International Electronic Funds Transfers: What You Need to Know

Admin September 22, 2024 Technology

Sending money internationally can be a bit more complex than making domestic payments. These transfers often come with higher fees, longer processing times, and sometimes involve additional hurdles. Yet, as global transactions grow—expected to soar from $190 trillion in 2023 to $290 trillion by 2030—understanding how international electronic funds transfers (EFTs) work is more important than ever.

In this guide, we’ll break down the process, including average transfer times, potential delays, and how to send an international EFT efficiently.

Key Points Covered:

  • How International Electronic Funds Transfers Work
  • Average Processing Times
  • Why Delays Happen
  • Steps to Send International Transfers

How Do International Electronic Funds Transfers Work?

While the process of sending an international EFT might seem straightforward, it involves various steps like international banking networks and currency conversion. Below is a breakdown of how it works:

  1. Initiating the Transfer: You start the process through your bank, either online, via a mobile app, or by visiting the branch. You’ll need details like the recipient’s name, address, bank information, and routing numbers (or BIC/SWIFT code).
  2. Interbank Communication: Your bank will communicate with the recipient’s bank using the SWIFT network, a global messaging system that securely facilitates international financial transactions.
  3. Intermediary Banks: Sometimes, additional banks may be involved to facilitate the transfer. These intermediaries may charge extra fees.
  4. Currency Exchange: If the transfer involves different currencies, your bank will convert the funds at an exchange rate that may include a markup.
  5. Completion: Once the transfer reaches the recipient’s bank, the funds are credited to their account.

Fees Involved:

  • Sending Fee: Charged by your bank to initiate the transfer.
  • Receiving Fee: The recipient’s bank may charge a fee to accept the transfer.
  • Intermediary Bank Fees: Additional banks involved in the process may charge their own fees.
  • Foreign Exchange Fee: If the transfer involves currency conversion, expect a fee for the currency exchange.

Average Processing Times for International Transfers

International EFTs generally take 1 to 5 business days but can take longer depending on several factors. In rare cases, transfers can complete within a single business day, especially between countries with strong banking connections (like the US and Europe). Transfers between regions with less direct banking relationships (such as Europe and Africa) may take longer due to additional compliance checks or intermediary banks.

For faster service, some banks offer same-day international transfers for a fee, provided:

  • The transfer is initiated during business hours.
  • No currency conversion is required.

Common Reasons for Transfer Delays

Delays in international transfers can arise from multiple factors, including:

  1. Fraud Prevention: Banks enforce Know Your Customer (KYC) and Anti-Money Laundering (AML) checks, which can slow down the process if extra verification is needed.
  2. Incorrect Details: Even minor errors in bank details or recipient information can cause significant delays, requiring the transfer to be reinitiated.
  3. Holidays & Weekends: Transfers initiated on holidays or weekends will be processed on the next business day, leading to delays.
  4. Currency Exchange: Transfers involving currency conversion can take longer, especially with less commonly traded currencies.
  5. Bank Relationships: Transfers between banks with direct relationships are faster. If intermediary banks are involved, expect additional processing time.

Steps to Send International Electronic Funds Transfers

To ensure a smooth transfer, follow these steps:

  1. Choose a Bank or Service: Decide whether to use your traditional bank, an online payment service (such as PayPal or Wise), or a specialized transfer service.
  2. Gather Information: Make sure you have the recipient’s full name, bank details (including SWIFT/BIC code), and account number. Double-check all details to avoid delays.
  3. Comply with Regulations: Be prepared for KYC or AML checks, especially for large or irregular transfers.
  4. Initiate the Transfer: Use online banking or visit your bank to initiate the transfer. Ensure all details are correct, and pay any applicable fees.
  5. Track the Transfer: Obtain a tracking number if available, and monitor the progress of your transfer.
  6. Address Any Issues: If the transfer is delayed, contact your bank for updates and correct any errors if needed.

Final Thoughts

International electronic funds transfers can be more complex than domestic payments, but with the right knowledge and preparation, you can avoid common pitfalls. Always double-check transfer details, be mindful of fees, and ensure compliance with local regulations.

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