What are the most common factors slowing down international bank transfers?
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
1. Fraud prevention
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.
2. Differing time zones
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.
3. Currency conversion
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.
4. Bank holidays & weekends
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.