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Should I Use my Bank For International Money Transfers?

Despite the safety and security of international money transfers via your bank, when making such transactions, you cam be charged extortionate fees. Research conducted by Consumer Intelligence discovered that it costs between £17.50 and £20.80 to transfer £250 to a Euro dominated German bank account. There are several reasons why bank rates are so high; however, specialist and online money transfer companies often charge substantially less than banks to send money abroad.

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How do International Money Transfers Work?

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 the United Kingdom 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. There are sometimes delays in the transfer process due to the indirect nature of the processes with the intermediary bank. 

How do Banks Make International Money Transfers?

Banks use the financial messaging system SWIFT international payment network for money transfers. The majority of payments sent 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 Pound, the US Dollar and the Euro are popular global currencies traded often on the foreign exchange markets. Therefore, transfers in these currencies 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 the time that banks stop processing transactions for that day; however, 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 process time.
  • Time Zone: You should also take time zone into consideration when determining the timeframe for an international money transfer. For example, if a transfer is sent from the United Kingdom to a bank in America, since the US are between five to eight hours behind, the request will not be processed until the bank opens in America. 

Why Does the Cost Differ so Much 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 themselves against any fluctuations that might take place during the conversion process.

What Should I Use Instead?

If you want to save yourself some 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. 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


Unless you are happy to pay expensive fees to send money to another country, it is not advised that you use 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. 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.