Local bank transfer is a cross-border payment method where a deposit is made into a foreign bank account. Local bank transfers involve an intermediary organization or financial institution which operates between the payer (or the originator) of the transfer and the payee (or the receiver) of the payment. The intermediary acts as a clearing mechanism and helps to process and settle the transfer of funds.In the United States, the most common process that involves this type of intermediary is called an ACH transfer. The payment is issued by the payer and then ‘cleared’ and settled by the Automated Clearing House before being available in the payee’s account. Unfortunately, the domestic ACH system does have the capacity to settle international money transfers. Many other regions around the world also have clearing mechanisms that function similar to an ACH transfer. Europe has developed the single European Payments Area or SEPA – which allows for local bank transfers with similar ease to domestic ACH transfers. India has multiple mechanisms for local bank transfers including the NPCI, ECS, and more recently the NACH.Local bank transfers are also known as an international ACH, Global ACH or eCheck. A type of EFT (electronic funds transfer), the convention and process by which local bank transfer payments are made varies from country to country. Local bank transfers are quickly becoming the international money transfer method of choice for businesses that make mass payments. Online marketplaces, affiliate networks, and advertising networks regularly execute mass payment batches to their partners. Local bank transfers can be executed quickly and at scale while having the advantage of low fees and local currency.
Local bank Transfers vs International Wire Transfers
The difference between local bank transfers and wire transfers is the role of the network or intermediary. Wire transfers utilize a direct link between the banks on both sides of the transfer. While local bank transfers can be completed at a relatively low cost, international wire transfers tend to carry hefty fees. While international wire transfers are more expensive than local bank transfers, they tend to be more reliable and faster.
Why You Need Local Bank Transfer as an International Payment Method
Local bank transfers can make paying vendors and partners a lot easier for your company. It has many advantages, which other options may not give you. So if you have a large business, you may find using it beneficial. Here are a couple reasons why you want to use local bank transfers eCheck as a global payment method.
Global Reach
Local bank transfers can reach pretty much anyone worldwide. Many businesses, especially internet-based digital economy brands and large corporations rely on products or services from people outside the country. If you use this service to pay your suppliers or partners, you can automate the global payments workflow and reduce accounts payable workload by up to 80%. Instead of having multiple banks in different countries to make payments to, you can automate and consolidate your global payments into a single batch. With accounts payable automation, you or your staff can focus on growing your business.
Save Money and Time
Believe it or not, mass payments can save money and time. Rather than requiring a staff of accounts payable specialists to process payments, your payments can be grouped into one payment run and leverage the efficiency of automation. In addition to the time it takes just to process invoices and execute payments, extra steps are required for global payments. A robust end to end mass payment solution takes the manual steps out of your accounts payable workflow, helping to save money and time.
