How does International ACH function?
Payments
Asked by Question Bot11/Apr/20151 answer
1 Answer
F
Faisal Khan
Answered 11/Apr/2015
International ACH is simply the ability to do international transfers, with direct account credit. There are many ways to do this, and it starts with the originating country. If the originating country is the US for example, then the next step is to see, which payment networks will work with the US entity to do direct account credits. This can be done by establishing direct relationships with terminating (receiving) country's bank or by means of going through an intermediary that already has the relationship established (the like of Earthport, Tipalti, etc.)
When an intermediary is involved, the single party risk is high and the costs do go up (regardless how the likes of Earthport, Tipalti may tell you otherwise). When you go directly, the financial risk for default goes high, but the costs are lowered and single-party risk is curtailed to a larger extent. The downside being it becomes a gigantic task to implement multiple settlement corridors.
When an intermediary is involved, the single party risk is high and the costs do go up (regardless how the likes of Earthport, Tipalti may tell you otherwise). When you go directly, the financial risk for default goes high, but the costs are lowered and single-party risk is curtailed to a larger extent. The downside being it becomes a gigantic task to implement multiple settlement corridors.