The Most Reliable Ways to Make International Wire Transfers

What is Needed for an International Wire Transfer?

• The recipient’s full name and address
• The amount of the wire transfer
• Name and address of the recipient’s bank
• Recipient’s bank account number and account type
• Recipient’s bank routing number
• Recipient bank’s SWIFT or BIC code (when applicable)
• Reason for the transfer

What is an International Transfer?

If you do business with international clients, you will likely need to send or receive money globally. Traditional methods of sending money overseas include cash, checks, bank drafts, or money orders, which can be slow and risky.

The fastest and most secure way to move money from one country to another is to use an international wire transfer. You can send thousands of dollars at once and convert the funds to foreign currency as needed.

An international wire transfer is a service offered by almost every bank. It allows you to send a certain amount of money from your bank account to a recipient’s bank account anywhere in the world. If you plan on using your bank to send an international transfer, it’s important to understand SWIFT and how it works.

Society for Worldwide Interbank Financial Transactions (SWIFT)

International wire transfers are normally made using an international standard known as the SWIFT network. This financial institution allows money to travel between banks internationally. It assigns every bank a unique identifier code to ensure the transfer always gets to the intended recipient.

Unlike what the name suggests, SWIFT transfers are not quick. Using the network is a bit like traveling via plane. If there is no direct route from one airport to another, you will need to take a connecting flight or two. It’s the same for SWIFT.

Instead of a funds transfer traveling straight to the main destination, there is often anywhere from one to three banks it travels through first. Unfortunately, that also means some of these banks also take a fee.

SWIFT oversees the messaging networks banks and other financial institutions use to send and receive instructions for money transfers. Each entity in the SWIFT network has a unique code that’s 8 to 11 characters long. This is known as the bank identifier code (BIC) or SWIFT ID.

In summation, here’s what you need to remember about the SWIFT network:

• Transfers can take anywhere from 1-5 business days.
• Anywhere from 3-5 banks will charge a fee for the transfer.
• If your money is converted into another currency, be prepared to pay currency exchange rates.

Are International Wires Secure?

International wire transfers are relatively safe, provided you have the correct recipient details and they are using established banks. Once the money arrives in the recipient’s account, it is normally labeled “cleared funds,” and the transaction is complete. The payee should then be allowed to access the funds immediately.

It is rare for a global wire transfer to encounter issues, but it does happen. If a thief or hacker gains access to a recipient’s account, they could immediately receive and withdraw funds and/or send them elsewhere. When you wire money, there is always a risk.If you’re wiring a large amount, it’s worth speaking to the payee to establish extra controls for the transfer. The recipients should also double-check no one else has access to the receiving bank account.

The Top Ways to Send an International Wire Transfer

There are four main options for sending an international wire transfer:

• Through your bank’s online services
• In person at your bank’s branch
• Over the phone with your bank
• Via a special money transfer service (both offline and online)

Making a Transfer Online Through the Bank

Many banks will ask you to come in to make an international money transfer, but several have now made it possible to do so online. Here are the quick steps to sending a transfer this way:

1.   Find the wire transfer page

If you have online banking set up, log into your account and find the wire transfer section of your bank’s website. This is usually located at the top toolbar of their homepage. You can also Google “wire transfer” and look for your bank in the results. Lastly, call customer service if you are still not sure.

2.   Check your online transfer limit

The bank may require you to set an online transfer limit, which is typically $5,000. Sometimes, they automatically set a limit. If the amount you need to send is over the daily limit, you need to call the bank and make a request.

In some cases, to verify it is you on the phone, the bank might have some additional security questions for validation. This can be anything from a special code sent to your phone to a secure email.

3.   Provide bank details

To complete a SWIFT transaction, you’ll need to provide specific data on the recipient. This includes:

• Name and address of the payee’s bank.
• Name, address, and account type of the recipient (checking, savings, etc.)
• Payee bank account number or IBAN (international bank account number).
• Recipient’s BIC/SWIFT code.

4.   Enter the amount and currency type

When you enter the payee information, the currency is usually set in the wire transfer form for that country’s currency. If not, select the currency and enter the transfer amount. As a general rule, a bank account in a foreign country is denominated by the local currency.

