Managing Fees & Optimizing Costs in International Invoice Payments

International accounts payable teams live with a fee stack that is fragmented, opaque, and often misunderstood. Cross-border flows reached “about $150 trillion in 2022” and generated $240 billion in revenues for payment providers. (McKinsey & Company) That revenue does not appear from thin air; it is funded by spreads, charges, lifting fees, compliance costs, and error remediation borne by corporates. A secure international invoice payment guide must map that stack, quantify it, and prescribe controls that cut waste without raising overseas payment risk.

1. The fee stack: what really gets charged

Most AP teams see only the visible line items on a bank advice. Hidden layers often add more.

1.1 FX spread

Close-up of hand writing cryptocurrency related words on a whiteboard, featuring BTC, ETH, and economics.

Banks and PSPs quote “all-in” exchange rates that embed a margin over mid-market. Spreads on vanilla G10 pairs for corporates can range from 5 to 40 basis points; exotic pairs can exceed 200 bps. Independent benchmarks (Reuters, Refinitiv, XE mid-rate) help back-calculate the margin. Spot versus forward points and day-count conventions further blur comparability.

Practical step:

Capture the quote timestamp and size, then compare to a reliable mid-market snapshot. Automate this through your TMS or ERP interface. Anything above a negotiated ceiling triggers an exception workflow.

1.2 Transfer fees and correspondent “lifting” fees

Wire charges are often tiered: originator fee, beneficiary fee, and intermediary deductions. SWIFT MT103 fields 71A/71F specify whether charges are OUR, SHA, or BEN, but many intermediaries still deduct “repair” or compliance fees. The Payment Systems Regulator in the UK has highlighted complex reimbursement debates, reflecting how costs shift across parties. (The Times)

Mitigation:

Use OUR for critical invoices where a net amount must land.
Where SHA is contractually required, adjust purchase orders to gross-up for expected deductions.

1.3 Remittance and small-ticket corridors

The World Bank’s Remittance Prices Worldwide database shows stubborn costs. “In Q1 2024, the Global Average cost for sending $500 was 4.32 percent.” (remittanceprices.worldbank.org) G8 sending corridors saw average costs of 6.22% in Q2 2024, up from 5.87% in Q1. (remittanceprices.worldbank.org) Even if a corporate is not a remitter in the retail sense, those same corridors and rails serve SME suppliers.

1.4 Compliance overhead

FATF Recommendation 16 obliges providers to include complete originator and beneficiary data in cross-border wires. (Moody’s) In June 2025 FATF updated the standard to “add a critical safety net … by increasing transparency of information that accompanies cross-border payments”. (FATF) ISO 20022 message formats can ease that burden by structuring richer data. (ComplyAdvantage) For corporates, missing data often means repair fees or rejections.

Cost lever:

Validate mandatory fields (name, address, account, LEI/ID where required) at vendor onboarding. Make it part of the international vendor payment checklist.

1.5 Fraud losses and recovery costs

Invoice redirection scams and authorised push payment (APP) fraud drain working capital. UK Finance recorded £1.17 billion stolen in 2023. (UK Finance) APP fraud losses were £459.7 million with 232,429 cases; 62% of the loss was reimbursed. (UK Finance) In 2024 losses fell to £450.7 million, but reported fraud incidents rose 12% to 3.31 million. (Reuters)(UK Finance) Cost is not only the stolen principal: a Financial Times case study reported nearly a year and £100,000 in legal fees to recover £324,634. (Financial Times) This illustrates why teams need to avoid invoice scams abroad and protect against FX fraud through process controls, not just insurance.

2. Mapping cost drivers to controllable levers

Driver	Typical manifestation	What AP can actually do	KPI to track
FX margin	Mark-up over mid-market	Multi-bank RFQ, forward contracts, netting	Bps saved vs benchmark
Transfer fee	Flat wire fee per payment	Batch payments, local rails (SEPA, ACH), fintech PSP	Avg fee per transaction
Lifting fee	Intermediary deduction	OUR charge code, route optimization	% payments with short-credit
Compliance repair	SWIFT repair fee, delay	Data validation, ISO 20022 fields	% repaired / rejected
Fraud / scam	APP loss, legal cost	Call-back, bank account verification, dual approval	Incidents per 10k payments
Late delivery	Value date slippage	Cut-off management, time-zone aware scheduling	% value-dated T+0/T+1

3. Choosing the best way to pay a foreign supplier

No single rail wins every time. Criteria: amount size, urgency, corridor regulation, supplier capability, and your own risk appetite.

3.1 Traditional cross-border wire (SWIFT)

Strength: ubiquity. Nearly any banked counterparty can receive it.
Weakness: opaque tracking, multiple lifts. GPI and tracker tools help but still rely on correspondent banks.

3.2 Local rails via in-country accounts or PSPs

Strength: cost reduction. Domestic ACH/RTGS fees are cents rather than tens of dollars.
Weakness: need for local entity or PSP license. Tax and substance considerations can offset savings.

