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International bank transfers are traditionally executed via wire transfer, but how does this process work, and how long does it take? Read on to find out!

What is a wire transfer?

Wire transfer is a method of electronic funds transfer (EFT) between two parties. They are used for a variety of purposes to send money both domestically and abroad between individuals and businesses.

Wire transfers occur between two banks via a network either within one country, such as Fedwire in the US or LVTS in Canada, or a global network called SWIFT (Society for Worldwide Interbank Financial Telecommunication) for international wires.

How do wire transfers work?

When a person initiates a wire transfer, the sending bank sends a message to a network such as SWIFT or Fedwire instructing them to clear the transfer. After it is cleared, the recipient bank receives a message instructing it to deposit the funds in the recipient’s bank account, and then the transfer is complete.

The two banks must have a reciprocal account with each other in order to successfully complete the wire transfer; this allows them to balance out the funds at the end of the day on a macro scale after many transfers are completed.

For international transfers, if the two banks do not have a direct connection, one or more intermediary or correspondent banks are needed in order to transfer the funds along the way. Specifically, these banks are usually needed in order to facilitate wire transfers between countries that do not have an established financial relationship.

And since the currency needs to be exchanged for international transactions, one of the intermediary banks will likely make the conversion at a marked-up exchange rate in order to make a profit for itself. The average amount for this FX fee is 2-4%.

Wire transfers are not free to make payments, as opposed to other forms of electronic payment. The sender must pay an outgoing wire which is, on average, $25 for domestic wire transfers and $43 for international wire transfers. The recipient may also pay an incoming wire fee for an incoming wire transfer, which is, on average, $15 for both domestic and international wires.

How To Make A Wire Transfer

The person initiating a wire transfer must go to their bank or use their banking application and instruct them to transfer an amount of money to a recipient. The sender must provide the their bank with a lot of information, including their own bank account number, the recipient’s name and bank account/routing numbers, information about the recipient’s bank, such as its name and address, and IBANs or SWIFT/BIC codes of the receiving banking institution so that the funds go to the right place.

The sender must then provide their ID (depending on the bank and amount) and deposit the money upfront, as well as a fee. 

How long do wire transfers take?

Domestic bank transfers can take up to 2 days to complete. If the transfer occurs between bank accounts of the same financial institution or large institutions such as the big 4, then the transfer can be completed in as little as 24 hours.

International transfers are more complicated, and thus take more time to complete. The average time for an international wire transfer is 5 days, and if there are any mistakes with the information that the sender provides, it can take even longer.

There are several reasons for this slow transfer time. Firstly, the intermediary banks that process the request via the SWIFT network complicate the process and make it take longer for the recipient to receive the payment.

Also, banks often purposely slow down the transfer process, breaking it up into different stages, in order to limit fraud. This is because if a fraudulent transfer is initiated, there is no way for the banks to reverse the payment and correct the issue. 

Finally, when money is transferred, money can appear simultaneously in the accounts of the payer and the payee: this is called the float. The float is basically double-counted money, which, due to delays in processing, can provide banks a profit on interest and thus incentivize them to hold your money longer when making wire transfers.

How borderless™ Can Help

borderless™ is an alternative method to make local and international bank transfers.  borderless™ is a global payment solution enabling businesses to pay anyone anywhere in 120+ countries in local currency. borderless uses a smart global yet local infrastructure avoiding the slow SWIFT payment system that banks utilize, making payouts cheaper and faster. To make payouts even more convenient for the user, borderless provides a direct debit service to its users where we automatically pull funds from their bank account. Check out our blog post on direct debit to learn more. 

We make global payments faster: Using Real-Time Payment rails and local infrastructure we can deliver payments in seconds or hours

We make global payments simpler: Using @handles, you can pay anyone without collecting or entering bank details saving you time and reducing human error.

We make global payments automated: borderless offers an easy to use dashboard, API (application program interface) and CSV file upload to pay thousands of individuals or vendors at once.

With global bank payments via borderless™, international bank transfers and global payouts take just a few seconds or hours to complete. Also, instead of having to physically go to a bank or having to manually enter information such as routing and account numbers, SWIFT/BIC codes, borderless™ allows you to easily make payments online in a click of a button using @handles. @handles are an easy way for people to quickly make payments to others without the need to collect their banking information reducing data liability and admin time.

borderless™ allows payment tracking in real-time unlike other financial institutions where neither party knows where the funds are or when they are delivered. This provides transparency and peace of mind for both parties. 

borderless™ is also much more affordable for making payments than banks or PayPal. Making payments both domestically and internationally with borderless™ is up to 80% cheaper than banks. We offer low, affordable rates with capped fees for making payments, saving you money on wire fees and FX rates. Compared to the complex, opaque, and slow wire transfer process, borderless™ is simple, transparent, affordable, and efficient. It is the best choice for making and accepting international bank payments.

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About Us

borderless, a global payments company that provides a payout software and API to companies to process payments to 120+ countries. borderless specializes in cross-border payments, and their platform utilizes local payment rails, real-time payment rails, and SWIFT to facilitate faster and more efficient payments. We invite you to explore how borderless can assist your marketplace or digital platform in navigating marketplace payments and international payments. To learn more, contact our team to schedule a demo today.