Dollar Payments Still Dominate Small Business Cross-Border Trade

Small and medium-sized businesses that once sourced domestically now purchase inventory, components and services from factories and vendors scattered across Asia, Europe and Latin America.

The challenge lies not in finding suppliers abroad but in paying them efficiently.

PYMNTS Intelligence research conducted with Mastercard found that 57% of U.S. SMBs source goods or inputs internationally, demonstrating that global procurement has become mainstream rather than exceptional. Yet despite that expansion, 63% still pay overseas suppliers primarily in U.S. dollars. The figures suggest that currency practices have not kept pace with supply chain realities.

The dollar remains the world’s principal reserve currency for good reason. It is liquid, widely accepted, relatively stable and deeply integrated into global trade. American companies keep their books in dollars, borrow in dollars and manage cash flow in dollars. Paying suppliers the same way appears to simplify operations.

For many firms, it does.

Accounting systems become easier to reconcile. Treasury departments avoid managing multiple currency balances. Budget forecasts remain straightforward because exchange-rate movements do not immediately affect outgoing payments.

Those advantages explain why the dollar continues to anchor international commerce. They do not necessarily mean it is the optimal currency for every transaction.

Receiving dollars shifts foreign exchange responsibility onto the supplier. A manufacturer in Vietnam, Germany or Mexico that invoices in dollars may still need to convert proceeds into local currency to pay employees, utilities and taxes. Exchange-rate volatility and conversion fees become part of that supplier’s operating costs.

Those costs may be reflected in pricing, contractual terms or negotiations.

In markets where local currencies fluctuate sharply or where domestic financing costs are high, suppliers may prefer payment in euros, pesos or other local currencies because it provides greater certainty over cash receipts. Others may simply wish to avoid maintaining significant dollar exposure on their balance sheets.

The PYMNTS Intelligence/Mastercard data indicates that businesses already operating across multiple currencies are far more likely to seek broader currency capabilities than firms paying exclusively in dollars, suggesting that experience often reveals the limitations of a dollar-only approach.

Embedded FX Moves Into the Workflow

Historically, foreign exchange has existed as a separate treasury activity. A company initiated a payment and then separately arranged for currency conversion through its bank or another provider.

Embedded FX changes that sequence by integrating conversion directly into the payment process. The buyer selects the supplier and approves payment while the system automatically handles exchange rates and settlement without requiring a distinct transaction.

The practical effect is one that helps remove operational friction. Currency conversion becomes another background service alongside payment routing, reconciliation and reporting.  Many SMBs lack dedicated treasury teams. They want procurement staff to buy inventory, not monitor foreign exchange markets.

The benefits of paying in local currency vary by industry and relationship.

Manufacturers sourcing components from Asia may strengthen supplier relationships by eliminating uncertainty over exchange-rate losses. Retailers purchasing seasonal inventory can negotiate pricing with fewer embedded currency cushions. Hospitality operators importing specialty products may secure more predictable costs if suppliers no longer need to hedge dollar exposure.

Professional services firms hiring overseas contractors may also benefit by compensating workers in the currency in which they incur expenses.

Embedded FX therefore expands choices rather than replacing existing practices.

Stablecoins Add Another Layer

Stablecoins deserve attention in this discussion, although they remain only one part of a broader payments landscape.  Dollar-backed digital tokens can reduce settlement times and operate outside traditional banking hours, making them attractive for certain cross-border transfers. They may lower costs where correspondent banking networks are inefficient or unavailable.

For many SMBs, embedded FX and stablecoins may eventually complement one another rather than compete.

The PYMNTS Intelligence and Mastercard findings point toward an expanding frontier in embedded finance, where opportunity lies in making international payments feel as routine as domestic ones.

At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.