Modern API Payouts: How Cross Border Payments Work

Hiring across borders opens access to global talent, but it also introduces one of the biggest operational risks for growing companies: keeping international payments secure and compliant. When you onboard a contractor from another country, you’re relying on the identity and bank details they provide. If this process is handled manually, it can create a costly security gap.

It’s no longer just about financial loss; it's also about operational drag and regulatory exposure. Manual checks slow down operations and expose your company to regulatory issues. Each time someone verifies a document or confirms a bank detail change through email, it creates another point where fraud can slip in. With increasingly sophisticated fraudsters, basic documentation and human review alone are no longer enough to protect payments at scale.

But don’t just take our word for it. According to the 2025 Association for Financial Professionals (AFP) Payments Fraud and Control Survey, 79% of organizations were targets of attempted or actual payments fraud activity in 2024. Not only that, vendor impersonation attempts were also rising, with fraudsters changing contractor bank details and targeting wire transfers in BEC attacks, which made upfront verification a critical safeguard.

How Cross Border Payments Work and How Can it Create Fraud Risk?

When you initiate a global payment, the funds often travel through complex, multi-layered financial networks. This opacity and reliance on manually submitted data is what fraudsters exploit. The key challenge lies in establishing trust at the very start of the process, ensuring the contractor is legitimate and their provided bank account is safe before you even schedule a payment.

What is an example of a cross-border payment?

A good example is a US e-commerce company hiring a marketing consultant based in Mexico. The company agrees to pay a monthly fee, and the first payment moves from a US bank in USD to a Mexican bank that receives the amount in pesos. If the consultant’s onboarding documents or bank details were compromised at any point, that first payment could be sent to a fraudulent account with no way to recover it. This is why verification needed to happen before any transfer was initiated.

How Automated Pre-Payment Verification Solves Risk

To mitigate the risk of fraud and non-compliance, businesses need a layered, automated system that runs critical checks in real-time during the contractor onboarding flow. This moves the security from a reactionary recovery effort to a proactive defense.

Cross border payments work for compliance

Any US company making international payments must adhere to strict regulatory guidelines. Also, sanctions screening, such as checking against the Office of Foreign Assets Control (OFAC) list, is mandatory. An automated system performs this check instantly, ensuring the contractor is not listed as a sanctioned individual or entity, which protects your business from massive regulatory fines and reputational damage.

Validating Contractor Identity

Identity verification confirms that the person you are onboarding is real and matches the claimed identity. Using integrated tools to verify government-issued IDs helps prevent synthetic identity fraud and impersonation.

Ensuring Bank Account Integrity

This may be the most direct line of defense against vendor impersonation fraud. Automated bank account verification (BAV) ensures two things:

• Ownership Match: The bank account name matches the contractor's verified legal identity. 
• Account Status: The account is open, active, and set up to receive payments.

This critical step eliminates payment failure due to incorrect details and prevents a bad actor from successfully diverting funds by simply submitting a fraudulent bank number.

Which payment methods are used for cross-border payments?

While traditional wire transfers (SWIFT) are still used, they are slow, expensive, and particularly vulnerable to the manual errors that enable fraud. Modern pay efficiency is achieved through global payouts platforms that leverage a multi-rail strategy, including:

• Local Bank Transfers: Utilizing local payment rails (like ACH, SEPA, and their international equivalents) drastically reduces costs, increases payment speed, and is often better suited for integrated, automated verification processes.
• Payments API: This system allows finance teams to send payments in bulk and integrate compliance and security checks directly into their existing payroll or treasury workflows.

By moving away from manual, one-off wire transfers to an API-driven payout system, businesses can enforce pre-payment security rules automatically, turning a significant compliance and fraud risk into a streamlined, secure operation.

Choosing a Partner for Secure Global Payouts

Businesses need a payments API that mitigates the risk even before a transaction is made.Dots is engineered to be a proactive security solution that integrates essential verification steps directly into your contractor onboarding process, including:

• Identity verification
• Bank account validation
• Automated sanctions screening (OFAC)

This rigorous, automated vetting ensures every international contractor and their payment details are thoroughly validated before a single dollar leaves your account, effectively neutralizing the risk of payment fraud and compliance violations inherent in manual processes. 

By seamlessly automating these non-negotiable checks, the platform transforms a critical vulnerability into a high-security, high-efficiency operation, providing the robust foundation you need to scale your global workforce with confidence. 

Ready to secure your global payments and onboard contractors with integrated compliance? Book a demo with Dots today.