However, it is not uncommon for foreign banks to offer client accounts in multiple currencies, especially US dollars. Double-check that you are transferring money in the desired currency. Otherwise, the transfer could be rejected if you send it in the wrong currency.

5.   Pay the processing fee

The bank will tell you how much they’ll charge for a transfer and your exchange rate. US banks charge fees fixed between $30 and $50. Typically, you’ll spend 5-7% more on a transfer than a specialist provider. Once you know the amount, simply confirm how you want to pay. This is usually drawn directly from your bank account.

In some cases, the receiving bank may also charge a fee ranging from $10 to $20. Remember that up to three intermediary banks can also charge a fee. It can get expensive, so be prepared.

6.   Find out how long it will take to arrive

After you complete the transfer form, the website should give you an estimate of the time it will take. Your bank will track the status and update you via the web portal. Most transfers take 1-3 business days, depending on many factors.

For example, if the destination bank is in a drastically different time zone, they may have different days in which the bank works. Additionally, the money usually travels between 3-5 banks, so keep all of these factors in mind. If you need to know how much a bank wire costs, it’s best to start with the bank name and a phone call.

Making a Transfer to the Bank Branch

Your bank may require an in-person transaction to send an international wire transfer. However, doing it online is the same as doing it in person, as you will need to bring the same data.

1.   Bring all banking data to the branch with you

This includes:

• Your name and the US bank account you want to pull funds from
• The name and address of the recipient’s bank
• Payee’s name, address, and account type (checking, savings, etc)
• Recipient’s account number or IBAN
• Recipient’s BIC or SWIFT ID

2.   Decide the amount of the transfer and the currency

It’s always best to check with the recipient before you choose the currency option. People who regularly transact with international companies usually have a multi-currency account.

3.   Pay the international transfer fee

All banks charge a processing fee ranging from $40-$50, though it can sometimes be as high as $80. Within the Eurozone, transfers often cost between €5-€7, plus a percentage of the transfer amount, ranging from .1-1%. 

The receiving bank may also charge a fee of $10-$20 (€9-€18). Once you have paid, the clerk will tell you how long the transfer should take.

Making a Transfer Over the Phone

Much like an in-person transaction, the bank’s call center can handle your international transfer. Simply collect all the data as you would for a visit to the branch, and the customer service agent will walk you through the rest. Ultimately, they’ll let you know how long the transfer should take.

Use an Alternative Transfer Service

One of the most convenient ways to send a money transfer globally is to use a service specializing in international currency exchange. These entities are focused on helping you send money overseas safely, cheaply, and quickly using the speed and accessibility of the Internet.

To get started is simple. You just create an account with the selected provider and send your first transfer within 24 hours. With this method, there are typically a few ways to pay. You can use your bank account or pay with a credit or debit card. Specialist providers are always fully regulated, and recipients generally receive the money directly into their bank account.

In addition to banks, there are many standalone services you can choose from. Although they may lack the history of an established bank, don’t let that scare you. If you’re looking for low transfer fees, this is just as safe an option as a bank, with a much lower price tag. However, the tradeoff is that this avenue can take slightly longer than simply going through the bank.

Familiar payment services you may have heard of include:

PayPal

Founded in 1998, PayPal is one of the most popular wire transfer services. Opening a PayPal account is free, and the fees are minimal if you are making a domestic wire transfer within the United States or Canada.

If your account is partially (or fully) funded using a debit or credit card (and not a bank account), PayPal charges 2.9% of the transaction plus a fixed fee. This charge depends on the currency of the recipient’s country. Therefore, using a PayPal account linked to a bank account rather than a line of credit is much cheaper.

Western Union

Western Union has existed since the 19th century and was known for sending and receiving telegrams. Today, it’s a major player in the wire transfer market and is available in 200 countries with 130+ currencies.

The fees will vary depending on how you send money. If you use a credit or debit card and send money to someone’s bank account, Western Union charges up to $10 per transaction. Additionally, some major banks in other countries are not supported. When you use a credit or debit card and wire the money to another Western Union location, the fee is cut in half to $5.

If speed is required, Western Union may not be the best option. Sending an international transfer to a bank account can take 4 to 8 days, while sending it to a local Western Union branch can take minutes.

TransferWise

Another great option to avoid high bank fees is TransferWise. While many banks offer competitive fees, they typically offer poor exchange rates. If you also factor in the extra international SWIFT fees, the amount charged can be overwhelming.

