Why cross-border B2B payments cost so much and take so long

In recent years, targeted improvements have made progress in traditional cross-border banking systems. SWIFT GPI and the successful ISO 20022 migration have made international payments faster, more transparent, and easier to track.

Despite these upgrades, cross-border payments are still expensive for businesses. A Bank of Canada study of 2021 to 2024 data found bank margins of 2–3.5% on the payments Canadian businesses send abroad. While today's wire transfers sometimes arrive within hours, final settlement can take days in some corridors.

This guide explores why cross-border B2B payments sometimes cost more and take longer than fintechs and enterprises might prefer. It also explains how stablecoin rails can reduce transaction costs and turnaround times by adding a complementary layer to existing infrastructure.

Why cross-border B2B payments can take 3–5 days to settle

Less than half of retail B2B cross-border payments settle within one business day, and some routes take significantly longer. Here's why.

The intermediary banking chain

Correspondent banks hold accounts with one another, so you can send money through one and have it withdrawn at another. When sending money to a bank the initial bank doesn't have a relationship with, intermediary banks connect the two. Transactions hop between institutions before reaching their final destination at the recipient's local bank. Most chains are short, involving an average of one intermediary bank. Counterintuitively, longer chains don't necessarily stretch payment processing times, though they often increase transaction costs.

What actually travels is the payment instructions, not the money itself. Each bank in the chain settles its leg of the payment by adjusting its own balances on its own schedule, potentially adding delays to the final settlement.

Compliance holds, cut-off times, and FX windows

Once the payment instructions reach the destination bank through the messaging layer, the remaining delays happen at the receiving bank, due to factors like:

• Compliance checks. Sanctions alerts, suspected fraud, and incomplete payment data can trigger manual review, adding time before the bank issues the final payment.
• Business hours. If a payment arrives after hours, it has to wait for the next business day. A payment that lands the Friday before a holiday weekend, for example, might not be credited until Tuesday.
• FX windows. Currency conversion has to adhere to set cutoff times and, depending on the market, fixed daily rates. Late payments roll over to the following business day.

While many cross-border B2B payments on traditional rails don't take more than a business day to finalize, others can take much longer when unfavorable conditions converge.

The main cost drivers behind cross-border payment fees

Transaction costs reflect an accumulation of multiple fees across each stage of the bank transfer.

The cross-border fee stack

Several costs add to each payment, and with a B2B cross-border payments market size of $34.8 trillion in 2025, the fees add up.

Here are some of the most common charges:

• Sending bank wire fee. Originating banks charge the payer a fee for initiating a transfer.
• Intermediary bank fees. Global payments that have to hop between intermediate correspondent banks can incur additional charges from each bank in the chain.
• Receiving bank fee. Beneficiary banks may charge businesses a fee to receive payments. The amount depends heavily on the transaction size, ranging from about 1.3% for payments less than $500 to about 0.1% for payments over $20,000.
• Compliance or investigation fees. Banks may charge a fee if a payment gets flagged for manual review or a discrepancy needs to be resolved.

The highest hidden cost: FX markups

When businesses send money globally, the converting bank usually builds a margin into the foreign exchange rates it offers. It serves as compensation for handling the conversion, but the cost doesn't appear as a separate line item, limiting transparency. This FX spread is typically the biggest single charge in the fee stack. In a study on cross-border B2B payments in Canada, it made up more than 75% of what banks charged.

To illustrate, imagine a U.S. company needs to pay a Canadian supplier. Here's how the costs break down:

• Total intended to send. $20,000 USD
• Mid-market exchange rate. $1.40 CAD per USD
• FX markup. 2%, or $0.02 off every U.S. dollar sent
• Exchange rate formula. $1.40 CAD × 0.98 = $1.372 CAD per USD
• Formula with figures plugged in. $20,000 USD × $1.372 CAD per USD = $27,440 CAD

The supplier expects to receive $28,000 CAD. However, the markup listed above eats into this total, leaving the supplier with $27,440 CAD instead. That's a difference of $560 CAD, a hidden fee of $400 USD at the mid-market rate.

Prefunding and trapped liquidity

Banks prefund accounts at correspondent banks abroad to ensure they have enough local currency to settle payments on demand. Funds parked in foreign accounts can't be invested elsewhere, so banks tend to offset the cash flow and opportunity cost by charging customers higher fees.

Stablecoins speed up cross-border B2B settlement

Stablecoin rails offer a second payment system that can sit alongside traditional payment methods like wire transfers and ACH. Cross-border stablecoin payments can settle faster than the correspondent banking model, and the onchain leg costs less. The full cost of a payment still depends on the on- and off-ramp providers, FX conversion and local payout partners involved.

Fewer intermediaries

With stablecoin transactions, value travels together with the payment instructions, collapsing the correspondent chain into fewer steps. There's less need for prefunded accounts tying up capital, and onchain settlement isn't constrained by business hours or FX windows.

This means stablecoin payment infrastructure can remove correspondent banking from B2B flows, but only for the settlement leg. On- and off-ramp providers are still necessary to connect financial transactions to local bank accounts and payment systems at both sides.

Predictable, dollar-denominated fees

One of the key practical benefits of adopting stablecoin rails is cost predictability. Dollar-denominated network fees on payment-focused blockchains simplify cost calculations by keeping fees in a currency that's steady and familiar.

How Tempo approaches cross-border settlement

Tempo is a Layer 1 blockchain designed for stablecoin payments. Core features include:

• Dedicated payment lanes. Blockspace is set aside for payments, so heavy network activity in other areas doesn't slow payments or balloon costs.
• Settlement in under a second. Payments settle onchain in under a second, with no re-orgs.
• Stablecoin-denominated network fees. Network fees are payable in USD-denominated stablecoins, which means there's no separate volatile gas token to manage.
• Payment memos. Transfers made with Tempo's native token standard can carry a 32-byte onchain reference to simplify reconciliation with offchain records, such as invoices or ISO 20022 data.

Businesses are using or integrating Tempo for international payments:

• DoorDash is building stablecoin payouts for merchants and Dashers across over 40 countries using Tempo.
• Stripe runs Tempo as the infrastructure for Stripe Treasury stablecoin payments.
• Felix is adding Tempo to its settlement infrastructure for instant remittances in Latin America.

Faster, cost-effective cross-border B2B payments with Tempo

Correspondent banking is a reliable system, but payments sometimes take multiple days to settle and come with a higher cost. Intermediary banks each take their own transaction fees, and an FX spread and other fees raise the bill further.

Tempo's stablecoin rails offer an alternate route for high-volume, time-sensitive global payments, with onchain settlement in under a second and 24/7 availability. Network fees stay predictable, typically sub-cent and payable in stablecoins.

Choose Tempo to add a faster and more efficient stablecoin payment solution to your existing payment stack without replacing your trusted banking relationships.

FAQ

Are stablecoin rails a replacement for traditional banking?

No, these two payment solutions are complementary rather than mutually exclusive. Teams can add stablecoin rails as an additional layer that runs alongside correspondent banking rails.

Is stablecoin settlement cheaper than a wire transfer for B2B payments?

The onchain settlement leg usually costs less than a wire, because each intermediary bank in a wire transfer can add its own fees on top of the FX markup. The full cost of a stablecoin payment depends on the on- and off-ramp providers, FX conversion and local payout partners involved.

Network fees for stablecoin settlement on Tempo are typically sub-cent. However, institutions still need to factor in fees charged by on- and off-ramp payment providers.

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Talk to the Tempo team about settling your cross-border B2B payments on Tempo.