Guide on international money transfer for small businesses
If you have dealt with international wire transfers, you’d probably fill that blank with the word ‘expensive’. And you know exactly why.
As a small business, every penny that you spend is important. And foreign money transfers can cost you a hefty fee. The traditional way of sending money internationally involves banks who charge a markup fee depending on the amount of money you are sending and the currencies involved.
Over the years though, many new ways of wiring money across borders have emerged that are much cheaper and can save you a lot of money over time.
Simply put, an international wire transfer refers to money that is being sent between two countries from one individual or a business to another using an electronic method. Since 92% of the world’s money exists in the form of digital data, it is not physical money that is sent, but rather a piece of information that is exchanged.
The transaction can take place through banks, specific providers like Western Union/MoneyGram, or other third-party money transfer service providers. Businesses send money internationally through online wire transfers as they’re known to be fast, safe, convenient, and have a global reach.
To carry out an international money transfer you require the following:
1. Name of the recipient.
2. Bank details of the recipient.
3. The country you are sending the money to.
It is also good to research the different ways you can send money internationally such as through banks or other service providers. You should do this because different institutions will charge different fees for transferring money abroad.
If you are choosing the traditional route of transferring money to another country through a bank, you should definitely first check what rates they charge for doing so. You should make sure to contact a bank representative and clarify the inter-bank rates as this fee is usually quite high and you’ll end up paying the receiver less than what they were actually supposed to get.
Most wire transfers online through banks or otherwise are quite safe as they must follow strict regulations in order to be in this business. The transfer networks ensure that they are adhering to country guidelines and carrying out each transaction in a secure way.
Most money transfer providers carry out international payments quite quickly. Some even in minutes. Usually, the transfers are completed between 1-5 days depending on the country you reside in, the country you are sending the money to, the currencies you’re dealing with, and other factors like national holidays, etc.
Even if the rates a bank or service provider charges are not mentioned anywhere, it does not mean they don’t exist. You should ensure that you check what are the different exchange rate charges that each service provider is offering and which is the most feasible option for you.
SWIFT is an international wire transfer network that follows many protocols making it easier and safer for people across the world to send and receive money. This financial institution has partnered with banks around the world and assigned unique codes to each one of them. This allows the network to ensure that the money is transferred correctly.
Although wire transfer online is quite fast, the SWIFT network is comparatively a bit slower than other methods. An analogy for this would be a person traveling through the public bus or train. Buses and trains make a stop at every junction or route before they arrive at their final destination. If a person represents money, then you know that you’ll have to wait till your stop arrives.
The SWIFT messaging network works in a similar way. There might be times when pieces of information/transactions have to pass through a couple of banks before they arrive at the recipient's bank. And every bank charges a small fee for each transaction. So that is the cost of a safe network. It might take a bit longer and a bit more money, but you’ll always know where your money is.
As mentioned earlier, every bank that is part of the SWIFT network has a unique code. This is called ‘BIC’ or Bank Identifier Code. It is an 8 to 11 digit long number that helps in accurately tracking every transaction.
The two most common ways you can wire transfer internationally are using the online website of your bank or directly visiting your bank’s branch nearest to you and getting help with the process from an employee.
The first step to making an online wire transfer through your bank is to navigate and find the wire transfer option. Log in to the bank’s website and you will most probably find the section somewhere on the top bar or left column of the homepage.
If you can’t find it, then try searching ‘wire transfer’ + ‘the name of your bank’ on Google and the page should most likely show up. If it still does not, you should call the customer support of the bank and get their assistance.
Once you find the page check what your international money transfer limit is. If it is not already set by the bank, you will get an option to do so. If you find that the amount you want to transfer is more than the limit that is pre-set by the bank, then you will have to contact the bank personally and request them to increase it if you can’t do it manually on the website.
Banks keep such limits to ensure that there is no fraudulent activity taking place. And to ensure further safety of the money transfer limit from your account, they might ask for further verification from you in the form of special codes like OTPs sent to your phone number or email.
To carry out a SWIFT transaction you will need to provide the following details:
1. The name and address of your bank
2. The name, address, and account type of the person who will be receiving the money.
3. Payer’s (your) bank account number also known as IBAN (international bank account number)
4. And finally, the recipient’s BIC/SWIFT code.
Next, you must select the amount and the currency you want to transfer the money in. Usually, the currency that is set by default in the wire transfer form would be the currency of your country. You could leave it as it is or change it to the currency of the recipient’s country.
But make sure that whatever currency you are selecting the money for the receiver to receive is supported by their bank. Else if you send the money in the wrong currency, the transaction could be rejected.
Before you finalize the amount you’re sending, check the processing fee that your bank will charge you for the transfer. This is usually higher than the rates that other third-party providers charge. There might be instances where the receiving bank will also charge a fixed fee.
And as we spoke about the SWIFT network, remember that the transaction could pass between 2-3 banks who may also charge a fee. You should get an idea of how much this could be from a bank representative and then decide the final amount you are paying so the receiver doesn’t receive much less than what you actually intended to send.
Finally, once you complete the payment through the wire transfer page, your bank should show you an estimated time it will take for your funds to be transferred to the recipient. This will let you keep track of the transfer whenever you log in to your bank account.
When you have decided that you need to go to your bank’s branch and get personal assistance from an employee, make sure you bring all necessary bank documents and details along with you.
1. Bank account details you want to transfer money from.
2. The bank name and address of the recipient
3. The payee’s address, name, and bank account type.
4. IBAN or the recipient’s bank account number
5. Recipient’s SWIFT ID or Bank Identifier Code
To select the final amount you want to transfer, talk to the bank employee who is assisting you and take into consideration all the fees that will be levied on the wire transfer.
If the recipient is transacting internationally on a regular basis, they probably have a multi-currency bank account. But you should still discuss with the receiver and make sure the currency they want the money to be transferred in.
Finally, before the bank transfers your money, clarify the fixed charge you must pay. This will be different for all banks and depend on factors such as the amount you’re transferring as well as the currency exchange rate.
Once you complete the payment, the bank employee will let you know the estimated time for the transfer to reach the recipient’s account.
Compared to other methods of sending money abroad, international wire transfers are mostly completed within 1-2 days depending on the amount you are transferring, the service you are using and the currencies involved in the exchange.
Thanks to the internet, you can literally send money to any part of the world all at the comfort of your home. Online wire transfers are as simple as logging in to the website of your service provider or bank, filling in the necessary information, and executing the transfer.
Rather than physically going to a bank, talking to a representative, and being stuck with the rates the bank charges, transferring money online gives you the freedom and flexibility to choose how you want to send money cross-borders. You get to compare each service provider and choose the best suitable option for yourself.
Payment methods that involve the SWIFT network have very good traceability. The network provides tracking details that help you know exactly where your money is in the online transfer process.
When you send money internationally through banks and service providers, they use modern technology to ensure that all transactions taking place through their networks are safe and follow country policies and guidelines.
With Volopay businesses can easily carry out domestic as well as international wire transfers at much cheaper rates than traditional banks.
We can do this as our system allows you to maintain balances in different currencies and transfer money at the lowest FX rates. Check the latest exchange rate on our dashboard and choose the right time to transfer money.
You can carry out transfers in SWIFT and Non-SWIFT methods. Non-SWIFT transactions are much cheaper and faster for local currency transfers. So if you have to send USD or CNH from a different country, then this is the way to go.
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With the rapid advances in technology, you can easily make international wire transfers and exchange various currencies.