In a time of technological advancement, consumers are used to receiving everything instantly. Payments are no exception. If you are making an overseas money transfer you will likely want to know how long it’s going to take. Unfortunately, there is no definitive answer to this one.
Several factors influence the time it takes for funds to reach an overseas account. However, a standard timeline for most international transfers is about 1 to 4 business days.
Why aren’t international transfers instantaneous?
It’s 2022 and most financial transactions are now completed online. So why is it that transferring finances internationally isn’t an instantaneous process? The simple answer is fraud. With large volumes of payments to be processed through larger sending banks, necessary regulatory procedures mean that there are often delays with the expediting funds from the sending bank’s side. Transfers move in a series of steps which are purposely slowed down in order to reduce the possibility of fraud. Each country has rules surrounding the movement of money through its international borders.
Sometimes the banks receiving the transfer need to confirm the information and funds received as a fraud protection measure. While this is an important compliance measure and in the best interest of all parties transferring and receiving international money transfers, incoming funds may not be accessed by the beneficiary for another one or two days after the funds reach the receiving bank. Larger sums are obviously subject to more stringent, and as a result, lengthy controls.
What is the role of an intermediary bank in the transfer process?
An intermediary bank is required when sending a payment in a currency that is not the domestic currency of the destination that the funds are being sent to. International wire transfers often occur between banks that do not have an established financial relationship. When agreements are not in place between the bank sending the wire transfer and the bank receiving it, a correspondent bank must act as an intermediary. For example, a bank in Dublin that has received instructions to wire funds to a bank in Thailand cannot wire funds directly without a working relationship with the receiving bank. When intermediary banks are used, the indirect nature of the transfer can sometimes, (but not always) mean that there is a delay in receipt of the funds being transferred.
Common factors influencing transfer time
The SWIFT international payment network is one of the largest financial messaging systems in the world. The majority of cross-border payments outside of the Eurozone are sent via SWIFT which uses BIC and IBAN to identify and apply funds to bank accounts worldwide.
It is essential that the details of the bank account to which funds are being transferred are correct if speed is of the essence for an international money transfer. All too often, funds are delayed in the international banking system due to incorrect account details preventing funds from being applied to the beneficiary account. This can potentially delay a transfer by weeks due to the recall and re-sending of funds with amended correct details.
Let’s examine the most common factors that play a role in how long an international bank transfer takes:
1. Payment method
The most common method used to transfer money internationally to a beneficiary overseas is through wire transfer. These can also be more expensive (varies by bank) than other options but they can be the quickest option depending on factors like currency and destination. When making non-urgent payments in Euros within the Eurozone, SEPA payments are a cost-effective method of transferring money.
2. Currency used
Popular global currencies like the Euro, Sterling and the US Dollar are regularly traded on foreign exchange markets. This means that transfers in these currencies will normally be completed as quickly as possible. Transferring rare or exotic currencies may take longer to reach your beneficiary.
3. Weekends and holidays
If you initiate a payment late on a Friday afternoon you will need to wait until the following Monday before the payment is processed. Naturally a weekend adds a further 2 days to the process and bank holidays can extend this further to 3 days when payments are initiated on a Friday afternoon. When determining the length of time an international transfer takes from initiation to receipt of funds, the timeframe is always measured in working or business days (omitting bank holidays and weekends)
4. Cut off times
Being aware of bank cut-off times is important in terms of assessing how long it will take for receipt of your transfer request and for your transfer to be initiated. All banks have a cut off time each day for receipt of payment and transfer instructions, so the earlier a transfer instruction is made the sooner the payment will be processed. Requests processed at the end of the business day will not be sent until the following day adding an extra day to the transfer process. Always be aware of bank cut off times especially when payments are urgent.
5. Time zone
You should expect a delay if there is a significant gap between the time zones of the countries between which funds are being transferred. If for example, a payment is initiated in Ireland to be sent to an account at a bank in the US, the payment will be pending until the US bank opens.
Will we witness real-time international bank transfers anytime soon?
As consumers, we are used to real-time financial experiences through card transactions or e-commerce and so the increasing demand for more efficient international payments is not going to recede anytime soon. Across the SEPA region and in countries like the UK, Australia, South Africa and Singapore, faster, near instant domestic payments are already a reality. The UK has led the way when it comes to instant payments. The Faster Payments Service (FPS) was introduced in the UK in 2008 allowing payments to usually be made available almost immediately to a receiving account, although they can sometimes take up to two hours.
In November 2017, a new voluntary pan-European instant credit transfer scheme that will bring real-time money transfers across the SEPA region is on course to go live. SEPA instant credit transfers (SCT Inst) is a scheme designed for Euro transactions, based on the existing SCT scheme and the ISO 20022 message standard, that offers 24/7/365 availability, ensuring that funds are made available to a beneficiary account within 10 seconds and, at least initially, allows a maximum transaction amount of €15,000.
Instant global bank transfers – what are the challenges?
Despite the obvious moves to make instant global money transfers a reality, many obstacles have yet to be overcome. Businesses are looking for the same speed and convenience from international banking as they have come to expect from domestic banking – however, technology cannot yet facilitate that and regional solutions are rarely interoperable with other countries. A new ISO2002 standard has been developed as a worldwide payment code, but different rules continue to coexist in countries across the world, and this is what causes many of the delays experienced with international money transfers. Further integration is needed which must also take security and regulatory requirements into consideration.
Development is being driven by innovation within the finance sector as well as new entrants in the FinTech arena. It is clear that collaboration is the way forward. Many long-serving financial institutions are still hesitant when it comes to moving from proven legacy systems and are fearful of untested alternatives that promise to speed up the international payments process. However, it is these timid players that will be left behind in a marketplace that is demanding instant payments. The question, therefore, is when not if, instant international payments will become a reality.
Fexco for fast, secure international payments
For over 25 years, Fexco has been providing fast, secure and cost-effective international and domestic money transfers for business and personal customers. Fexco partners with the world’s leading banks guaranteeing that funds are transferred quickly and securely. Banks can take days to process your transfer request due to the volume of payments and associated regulatory issues. Fexco applies strict Anti-Money Laundering (AML) checks to all payments at the initiation stage which reduce the chance of further delays later on in the international transfer process.
Fexco’s dedicated account managers advise on the quickest and most secure international payment methods for your particular need. You will also get complete control of the payments process through PayDirect, the FCP online payments system, which contains records of all payment and beneficiary details for future transactions. A specialist team of customer service agents will advise you on timescales for international payments and provide expert advice on the formatting of more complex payments to smaller banks worldwide. Some of the main benefits of the Fexco international payments offering include:
- Same-Day Payments: Our customer support team will advise on currencies and settlement options for same-day payments, ideal for urgent transfers.
- Variety of Payment Products: Some of the popular overseas payment products we provide are SEPA payments, wire transfers and BACS payments.
- Straight Through Processing: FCP received Deutsche Bank’s 2015 Straight-Through Processing (STP) Excellence Award in recognition of its success in achieving an STP rate of 99% for its international money transfers. The industry norm for STP amongst banks and financial institutions is around 90%. An electronic fund transfer is ‘straight through processed’ if it is transferred from the sender to the payee without the need for any manual intervention.
- Account Validation Tool: Our validation tool ensures that bank details are correct before funds are sent. This speeds up the transfer process by greatly reducing the possibility of transfers getting lost in the international banking system.
- Automatic Payee Notification: Payees receive email notifications and confirmation when their payments have been sent.
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