bank markups of 1.5% to 3%.

Q: How long do cross-border payments take?

A: SWIFT wires take one to five business days depending on intermediaries. ACH transfers settle in one to two business days. UK Faster Payments can arrive within hours. SEPA transfers typically settle within one business day. Local payment rails are generally faster and more predictable than international wires.

Q: How do I reconcile cross-border payments in QuickBooks or Xero?

A: Use consistent invoice reference numbers in payment descriptions so transactions match automatically. Platforms like Venn integrate directly with QuickBooks and Xero, syncing transactions and enabling OCR receipt capture for streamlined reconciliation.

Venn is a business banking platform, not a bank. Funds held with Venn are covered under CDIC insurance protection. Interac e-Transfer® is a registered trademark. Venn supports businesses in all Canadian provinces other than Quebec.

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**Disclaimer:** This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Venn Software Inc or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional. We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.