3.3 Card rails or virtual cards

Interchange and scheme fees can be negotiated. Useful for smaller, ad-hoc suppliers.
Surcharges: “A surcharge is an additional fee that a business imposes on a customer when they use a credit card.” (CSG) Understand local caps (e.g., EU PSD2).

3.4 Wallets and closed-loop networks

FX spreads can be favourable for micro-payments.
Reconciliation complexity rises; statements may not integrate cleanly into ERP.

Decision matrix:

Is the invoice value below your micro-payment threshold? Consider a card or wallet.
Does the supplier bank in a low-cost ACH market you can access via a PSP? Use the domestic rail.
For high-value, time-critical transactions, pick SWIFT with OUR charges and pre-confirmed route.

4. Safe cross border invoice process: end-to-end controls

4.1 Vendor onboarding and data collection

Verify bank account ownership via independent confirmation (bank letter, micro-deposit, secure portal). Avoid relying solely on PDF invoices, which can be spoofed.
Collect tax IDs, LEI, physical address, and expected currency; align with FATF R.16 data fields. (Moody’s)(FATF)
Store preferred rail and currency per vendor to avoid ad-hoc FX decisions at invoice time.

4.2 Invoice validation

Three-way match (PO, receipt, invoice).
Language/format normalization: ISO currency codes, IBAN formats. A rules engine can spot impossible IBAN lengths or non-check-digit matches.

4.3 Payment authorization

Dual approval with role segregation. One approver validates commercial legitimacy; another validates banking coordinates and FX rate reasonableness.
Mandatory call-back procedure for any bank detail changes. Use numbers on file, not numbers in the change request email.

4.4 Execution and post-payment audit

Use payment trackers (SWIFT gpi, PSP dashboards) to confirm credit. Reconcile value date and amount. Investigate variance beyond tolerance.
Set alerts for partial credits, implying intermediary lifts.

This set of practices supports “safeguarding international AP workflow” and helps reduce overseas payment risk without slowing operations.

5. FX risk and cost optimization tactics

Hedge accounting and operational hedging reduce volatility and fees.

5.1 Natural hedging and netting

Match payables and receivables in the same currency across subsidiaries. Internal netting centers cut both FX notional and wire count.

5.2 Forward contracts and layered hedging

Rather than a single large forward, some treasury teams layer monthly forwards to “make regular, small hedging decisions” and adjust exposure. (Hedgebook)

Accounting reminder: under ASC 830, the hedged item is measured using the spot rate; transaction gains or losses go to earnings. (Viewpoint) Treasury and AP should align on when to fix FX to avoid P&L surprises.

5.3 Rate sourcing and RFQ engines

Embed a multi-dealer RFQ for FX deals above a threshold (e.g., USD 250k). Capture quotes in the ERP for audit and renegotiation leverage. Tie performance fees to bps saved versus benchmark.

6. Compliance and cross border payment compliance tips

Know your corridor rules
Sanctions lists, local exchange controls, and documentary requirements vary. Maintain a rule library in your TMS, flagging high-risk countries for enhanced due diligence.
Structured data with ISO 20022
Use pain.001 and pacs.008 messages to carry full originator/beneficiary data. Better data reduces repairs and aligns with FATF expectations. (ComplyAdvantage)(FATF)
Travel Rule alignment for crypto or hybrid rails
If paying suppliers via digital assets, apply the same originator/beneficiary principles to avoid falling foul of FATF R.16. (Moody’s)
Record retention
Store payment instructions, sanction checks, and approval logs for at least five years (typical AML horizon), longer if local law mandates.
Reimbursement frameworks awareness
UK PSR cap at £85,000 for APP reimbursement influences recovery strategies. (The Times)(Financial Times) Even if operating outside the UK, similar regimes may emerge, shifting liability.

7. Fraud prevention: tactical checklist to avoid invoice scams abroad

Out-of-band verification: any change to bank details triggers a voice call to a known contact. Email is not trusted.
Domain and email authentication: DMARC, SPF, and DKIM checks flag spoofed supplier domains.
Payment pattern analytics: machine learning in AP tools can flag anomalous amounts or new banks for old vendors.
Value caps for manual review: set threshold by currency equivalent; require treasury sign-off.
Escalation paths: if a payment is suspected fraud, have a pre-agreed “stop-payment” SLA with banks or PSPs.
Post-incident playbook: legal notices, police reports, and insurer notifications within 24 hours. The FT case shows recovery delays amplify cost. (Financial Times)

8. Building an international vendor payment checklist

Policy

Currency preference and FX fixing rule
Charge code default (OUR/SHA/BEN) by corridor
Approval matrix by amount and risk

Vendor Master Data

Legal name per registration
LEI or tax ID
Bank account proof and IBAN/SWIFT validation
Contact channels for verification

Transaction Steps

PO match, goods receipt confirmation
FX quote capture and spread check
Sanctions and AML screening logs
Payment instruction format (ISO 20022 where possible)
Tracker reference stored for reconciliation

Post-Payment

Variance analysis: amount, date, fees
Fraud incident register update
Fee benchmarking dashboard update

This checklist speaks directly to secure international invoice payment guide readers seeking structured action items.

