As more and more people become reliant on cross-border payments, technology is playing an important role in cutting costs.
In 2011, the G20 announced it would be prioritising reducing the cost of remittances, aiming to bring the average cost of sending a £150 remittance below 3% by 2030 while also targeting no remittance corridor to cost more than 5%.
Since announcing these goals, cross-border transfers have become even more essential, with millions of people relying on remittances to support families, pay for education and cover living expenses.
Why are remittances so expensive?
Cross-border payments are more expensive than domestic transfers because funds pass through more financial institutions before reaching their destination. Each intermediary involved in the transaction can apply processing fees, foreign exchange markups or settlement charges.
A lot of remittance providers still rely on large physical agent networks, creating additional operating costs tied to staffing, compliance and cash handling.
Another reason for being so expensive is due to the compliance obligations because providers must conduct know-your-customer (KYC) checks, anti-money laundering (AML) screening and transaction monitoring across multiple jurisdictions.
In a bid to cut costs and improve these types of payments, companies and consumers are turning to technology for solutions.
Blockchain rails
Blockchain payments technology is commonly brought up when discussing cross-border payments in today’s world.
Traditional international transfers usually rely on correspondent banking networks, where payments move through several intermediary banks before reaching their destination.
Blockchain-based payment rails reduce the need for intermediaries by allowing transactions to settle directly between participants on decentralised networks, which can lower network costs and improve settlement times.
Stablecoins have become a shining star of this trend because, unlike more volatile cryptocurrencies, stablecoins are pegged to fiat currencies, allowing providers to maintain value while benefiting from the speed of blockchain networks.
The US–Mexico corridor is one of the best examples of this in action. In 2024, crypto platform Bitso processed $6.5bn in stablecoin-powered remittances, representing more than 10% of the entire corridor.
Fintech apps
One of the big reasons cross-border payments costs are becoming cheaper is because of digital payments, with mobile apps helping to lower operating costs.
Though some traditional providers still have large branch networks, many fintech apps operate entirely through digital channels. Customers can onboard remotely, complete identity verification digitally and send funds directly from their phones.
While this may seem like the norm, this reduces overhead costs and allows providers to offer more competitive pricing structures.
Modern apps also use real-time foreign exchange pricing and automated routing systems to improve efficiency, and some platforms now charge a fraction of traditional bank transfer fees, while others offer zero-fee transfers under certain conditions.
According to a 2025 report titled ‘The Future of Fintech and Automation in International Financial Projects: A Comprehensive Analysis of Emerging Trends and Blockchain Applications’, fintech apps are reducing remittance costs by as much as 80%.
Additionally, competition from challenger banks and fintech platforms is putting pressure on traditional banks and money transfer operators to reduce their pricing.
Open banking for cross-border payments
Application programming interfaces (APIs) are another way to bring down the costs of remittances.
API-driven third-party providers allow remittance firms to connect directly with banks, payment gateways and foreign exchange providers. This enables faster payment routing, improved interoperability and more efficient settlement between institutions.
This is because it eliminates the need for institutions to build every component internally, and instead allows them to use APIs to access payment rails, compliance services and currency conversion tools through integrated platforms.
Cloud-based payment infrastructure
Cloud technology is also helping reduce the cost base associated with international payments.
Traditional remittance infrastructure relies on centralised banking systems and physical data centres, which can be expensive when it comes to upkeep and difficult to scale.
Cloud-based payment platforms allow providers to operate more flexibly while reducing infrastructure and maintenance costs.
Instead of managing large on-premise systems, providers can process payments through cloud environments that support real-time updates, automated workflows and lower operational overhead.
AI compliance and fraud detection
In addition to infrastructure, another area that can be optimised to reduce costs is compliance, which is one of the highest operational expenses within remittance services, particularly around KYC and AML requirements.
AI-driven compliance systems can analyse transactions in real time, identify suspicious activity patterns and automate parts of identity verification workflows that previously required manual review.
This helps providers reduce onboarding times, improve transaction monitoring and lower staffing costs linked to compliance operations.
Machine learning models can also improve fraud detection accuracy by identifying unusual behaviour across large transaction datasets more efficiently than traditional rule-based systems.