TransferWise sends money using local bank systems to avoid high international transfer fees. All you need are the local bank details of where the money is going, and the TransferWise platform will only use the real exchange rate. This is the same one you see on Google. They simply charge a low upfront fee.

Additional Online International Wire Transfer Platforms:

• Remitly: A good option for sending money to friends and family overseas.
• OFX: This is a specialist foreign exchange service with superior customer service.
• WorldRemit: This is especially good for countries in Africa, Asia, and South America if you send less than $10,000.
• XE Money Transfers: This is a reliable service with no upfront fees.

Global Currencies and Hidden Fees

Low upfront fees often cost you much more when the transfer is finished. That’s because global currencies are traded throughout the business day.

At any moment, if you take the median of the price a currency is bought and sold, you get the mid-market/interbank exchange rate. This is the rate that sets the worth of your money compared to other currencies. The issue is when services and banks give you a far worse currency rate than what can be found on Google. They then pocket the difference.

This means you pay an extra, un-advertised cost for your transfer. The additional charges folded into the exchange rate can increase fees up to 4-6% of what you are sending.

Do your research to avoid these hidden fees and find the most affordable option. Before you commit to sending money, compare the amount you will get in the destination currency. Every transfer service offers a slightly different exchange rate, so it’s good to check how their rates stack up against the standard exchange rate.

Exchange rates change daily. Google offers a simple currency converter to ensure you are not paying exorbitant fees.

Open the Google search page and enter “currency converter” into the search bar. Set the baseline currency in the top field and the converting currency in the bottom field. Enter the amount, and the tool will automatically convert. Then, you can decide which services or methods are worth your time and money.

If you regularly send money across borders, consider signing up for a borderless multi-currency account. You can store funds in dozens of different currencies and get paid (or pay) with local bank details in the U.S., the UK, Australia, and the EU.

International Wire Transfer Fees and Rates from U.S. Banks

Banks in the United States charge high fees for international wire transfers. These fees vary depending on if you make an online transfer, do it at a branch, or over the phone. Here is the typical range per transfer for the most popular banks:

• Citibank – $35 to $45
• Bank of America – $35 to $45
• Wells Fargo – $35 to $45
• Chase – $40 to $50
• US Bank $50

That’s not the only fee you’ll pay. Banks also hide other fees in the exchange rates offered. Always ask!

U.S. banks typically provide worse exchange rates than the base exchange rate because it’s a way for them to make extra money. The exchange rate is 2-4% higher than you might receive elsewhere. Combined with the wire transfer fee, for every $1,000 spent, you are looking at fees ranging from $50-70.

There are also intermediate bank rates to consider. These are the banks that are in the middle of a transaction, bouncing the incoming wire across the globe. They also want a piece of the pie.

As your international wire transfer passes through these middle banks on the way to the final destination bank, each one will take a cut of anywhere from $10 to $20. Finally, the destination bank will also take a share with an average fee of $10 to $20.

International Wire Transfer vs. Global ACH

There are two ways to transfer funds internationally between bank accounts. An international wire transfer or a direct deposit of funds using local bank networks (also called global ACH). Although both strategies achieve the same thing, each remittance and payment method has unique requirements and implications. This includes things like:

• Transfer fees
• Cost of the service
• Information needed
• Amount of time the transfer takes
• Etc…

So which method is best? Try weighing them against three factors:

1.   Speed

2.   Fees

3.   Regulations

Speed

If you are in a rush to get funds to someone in another country, the clear winner is an international wire transfer. Typically, funds remitted this way only take up to two business days to arrive. That’s because you’re sending the money directly from your account (i.e. a business checking or savings account) to a recipient’s account at the receiving bank.

The banks are always in direct communication with each other, and thus the transaction is faster. However, you will still need account numbers like the SWIFT code or IBAN (International Bank Account Number) of the foreign bank to complete the transfer.

The speed of an international wire transfer can vary depending on the countries and currencies involved. Every place has different standards and regulations. Typically, an international wire transfer arrives at the destination bank between 2 and 4 business days after you send it.

A global ACH can often take up to 2 extra business days than an international wire transfer. Outbound wire transfer cutoff times will vary by bank and time zone of the originating bank. Instead of two banks communicating back and forth, a global ACH leverages the clearing network of the recipient’s bank.

