Global settlement is the final step in the cross-border payment process. It determines how quickly funds appear, how much is lost to fees or foreign exchange (FX), and how much liquidity is locked up in the meantime. Despite advancements in digital payments, the system that moves money across borders still relies heavily on infrastructure built decades ago.

The scale of global settlement systems is enormous. Annual cross-border payment volumes are expected to reach $320 trillion by 2032, and banks collectively hold trillions of dollars in prefunded accounts to keep these flows running. Yet many payments still take a long time to arrive, especially when they cross time zones or pass through manual review points.

Below, we’ll explain how global settlement systems work, where the bottlenecks persist, and what businesses can do to move money across borders with more clarity, speed, and control.

What’s in this article?

• What is global settlement?
  
• How do settlement layers operate across borders?
  
• What technologies support global settlement systems?
  
• How does settlement affect liquidity?
  
• What slows down global settlement?
  
• How can companies improve global settlement processes?
  
• How Stripe Payments can help
  

What is global settlement?

Global settlement is the moment the payment becomes final and the funds are moved into a business account. After a customer pays and the transaction is authorized, settlement completes the cycle by delivering the money.

When the payment takes place in a single country, settlement is straightforward. Across borders, it becomes more complicated. A buyer in France might pay in euros, while a US company wants to be paid in dollars. Settlement handles the conversion and moves the funds through different banking systems so the business receives the money in the form it wants.

Because payments cross multiple systems, global settlement involves more moving parts than domestic transactions. These include banks, processors, card networks, and often central banks. Global settlement must reconcile two currencies: the one the customer sees (presentment) and the one the business receives (settlement).

Behind the scenes, global settlement is a sequence of messages and fund transfers that work together to achieve a single outcome: the business gets paid and can use the money. This process isn’t instant, but when it works well, it feels simple.

How do settlement layers operate across borders?

Cross-border settlement is closer to a relay than a single transaction. Value and data are handed from one system to another across currencies, institutions, and time zones. The machinery that makes this possible is layered and often invisible.

Here’s how global cross-border settlement works.

Correspondent banking and intermediaries

There’s no universal global network that all banks are a part of. Instead, they maintain correspondent relationships with foreign banks through the accounts they hold with them. If a bank in the US needs to get money to a bank in India, it usually sends instructions through the Society for Worldwide Interbank Financial Telecommunications (SWIFT) to a partner bank that can complete the local transfer. If no direct relationship exists, the payments go through one or more intermediary banks. Each stage adds time, cost, and potential points of failure.

Messaging vs. settlement

SWIFT translates instructions, instead of moving money. Fund transfers happen later through domestic settlement systems. Card networks work in a similar way: authorization occurs instantly worldwide, but funds settle afterward through traditional banking networks.

Closed loop vs. shared platforms

Some systems keep the settlement internal. If both parties are on the same platform, such as a remittance app, value can move instantly. Cross-border payments, however, typically run on shared platforms (e.g., card schemes, payment providers, bank partnerships) that standardize the flow but still depend on local payment networks to settle funds.

Timing constraints

Settlement happens only when the receiving country’s banking system is open. There’s a small overlap window between roughly 6:00 a.m. and 11:00 a.m. Greenwich Mean Time (GMT) when many global payment systems are simultaneously online. Outside this window, many payments must wait until the next business day.

What technologies support global settlement systems?

Cross-border payments still rely heavily on aging infrastructure, but modernization is accelerating. A 2024 report found that 93% of financial institutions were planning to or had already initiated payment modernization programs. Several technologies are making settlement faster and more predictable.

They fall into a few main categories.

Structured, modern messaging

SWIFT Global Payments Innovation (GPI) has turned multiday transfers into almost real-time events, with end-to-end tracking. The shift to ISO 20022, an updated data standard, allows banks to automate more processes and drastically minimize errors and manual reconciliation.

The rise of real-time payments and early cross-border links

Domestic real-time payment systems such as the Unified Payments Interface in India, Pix in Brazil, and FedNow in the US settle within seconds, anytime. They’re mainly domestic today, but early cross-border links, such as the one established between India and Singapore in 2023, show how they could eventually power nearly instant international transfers.

Providers that handle the hard parts

Global payment providers like Stripe offer a unified layer above a fragmented infrastructure. They route payments, manage compliance, handle FX, and integrate with local payment methods. This enables businesses to access global settlement without managing dozens of systems themselves.

Always-on digital payments

Stablecoins and blockchain networks instantly settle value 24/7 and are frequently used where traditional systems are costly or slow. They’re not yet the mainstream architecture of global settlement, but their footprint is growing, especially in underserved regions.

How does settlement affect liquidity?

Slow or uncertain settlement ties up money. The longer the funds are in transit, the more liquidity businesses and banks must hold in reserve.

This is how settlement can affect your liquidity.

Cash gets stuck in transit

If an international payment takes three days to settle, the recipient loses three days of usable cash. High-volume businesses often maintain extra working capital to offset these delays, which stretches their cash cycles.

Banks immobilize even more liquidity

Banks must prefund foreign accounts (nostro accounts) to keep cross-border payments moving. It’s money that could be invested but instead sits idle, waiting for settlements to clear.

Uncertainty forces overpreparation

Unpredictable fees, cutoff times, or exchange rates make settlement time uncertain. To avoid shortfalls, institutions hold more liquidity than they’d otherwise need.

FX risks compound the issue

When settlement takes days, exchange rates might shift before the payment completes. Businesses hedge or hold foreign currencies beforehand to manage exposure, which ties up even more cash.

What slows down global settlement?

Despite digital advancements, cross-border settlement still struggles with friction caused by infrastructure, policy, and process differences. These factors slow down global settlement and compound across systems.

Here are the obstacles that impede global settlement.

Fragmented standards

Countries maintain their own payment networks, data formats, and regulatory requirements. Data that’s acceptable in one system might be rejected in another, which leads to delays and manual reviews. This fragmentation makes automation difficult.

Too many intermediaries

Every intermediary bank adds screening, fees, and potential delays. More parties mean more uncertainty about time and costs.

Mismatched operating hours

Banking systems still run on local business hours. Holidays and weekends don’t match up across countries so payments often sit until all required systems are open.

Redundant compliance checks

Every intermediary performs its own Anti-Money Laundering (AML) and sanctions screening. Even minor data inconsistencies can trigger lengthy reviews that hold payments for days. These checks matter, but the current processes are slow and duplicative.

Legacy infrastructure

Many banks still process payments in overnight batches using outdated systems, when more modern methods are available. This limits speed and visibility.

How can companies improve global settlement processes?

Businesses can’t overhaul the global settlement infrastructure, but they can position themselves to avoid slow, expensive methods.

Here are some ways you can speed up global settlement.

Use providers with local integrations

Working with a platform that connects directly to local payment systems reduces the amount of intermediaries and speeds up systems. Providers like Stripe process transactions locally where possible, then convert and settle funds in your home currency.

Choose sensible settlement currencies

Let customers pay in their local currencies, but settle in the currency you need. This avoids unnecessary conversions and decreases FX costs.

Strengthen data quality and timing

Clear, complete payment details prevent delays. Use standardized formats, validate beneficiary information, and time payments around receiving countries’ banking hours. On the receivables side, structured remittance data accelerates reconciliation.

Reduce liquidity pressure

Tools such as instant payouts, short-term float, and multicurrency management help boost cash flow while you wait for settlement. Businesses with predictable cycles can also refine payment timing to free up working capital.

How Stripe Payments can help

Stripe Payments provides a unified, global payment solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world. Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods, and Link, a wallet built by Stripe.

• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.

• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.

• Improve payment performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.

• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.