Payment Gateway Rails: How Cross Border Checkout from USA to South Korea Works

Amirul Imtiaz bin Shah Rizal
Jul 4, 2022
5 minutes of read


Payment Gateway Rails: How Cross Border Checkout from USA to South Korea Works

The cross–border trade is continuously growing with the global payments market expecting to reach $156 trillion USD by 2022¹. Its huge potential means there’s demand for eCommerce platforms to tap into the global market by providing a seamless international checkout experience,especially since transactions are catering towards a digitalised society where online payments are now established across all regions and demographics around the world.

In addition to this, according to the 2021 annual export and import trend report released by the ministry of trade, industry and energy, Korea’s exports increased 25.8% year-on-year to USD 644.54 billion, the largest amount in three years². It’s no wonder that they become popular cross-border products to buy wherever in the world, including the USA.

When a transaction or payment is made online, buyers expect them to be fast and seamless. However, there is more to just sending payments and having the sellers receive them. In this instance, how would the transaction process look like from an American buyer to a South Korean seller?

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Online Checkout - the American Buyer Pays for the Product

For a transaction to take place, a buyer has to make their payment into the payment gateway using a payment method that is made available to them. This is where localising checkout to your target market’s preferred payment habits would do wonders in increasing conversion.

Card Payments are the Predominant Payment Method in the United States

Online buyers in America are spoiled for choice when it comes to choosing their preferred method of payment online. With that said, cards top the charts as the preferred payment method, comprising 58% in 2020 and forecasted to retain its market share of all eCommerce transactions in 2023 according to JPMorgan³.

With cards being the dominant payment method, international transactions can happen easily through their card’s payment network.

The 4 major card networks in the United States include:

  • American Express
  • Discover
  • MasterCard
  • Visa

Digital Wallets Make Checkout Easy for American Shoppers Provided the International Seller Has an Account

The second most popular payment method is that of digital wallets or eWallets for short. On the front-end, the funds can be transferred easily from one digital wallet to another much like card payments, as long as the receiving party also has an account registered on the same eWallet platform.

But it doesn’t stop there.

Bank Transfers Help American Consumers Have a Peace of Mind

Some Americans may prefer shopping online with the peace of mind of not going into credit or having their credit card information stolen.

This is where banks come in to fill in the gap.

Whether it is through a bank redirected app or local bank transfer, the funds paid through this method would first have to go into the payment provider’s American bank account first before it can be sent cross-border to the international merchant’s bank account.

Some of the popular American banks include:

  • JPMorgan Chase
  • Bank of America
  • Citibank Group
  • Wells Fargo
  • Goldman Sachs
  • Morgan Stanley etc.

On a side note, merchants would stand to gain knowing that bank redirect apps would have their payments processed faster due to its synchronous nature than a local bank transfer where the payment provider would have to track and reconcile the receipt of the funds before making that cross-border transfer.

Cross-Border Payment - Sending the Payment from USA to South Korea

Cross-border payment is simply the process of transferring an international transaction's funds, in this case from the American buyer’s account to the South Korean seller’s account. The fund transfer process varies depending on the payment method used.

Card networks have their own payment rails which are maintained by the four major networks listed, where the payment is sent directly without any other external parties handling the funds outside of the payment gateway.

On the other hand, international bank transfers are usually done via SWIFT wire transfer. The fees for this payment method tends to contribute to a payment platform’s cost.

Platform fees vary from one another based on how they calculate their costs. Some payment providers like Tazapay may have specialised local payment partners in the markets they operate in to ensure that the costs are kept low, transferring the savings from the various payment methods to the users.

For cross border transactions, it’s a good rule of thumb to take note of the following fees.

  • Bank Surcharges: Affects payment methods directly linked to the banks themselves. The surcharge amount depends on the bank.
  • Card Surcharges: May reach as high as 4% depending on the card network.
  • Wire Transfer Costs: Local transfers would be cheaper while international transfers would cost more varying from bank to bank.
  • FX Conversion Costs: Conducting cross-border transactions, regardless of payment method, would incur costs.

Using Multicurrency Accounts to Hold USD as a Hedge against FX Fluctuations

Merchants that source internationally can hedge against any FX fluctuations of their own currency by having a multi currency account to pay international suppliers.

This way, sellers can receive in USD and thus, pay their suppliers in USD without worrying that their purchasing power may decrease if their local currency’s value decreases.

Payout - Releasing Funds to the South Korean Seller

The final step in the cross-border transaction process is when the seller in South Korea receives the payment from the payment provider.

If a merchant runs their own eCommerce shop  where the website could be developed in-house or built with a tool like Shopify or WooCommerce, the payouts can be received by the seller within a few days to a week depending on the payment method that the buyer has selected.

On the contrary, payouts orchestrated by a marketplace or platform are first sent to the marketplace and platform’s bank account before it gets transferred to the seller based on the date of payout as outlined in the marketplace’s or platform’s Terms and Conditions.

The seller’s payout could go to some of these major South Korean banks:

  • KB Kookmin Bank
  • Shinhan Bank
  • NongHyup Bank
  • Hana Financial Group
  • Korea Development Bank
  • Woori Bank
  • Industrial Bank of Korea etc.

By this point, the buyer would have also had their shipments underway or arrived at their address and the seller would receive their payment, thus completing the cross border transaction.

USA to South Korea cross border payments in a nutshell

Now that you know how cross-border payments from the USA to South Korea works, having a payment provider that localises its solutions to your target market is the icing on the cake that can increase conversions. With features such as multiple payment options, seamlessly integrated checkout pages, and more, you would be better equipped to cater to your American buyer’s experience while also enjoying a higher margin with your business dealings.

In this case, why not give Tazapay a go? With a global network spanning 173+ countries offering localised payment methods over 70+ major markets, you’ll be sure to delight your buyers with a frictionless payment experience via our easy API integrations. Contact us today to find out more.


  1. Three trends redefining the global cross-border payments market
  2. Business Standard Article: South Korea Exports
  3. 2020 E-commerce Payments Trends Report: United States Country Insights
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Payment Gateway Rails: How Cross Border Checkout from USA to South Korea Works
Payments Resources

Payment Gateway Rails: How Cross Border Checkout from USA to South Korea Works

Jul 4, 2022
5 min of read

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