For example, the clearing network in the United States is NACHA, which is short for the National Automated Clearing House Association. This is also known as an ACH transfer. In Europe, the clearing network is SEPA, which is an abbreviation for the Single Euro Payments Area.

Funds transferred through the direct deposit method are always processed in groups or batches with other transactions using bank transfers. This slows down the process and can take several hours to a few days.

International Wire Transfer Fees

As stated above, when sending money overseas, it’s important to consider the charges. International wire transfers can come with hefty fees. It can cost up to $50 to send money and up to $10 just to receive it. Additional fees are always accrued during the currency exchange as well. This is usually not discussed and may come as a surprise to any business sending money globally.

On the contrary, global ACH or local bank transfer transaction fees can be minimal. In fact, some are as low as $5, which is significantly less than an international wire transfer. While larger financial institutions and banks can be the obvious choice for security, when a business needs to make one-off cross-border transfers, the processing fees can add up.

Although online banking will remove some steps, banks can charge fees based on the type of currency you send. For example, Bank of America will charge $35 for outbound international wire transfers sent in a foreign currency, and $45 for those sent in U.S. dollars.

These amounts do not include foreign currency exchange fees either. Additionally, wire transfers sent in a foreign currency will always arrive sooner than those sent in U.S. dollars. This seems sort of backward.

Global Money Transfer Regulations and Limitations

Another point to consider when choosing between an international wire transfer or a local bank transfer is the size of the transaction and frequency. Each financial institution has different minimum and maximum limits on the amount you can send and how often.

This is a “make it or break it” point if you are sending high-volume amounts or transfers constantly. All of this will affect your bottom line. If you are unsure how your bank charges, log into your online banking software or call a company representative. Do not go into the transfer blind.

If you intend to wire large amounts of money, the best ways to do so depends on a few factors like:

• The countries and currencies money is sent between
• How you pay for the transfer (some methods cost more than others)
• The fee and exchange rates that are charged by the bank or provider being used
• How the recipient chooses to receive their money

Considering all this, the most economical way to send international funds is through a money transfer service.

Limitations and other restrictions can also apply to overseas wire transfers or global ACH frequency. These include per person, day, or month, depending on your service. A global ACH is ideal for a business that makes transfers regularly and/or high-frequency, such as paying a freelancer overseas for an ongoing project.

Consumers are federally protected for international direct deposit and wire transfers. All financial institutions are required to disclose the following data:

• The exchange rate
• Fees and taxes charged by banks, intermediary institutions, and other third-party agents
• When the money will arrive at the final destination
• How to cancel transfers and correct errors

Financial institutions that are handling your international transfer are required to follow the guidelines set forth by the Office of Foreign Assets Control (OFAC). The agency regulates economic and trade sections against specific foreign countries, banks, and individuals based on the United States’ foreign policy. All banks are required to screen global ACH payments to ensure the transaction complies with every OFAC regulation.

In addition, sometimes, more advanced data is required to execute an international wire transfer as a component of your compliance, regulatory, and screening process. Information such as identification and bank details can be requested.

Banks like Wells Fargo and Chase require common identifying details like SWIFT, BIC, IBAN, and CLAB (for Mexico). Bank of America asks for all of that plus additional screening details like the intent and purpose of the wire (i.e. business, loan, etc.).

More advanced compliance procedures involve a photo ID to check against larger crime-based databases. This is to ensure all funds being transferred are not for criminal organizations or violating sanctions.

Spend More and Send More

In business, to stretch money further, send larger amounts in batches so the fixed fee doesn’t take up much of the total amount.

Choosing between sending your funds via an international wire transfer or a global ACH depends on various factors that make the most sense for your business, like time, amount, and frequency. You may want the money to arrive in a foreign account as soon as possible. That will come at a higher remittance fee.

Companies like Tipalti offer businesses an inexpensive alternative to sending larger amounts worldwide. They help companies with mass payment needs save money by switching from expensive international wire transfers to global ACH (a local bank transfer) in countries where this is an option.There are many aspects to consider when sending money internationally. Luckily, modern technology has allowed businesses to save time, drive revenue, and nurture international relationships. Ready to learn more about global payment methods? Download our free EBOOK.