There are a lot of reasons why people choose to send money to and from bank accounts internationally. International bank transfers are a safe, convenient and reliable way to conduct international money transfers. They can, however, be an expensive method, with banks often adding inflated fees and exchange rate margins. Here is everything that you will need to know when sending money to and from a bank account internationally.
International bank transfers are conducted using a SWIFT network. This network permits the transference of money from your bank account to another bank account in another corner of the world.
SWIFT is an international messaging network that financial institutions utilise to securely transmit instructions and information through a standardised system of code. SWIFT assigns a unique code, made up of 8-11 characters, to each financial organisation. This code is also known as the bank identifier code (BIC), SWIFT ID, SWIFT code or ISO 9362 code.
Whenever someone makes an international transfer request, it is processed at the initiating bank and then sent to one or more banks within the overlapping SWIFT networks, until it reaches the destination bank account.
Each international bank transfer may involve 1 – 3 intermediary or correspondent banks. These banks act as links that connect to the recipient’s bank. Your money transfer instructions pass through these banks on the way to the destination bank account. Each of the intermediary banks may levy a fee, which is deducted from the transfer amount, reducing the final of the funds received.
It must be noted that although there are other services like CHIPS and Fedwire, SWIFT is the most widely used network owing to its huge membership and robust coding system.
There are various ways you can initiate an international bank transfer: by visiting the bank, doing it online or over the phone.
If you choose to send money directly from your bank account to an overseas bank account through internet banking, you need to follow the steps below. While the exact process may vary depending on the bank you are sending money from, some basic steps remain the same.
Step 1. Log in to your bank’s online banking portal
Step 2. Click on the link to make a payment and choose the option to add a new payee
Step 3. Enter the country where you want to transfer money, along with the recipient’s details. You may have to provide the following details:
Step 4. Select the bank account you will be sending funds from (in case you have more than one account with the same bank)
Step 5. Complete the details of the transfer including the currency and amount you are sending to the overseas account. Some banks may also ask you to schedule a recurring transfer
Step 6. Once you have reviewed all the details, you can submit the transaction
Depending on the financial institution you are sending money from, you may need to visit the branch in person to make an overseas transfer. You will need to provide your identification, bank account details, and the recipient’s details.
You can even use phone banking to make an international bank transfer which is helpful for those who do not wish to use online banking and do not want to visit the branch either. In some cases, you can contact your bank branch and request assistance with the transfer. In this case, you will need to have your bank information and answers to your security questions handy, in order to verify your identity.
As we said earlier, sending money from your bank account to an overseas bank account can prove quite expensive. There can be fixed fees, exchange rate markups and other fees, making the total cost quite high. In fact, the final amount that reaches the recipient’s account could be quite a lot less than what they expected. Let us review some common fees you may be subject to when conducting an international bank transfers.
Banks have high international transfer rates ranging from $20 to $50. There is a fee for both ingoing and outgoing bank transfers; for example, Bank of America and Citibank charge between $35 and $45, Chase charges $40 to $50 and US Bank charges $50 per international bank transfer.
Banks may also charge an initiation fee, ranging from $10 to $35 depending on how you make your transfer (in-person, online or over the phone). Your bank may also levy a tracer fee – around $15 – if you request tracing services for a bank transfer you have already made.
When you make an international transfer via your bank, do not expect to get the same exchange rate that you see on Google or elsewhere. The rate that you see online is the interbank exchange rate: this mid-market rate which banks and other big financial institutions use when swapping one currency to another. You can read more about the exchange rates and finding the best exchange rate in our guide.
When you make a transfer from one currency to another via your bank, you seldom receive this exact rate. Most banks charge a 2 – 4% markup on the interbank exchange rate. This means, if you plan to send $500 to your family or friends in the UK, you may end up paying about $40 – $60 in exchange rate and transfer fees.
Unfortunately, you may be faced with several other fees when making an international bank transfer. The intermediate banks and recipient’s bank can also charge for their services. These intermediate banks could take anywhere between $10 – $20 from the original sum and the recipient bank might also charge a similar amount for inbound transfers.
Here is a summary of the fees you might expect to pay for sending money to an overseas bank account:
Although the transfer speed depends on a variety of factors including the origin country and the country you are sending the money to, an international bank transfer can take between 2 – 4 business days. Online money transfer specialists can move money within a few hours – even minutes – and often emphasise their instant delivery speeds.
Both banks and money transfer services are known to place daily limits on the amount you can send from your account to an overseas account. The limits vary across platforms and there is often both a minimum and maximum limit for international bank transfers. You must confirm the limit before you go ahead with the transfer, otherwise it might not go through and you will have to break your proposed transfer into several smaller remittances.
Bank transfers are famously expensive. While banks are trusted institutions, when it comes to international money transfers, you end up paying a lot more. Thankfully, there are many non-banking money transfer companies that can help bring down the costs of your international money transfer substantially.
Most online platforms offer favourable mid-market/interbank rates and charge a nominal transfer fee, which is normally less than 1%. There are a few online providers that charge both a markup on the rate as well as a transfer fee, but the total costs are still much lower than what you pay to your bank. The best thing about these money transfer companies is that they are upfront about what they charge. So, even before you make a transfer, you will know exactly what amount will reach the recipient’s account.
In short, it is always wise to consider and compare all available options when transferring your hard-earned money overseas, to guarantee the best deal. Banks might be the most recognisable financial institutions, but in some cases they’re far from the best value. To help you get started with money transfer providers, we’ve put together a list of top 10 money transfer companies.
International bank transfers are a secure and familiar way to send money to an overseas account. You just need to log into your online banking account or visit your local bank branch to make the transfer. Having said that, we have outlined the high transfer fees and weaker exchange rates that you may be subject to during the international bank transfer process. This means the amount that reaches the recipient account is much lower than it could be.
The right thing to do is to evaluate every alternative options and choose the one that offers the lowest fee and best exchange rate. There are several international money transfer companies that assist with sending money overseas safely, quickly and at a much lower cost than banks. Online money transfer providers are fully regulated and offer the same kind of security as banks, so make sure you compare the available services and find the best option for your situation.
Elliott is a former investment banker with a 20 year career in the city of London.
During this time he held senior roles at ABN Amro, Societe Generale, Marex Financial and Natixis bank, specialising in commodity derivatives and options market-making.
During this time, Elliott’s client list included Goldman Sachs, JP Morgan, Credit Suisse, Schroders Asset Management, and the Pennsylvania State Public School Employees Retirement System, amongst others.
Jonathan is the founder and editor of MoneyTransfers.com. Jonathan is highly experienced in the currency transfer market, having previously worked in the FX trading industry, alongside being an avid traveller. Using his knowledge he identified a need for transparency and further education to help people save money on their money transfers, leading to the creation of MoneyTransfers.com