Home Sending Money Should I use my Bank for International Money Transfers?

Should I Use my Bank For International Money Transfers?

Banks are notable for being a safe and secure way to hold and transfer your money. However, it is becoming more commonly known that there more efficient ways to transfer your money internationally, without the added cost and waiting time.

Updated: 28/07/2022
Read time: 5 minutes
Compare Rates
 
   
Spain
EUR
GBP
£

International Money Transfers

An international money transfer involves sending money between two countries with different currencies. When making an international money transfer through a bank, an intermediary bank is required if the banks do not have an established financial relationship. For example, a bank in Australia that has been instructed to wire funds to a bank in China, can not make a direct deposit unless the receiving bank has a preexisting working relationship with the sending bank.

Despite the safety and security of international money transfers via your bank, when making such transactions, you can be charged extortionate fees. There are several reasons why bank rates are so high, whilst specialist and online money transfer companies often charge substantially less than banks to send money abroad.

Using a bank transfer for international money transfers

What Can Slow Banks Down?

Banks use the financial messaging system SWIFT international payment network for money transfers. The majority of payments sent from Australia, and other countries outside of Europe are sent via SWIFT. The BIC and the IBAN are used to locate the required account to apply funds to an international bank.

Incorrect bank details can delay the international banking process even further; therefore, it is essential that you double-check before making your request. The recall process can take weeks, leading to long delays in the recipient receiving funds. There are several factors to take into consideration when determining how long it takes to make an international money transfer; they are as follows:

  • Currency Used: The Australian dollar is a popular global currency traded often on the foreign exchange markets. Therefore, transfers in this currency are typically processed at a faster rate. It may take longer to complete transfers for other currencies because they are not as popular.
  • Cut-off Times: All banks have cut-off times during the working day; a cut-off time is a time that banks stop processing transactions for that day; although they vary according to the bank. If your transfer is not made before the cut-off time, it is not processed until the following day. The earlier the transfer is made, the quicker it is processed. Unless you want to add an additional day to the transfer process, it is advised that you do not make requests close to the end of the business day.
  • Holidays and Weekends: A payment initiated on a late Friday afternoon will not get processed until Monday due to the weekend, and if there is a bank holiday or any other type of holiday on Monday, there is a further one-day delay. When considering the time frame for an international money transfer, they take place between Monday to Friday during business hours. Weekends and holidays are excluded from the processing time, which can again increase the time it takes for your money to reach the recipient.
  • Time Zone: You should also take time zone into consideration when determining the time frame for an international money transfer. For example, if a transfer is sent from Australia to a bank in the United Kingdom, since the UK is between eight to ten hours behind, the request will not be processed until the bank opens in the United Kingdom.

Why Does the Cost Differ Using Banks?

No matter how much money you are sending, the banks charge a minimum fee for international money transfers. The more you send, the more you should expect to pay in fees. There are several reasons why bank charges are so much higher for international money transfers; these include the following:

  • Handling Charges: You can compare handling charges to shipping fees. As mentioned, banks that do not have a direct relationship with each other use an intermediary bank. The more banks that are involved in the process, the higher the fees become because they all take a percentage of the amount sent to protect their fees. In some cases, the receiver also pays fees to receive the money.
  • Foreign Exchange Commission: Two different currencies are exchanged during an international money transfer. When your domestic currency is converted into a foreign one, the cost of this conversion is determined by the foreign exchange market. 

Currency exchange rates are never constant due to the continuous transactions taking place between buyers and sellers. Therefore, when you go into your local bank, the exchange rates that you see are never accurate; they are always higher due to the additional variable fees the banks include. 

The bank will typically inflate the rate to protect itself against any fluctuations that might take place during the conversion process.

Many Australian banks typically charge both handling fees and receiving fees for sending international money transfers. As an example Westpac will charge $10 for transfers sent in foreign currency and $20 for transfers sent in Australian dollars. Westpac also charge a receiving fee of $12 for those having remittances sent to them. Some Australian banks, such as, the Bank of Melbourne, and St George Bank, also charge overseas bank charges on top of this receiving fee, so costs can quickly stack up.  

What Should I Use Instead?

To save time and cash when making international money transfers, there are several cheaper ways to send money abroad, referred to as money transfer services. Since they don’t deal with banks, their fees are much lower, and the transfers are instant. In addition, such services are available online, and once you have set up an account and, in some cases, verified your identity for fraud prevention purposes, you can send money abroad using your debit or credit card

Summary

Save yourself from paying expensive fees to send money to another country and avoid using your bank for international money transfers. Money transfer services provide the same security against your money as a bank, the funds are typically transferred immediately, and the fees are much lower. One of the many advantages of using money transfer services is that there are no hidden fees. However, money transfer fees vary between providers; therefore, it is advised that you shop around and do some research for the best deal before making a transaction.

Related Content

Transferring Large Amounts Abroad
How to transfer large sums of money internationally? To transfer a large sum of money internationally, you’ll need to find a currency broker or bank that can handle this request for you. Your two main options are: Using a high street bank which can facilitate large transfers between two bank accounts. Using a specialist money […]
Are Money Transfers Taxed?
Being informed about your money transfer is a sensible choice for any sum, but if you are sending large amounts of money abroad, you need to make sure that you comply with the law. That includes any regulations that may apply to large transfers for both the sending and receiving country. In this guide, we’ll […]
Wire Transfers
What is a wire transfer? The goal of international wire transfers is the quick transfer of funds, eliminating the delays caused by mailing and clearing of checks. While people often use the terms “wire transfer” and “bank transfer” interchangeably, this is not 100% accurate: wire transfers are used by both banks and non-banking financial institutions. […]

Artiom
Written by
Artiom

Artiom is a marketing graduate from the University of Portsmouth, Artiom’s primary experience is in SEO but he has a broad knowledge of all facets of digital marketing. He optimises the organic experience on MoneyTransfers.com with the content team, manages and creates unique marketing tactics, and generally supports the overall growth of the website.

Companies
All Services
Send Money Abroad
Other Countries