How to choose the best cross-border payment provider
Find the right partner to help you expand international pay-ins and payouts.
Today, a domestic bank transfers can almost be instant. But why is it not the same for overseas transactions? Here, we’ll explore how long international bank transfers normally take, and outline how innovative banks are collaborating with fintechs to speed up the process.
There are two main ways to send money overseas. The first is a wire transfer, which is an electronic method conducted via banks and other financial institutions using the SWIFT system. This works similarly to a domestic transfer between financial institutions. However, as these payments are being sent to a different country, SWIFT transfers require intermediaries. Alternatively, senders can make an international money transfer without using banks, instead relying on other providers who use their own communication systems rather than SWIFT.
Both of these methods can usually be initialized online, depending on the financial institutions and providers involved, though wire transfers tend to be more expensive. This is due to the SWIFT fee and the fact that it is typically considered a premium service. That said, money transfer providers may still charge third-party fees, so banks and financial institutions will be able to offer cheaper services by partnering with companies requiring minimal third party involvement.
International bank transfers usually take one or two days but can take as long as five depending on the currency. For example, US dollars and euros are normally quicker than weaker currencies. However, sometimes it can take even longer than five days due to the processing time at the receiving end of the transfer, as well as things like the destination country’s banking infrastructure and regulations.
Given that international bank transfers can be done electronically, the majority of customers will expect the process to be instant, as they would if they were sending money domestically. Unfortunately, many international payment providers are not able to offer real-time services for the following reasons:
1. Fraud prevention
2. Differing time zones
3. Currency conversion
4. Bank holidays & weekends
Security is of the highest importance to both consumers and banks when making international bank transfers. Consumers want to know their money is safe, while banks need to make sure their funds are protected. High-profile cyberattacks also cause significant reputational damage to these institutions.
As a result, there are a series of fraud prevention steps that need to be taken, and these can seriously increase the time it takes to make an international bank transfer. It’s also important to remember that banks are at the mercy of regulations and laws set out by local and international governing bodies, which can mean additional checks outside of their control.
International bank transfers mean that money may be moving between different time zones, inevitably causing potential delays as the relevant banking systems need to be open and functioning for the payment to be processed. Depending on the corridor there’s no guarantee all the relevant financial institutions will be active at the same time.
Take, for example, a sender in India making an international bank transfer to the USA. If they initiated the payment at 10am it would be 9.30pm in LA. This means almost a 12-hour wait until LA business hours can commence, holding up the steps at the receiving end of the international money transfer.
For overseas transactions that require currency conversion, the process of converting the money to the recipient’s currency means that international bank transfers can take more time.
The currency conversion doesn’t always mean the process will take longer — this depends on the particular provider. For example, some allow customers to send the transfer in the recipient’s preferred currency at the beginning. Others have partnerships with another financial institution that allows them to make the conversion instantly.
Similar to the delays caused by different time zones, international bank transfers are likely to take longer if the payment coincides with a bank holiday or weekend in any of the relevant countries.
Remember that nations have their own bank holidays, and sometimes banks could be shut for as long as a week. As such, there’ll be no financial institutions to process the international money transfer in the meantime. The same applies to weekends, and it’s important to bear in mind that this doesn’t necessarily mean Saturday and Sunday for every country. Egypt and the UAE are just two examples where the weekend falls on Friday and Saturday.
The slow nature of overseas bank transfers can be problematic. Take migrant workers sending international remittances to loved ones in developing countries, for example. Even if they carefully plan the best time to initiate the payment, there’s often no clear indication of when exactly it will be received. This isn’t ideal if the money needs to be delivered quickly.
Speed and convenience are incredibly important to modern consumers, which means banks, other financial institutions and businesses need to offer fast international payment solutions to attract and retain a loyal customer base. Luckily, collaborating with forward-thinking fintechs allows them to offer significantly faster international bank transfers. This is because their fintech partners are capable of implementing cutting-edge technology, eliminating the number of intermediaries involved in order to create a quicker, more streamlined process.
Here at Inpay, an international money transfer takes just 30 minutes on average with no international SWIFT wire fees. These real-time payments can also be processed 24/7, 365 days a year in countries with instant payments infrastructure like the UK, India and Singapore. Meanwhile, SEPA payouts in Europe can be delivered within minutes (or on the same day at the latest). Furthermore, we offer security through advanced screening, tracking and monitoring of every payment, and Inpay is regulated by the Danish FSA and in other jurisdictions.
Get in touch now to discuss how Inpay can reduce international payment time for your business.
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