9. Payment rail selection playbook: lowering fees on global invoices

Scenario A: €15,000 invoice to a supplier in Poland, EUR currency

Use SEPA Credit Transfer through EU bank; fee often near zero, same-day settlement.

Scenario B: $75,000 to a contractor in Vietnam, USD denomination, urgent

SWIFT wire with OUR charges, pre-check correspondent chain through your bank’s gpi path. Negotiate flat fee; spread likely <100 bps if USD. Consider sending VND via local PSP if supplier can accept local currency; FX spread may drop but tax implications arise.

Scenario C: Multiple small invoices (<$1,000) to freelancers in the Philippines monthly

Batch via PSP that uses local Instapay/PESONet; negotiate blended fee. Compare to card push-to-debit solutions.

10. KPIs and governance: turning data into savings

Average total cost per cross-border payment (fee + spread % of principal)
Target: trending below World Bank averages for similar corridors. Use 4.32% as a red-flag marker for small tickets. (remittanceprices.worldbank.org)
FX margin variance
Track by currency pair; escalate if variance exceeds negotiated cap.
Repair/rejection rate
Data completeness and ISO 20022 adoption should drive this below 0.5%.
Fraud incident rate and recovery ratio
Benchmark against UK Finance ratios: 62% recovered is achievable with strong processes. (UK Finance)
Payment cycle time and value date adherence
Late credits tie up working capital and may trigger supplier penalties.

Governance model:

Quarterly fee review with banks/PSPs using aggregated data.
Annual policy refresh reflecting FATF and PSR changes. (FATF)(The Times)
Cross-functional steering group (AP, Treasury, Compliance, Procurement) to prioritize tech investments.

11. Technology stack that supports cost optimization

ERP/TMS integration: single source of truth for vendor data and FX rules.
Payment hub or API aggregator: route selection engine decides optimal rail per transaction.
Sanctions screening API: embedded at payment creation, not post-facto.
SWIFT gpi or equivalent tracking: visibility into intermediaries and timestamps.
Analytics dashboard: visualize spread, fee, and fraud metrics month by month.

Automation does not remove human oversight; it makes exceptions visible.

12. Contracting and negotiation pointers

All-inclusive pricing schedules: demand disclosure of lift fees, correspondent fees, and compliance charges.
Spread caps per currency: define bps over mid at execution time, not indicative quotes.
Service-level agreements: value date guarantees, repair timeframes, and fraud stop-payment windows.
Right to audit: ability to request detailed fee breakdowns quarterly.

Quote from McKinsey: “Cross-border revenues… rose 17 percent to $240 billion.” (McKinsey & Company) That growth gives corporates leverage; providers seek volume, and volume comes with transparent pricing.

13. Education and culture

Fraudsters target human gaps. Continuous training for AP staff cuts risk:

Phishing simulations focused on supplier change notices.
Refresher on red flags: urgency language, domain misspellings, sudden currency switches.

Adopt a mantra before release of funds: “No verified bank change, no payment.” Simple, memorable, and enforceable.

14. Future trends shaping cost and control

Regulatory push for transparency: FATF’s June 2025 update indicates more structured data and fraud-protection tools embedded in standards. (FATF)
ISO 20022 full migration: richer, standard data lowers repair fees and boosts straight-through processing.
Instant cross-border links: projects like Nexus, Project Icebreaker may compress settlement times but demand even tighter fraud filters.
Shared fraud intelligence: UK debate on liability caps shows tension; collaborative data sharing across banks and tech firms may reduce social-engineering success. (Financial Times)(Reuters)

AP leaders should track these shifts and align internal controls early.

15. Action plan: from diagnosis to savings

Baseline today’s cost
Pull 12 months of cross-border payments. For each, capture principal, fee, credited amount, FX rate versus mid. Compute total cost %.
Cluster by corridor and rail
Identify top 10 corridors by spend and count. These are priority for renegotiation or rail switch.
Run a pilot with an alternative PSP/bank
Compare net landed cost and STP rate.
Tighten fraud controls on high-risk corridors
Overlay UK Finance fraud typologies on your payment data. (UK Finance)(UK Finance)
Implement ISO 20022 data validation
Use schema checks before payment release. This reduces repairs and aligns with FATF updates. (FATF)(ComplyAdvantage)
Report to management quarterly
Show fee reduction trajectory, incident counts, and compliance status.
Iterate vendor onboarding
Update the international vendor payment checklist annually; integrate with procurement portals.

The fee stack is manageable once dissected. Costs hide in spreads, intermediaries, compliance friction, and fraud remediation. A data-driven AP function that embeds cross border payment compliance tips, a robust safe cross border invoice process, and disciplined FX execution will lower fees on global invoices and safeguard international AP workflow without sacrificing supplier satisfaction or regulatory posture.