Understanding Host-To-Host Payment


We live in an era of true global commerce, with even the smallest online business capable of buying and selling goods worldwide. Host to host connectivity is a type of digital transformation that establishes a direct link between a businessman and each different bank based on the standard that the bank follows. This entails dealing with the differences in banking systems in different territories in terms of protocols and languages.
Making international payments used to be a complicated and arduous task. Businesses would have to deal with different banking systems, currencies, and transaction protocols to conduct cross-border trade. Thankfully, Host to Host payments allows businesses to make and receive cross-border payments without a mediator. This guide will explore what Host to Host payments are, how they work, and their benefits for businesses.

What is host to host payment?

Host to Host payments are cross-border payments made directly between two banks without a middleman. Host to host payment process goes a long way toward facilitating digital transformation in how a company manages its finances. “Digitalization” is one of those buzzwords that gets bandied about a lot in the era of economic globalisation without many people taking the time to understand what it means. In the context of the host-to-host payments process, digital transformation refers to the ability of a merchant or their employees to automate a multitude of functions that previously required manual intervention. Host to Host payments are also generally faster than other cross-border payments, as they bypass the need for currency conversion.

Earlier host-to-host connectivity, transferring payment from a merchant to the preferred bank may have required negotiating a set of file formats, security protocols, and network services that differ from bank to bank and territory to territory. This could be a time-consuming and labour-intensive procedure for a merchant looking to develop their business globally where even the most widely accepted standards may not be used. Host-to-host connectivity removes this friction by providing a direct connection between the merchant and their bank, using a single set of standards that all participating banks adopt. This makes it easier and faster for merchants to expand their business into new markets.

How does the Host to Host payment system work?

Host to Host payments are made between banks using a network system known as the SWIFT network ‘Society for Worldwide Interbank Financial Telecommunication’. It is one of the largest and most widely used financial messaging systems globally. This allows for the secure transfer of money between banks in different countries. The process is completed by the sending bank sending a message to the receiving bank, which contains instructions on how much money should be transferred and where it should be sent. The receiving bank then processes the payment and sends a confirmation message back to the sending bank.

The advantages of using Host to Host payment

Host to host payment process for your business is beneficial in many ways, but the key advantage is that it allows for a streamlined payment process between you and your customers. Host to host payments uses the existing infrastructure of banking systems to facilitate transactions, meaning that there is no need for you to set up a separate system or account with a third-party provider. This can save both your money and time in the long run and allow you to relax knowing that your payments will be processed quickly and securely.

Another advantage of the host to host payments is that they can help to improve your customer service. By using a system already in place and trusted by your customers, you can provide them with a smoother and more efficient payment experience. This can lead to repeat business and increased customer satisfaction and help you stand out from the competition.

Finally, host to host payments is also generally more secure than other payment processing methods. This is because the data associated with each transaction is stored on the banks’ servers rather than on your website or database. This means that there is less chance of sensitive information being compromised or stolen, which can protect both you and your customers.

Above all, a host to host payment solution means that payments are automatically sent from the customer’s bank to the merchant’s, eliminating the time-consuming intermediate step of those secure payments having to be verified, authorised, and then manually uploaded to the bank in question.

Host-to-host payments are instant, meaning there is no need to wait for funds to clear before they are available. This is highly beneficial for businesses that operate on tight margins or need access to funds quickly to seize opportunities as they arise.

The type of digital transformation fueled by the host-to-host payments process also benefits from generating massive amounts of data. This information is easily obtainable, allowing a merchant to obtain an up-to-date and clean picture of how their company is performing.

How to choose a host to host payment provider?

Host to host payments, also known as h-to-h or HTH, are a type of business transaction in which one company pays another company electronically. Host to host payments are made using the banking system and usually involve large sums of money. Host to Host payments can be an excellent solution for your business. They offer the flexibility and convenience you need to make global commerce work for your business. There are several factors to consider when choosing a host to host payment provider, such as:
  • The size of your business: Host to host providers typically work with companies with a high volume of transactions. If your business is new and small or has a low volume of transactions, you may want to consider another type of provider.
  • The countries you do business in: Host to host providers typically have experience working with companies in multiple countries. If you do business only in one country, you may want to consider a provider that specialises in that country.
  • The currencies you use: Host to host providers typically have experience dealing with multiple currencies. If you only use one currency, you may want to consider a provider that specialises in that currency.
  • The payment methods you accept: Host to host providers typically have experience dealing with multiple payment methods. If you accept only one type of payment, you may want to consider a provider that specialises in that type of payment.
  • Your business size: Host to host providers typically work with businesses of all sizes. If you have a specific requirement or preference, you may consider a provider who specialises in working with small businesses.
  • Your average transaction value: Host to host providers typically has a minimum transaction value. If your average transaction value is below that minimum, you may want to consider a provider that has a lower minimum. A good place to start is to ask your bank if they offer Host to Host payments. If they don’t, they may be able to recommend a provider.

How to choose a host to host payment provider?

Below we have listed some common FAQs regarding Host To Host payment process transactions.
  • What is Host to Host? Host to Host payments refer to making and receiving payments between two banks, or ‘hosts’. This type of transaction is also known as a ‘bank-to-bank’ payment.
  • What are the benefits of using Host to Host payments? Host to Host payments process offer several advantages for businesses, including: – Increased speed and efficiency – Improved security – Obtain Corporate Integration – Improve the cash flow – Reduce the complexity and cost of banking – Keep records of global liquidity – Improve regulatory compliance
  • What is the best corporate payment solution for your business? The best corporate payment solution for your business will depend on several factors, including the size of your company, your budget, and your payment needs. If you are looking for a fast, reliable, and secure way to send and receive payments, Host to Host may be the best solution for your business.
  • In which countries/locations are Hosts to Host payments connecting with a bank? Host to Host payments are available in most countries with a banking system. However, there may be some restrictions depending on the country you send or receive payments from.
  • What types of businesses use Host to Host? Host to Host payment process is commonly used by businesses that need to send and receive large amounts of money quickly and securely. This includes companies in the e-commerce, manufacturing, and logistics industries.
  • How long does a Host to Host payment process take to go through? The time for a Host to Host payment process to go through can vary depending on the banks involved and the amount of money being transferred. Typically, host-to-host payments are processed within one to three business days.
  • Are all existing bank connectivity processes known and documented? Host to Host is constantly evolving, and as such, not all existing bank connectivity processes are known or documented. However, the Host to Host team works closely with banks and other financial institutions to ensure that all operations are as efficient and secure.
  • In an ideal world, what would your bank connectivity setup and process look like? In an ideal world, Host to Host would be able to connect with any bank or financial institution to provide clients with the most efficient and secure payment processing possible.

Profinch can help

Profinch with significant years of experience in providing services across the world. They are a one-stop solution for banks and FIs to provide clients with the most efficient and secure payment processing possible.

If you want to learn more about host-to-host payments or any other aspect of your business’s finances, contact our financial expert at Profinch.

For any queries or customised demo, please contact us by filling the enquiry form, and we’ll get back to you at the earliest possible.