Paying by International Bank Transfer is secure and fast. There are several things you should be aware of

How frequently does it happen to you that you make a payment for an international trip, only to find out at a later time that not all of your payment was received?

Or if you find that your bank statement has a number of unfamiliar charges all of a sudden at the end of the month?

It provokes introspection and causes you to question what went wrong. Since you are aware of the fees associated with banking transactions, the receiving Sailing Charter Company’s bank must be at fault in this situation. It’s possible that the receiving bank has very high fees, or maybe they just assumed that you wouldn’t notice the difference. But you did notice, and now you are curious about it.

As a Sailing Charter Agent, it is our responsibility to streamline the process, ensure that our customers have a better understanding of it, and provide additional value in order to empower them to make more informed choices.

Bank Transfers Around the World

1. What do International Bank Transfers entail?
2. Involved Parties
3. Costs
4. SWIFT Network
5. Bank Intermediary Fees – A Hidden Fee?

International Bank Transfers Europe Yacht Charter 5
International Bank Transfers Europe Yacht Charter 5

What exactly is a transfer of funds between two international banks?

A bank transfer international is a form of electronic money transfer that may be used to transmit money to another individual or business. Although this is a relatively routine transaction that can be completed at any bank, this approach can be challenging to carry out and is more expensive.

The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is a network that is widely utilized to facilitate the management of international wire transfers. This network provides assistance to smaller banks in their search for correspondent or intermediary institutions that can effectuate a transfer.

International Bank Transfers Europe Yacht Charter 2
International Bank Transfers Europe Yacht Charter 2

Participants involved

Issuer Bank

This is the bank or other financial institution that is responsible for holding the customer’s funds. It is in charge of carrying out the procedures necessary for the international bank transfer.

Banks that act as correspondents and intermediaries
Correspondent Banks

A financial institution that performs services on behalf of another bank is known as a correspondent bank. In this capacity, the institution acts as an intermediary between the issuing bank and the receiving bank.

It is possible for the issuing bank’s correspondent bank to carry out a variety of transactions on its behalf. Among these include the processing of wire transfers and deposits, acting as transfer agents for other financial institutions, and coordinating the preparation of documentation for such institutions.

Banks That Act as Middlemen

Both a correspondent bank and an intermediate bank provide a function that is analogous to the other. Additionally, it acts as a mediator between the bank that issues the currency and the bank that receives it, most frequently in separate nations.

When making international wire transfers between two financial institutions, such as banks located in separate countries that do not have any predetermined financial agreements, it is common practice to utilize the services of an intermediate bank.

Both correspondent banks and intermediate banks perform the same purpose of acting as a third-party financial institution that works in coordination with the receiving banks to make international fund transfers easier to complete.

A person or corporation that has an account with an issuing bank would then utilize a correspondent or intermediate bank to assist the transfer of funds to the receiving bank. This is done in order to avoid any fees that may be associated with the transfer.

Recipient Bank

The customer’s cash will be sent to this particular financial institution, which will then act as the recipient. It is in charge of determining whether or not an overseas bank transfer may be accepted.

International Bank Transfers Europe Yacht Charter 3
International Bank Transfers Europe Yacht Charter 3

Transfer Fees Charged by the Issuing Bank Costs

This is typically the fee that is detailed in the transfer confirmation provided by the issuing bank. It is concisely described, and just a little amount of variety is offered at an affordable price.

Fees Charged by Intermediary Banks

This is a one-time charge levied by the bank that acts as an intermediary between the issuing bank and the receiving bank when there are no preexisting financial agreements between the two banks.

This cost might come from as many as three distinct intermediary banks, each of which charges a different flat fee depending on the level of the issuing bank’s foreign presence.

Foreign Exchange Rate Markups

This expense is often incurred by the bank that is receiving the payment. On the other hand, if there are several intermediate banks involved, it is common for only one of them to carry out the transaction.

However, whomever makes the transaction will not utilize the rate that is found at the center of the market.

The current rate that is being utilized by the participating banks is easily searchable; nevertheless, this is an additional expense that contributes to the overall price of facilitating an international bank transfer.

Receiving Fees from the Bank

This is the price that the receiving bank will charge you as their counterpart fee in order to accept the international bank transfer.

International Bank Transfers Europe Yacht Charter 6
International Bank Transfers Europe Yacht Charter 6

The SWIFT Network

The SWIFT System is the most often utilized method for conducting international bank transfers (Society for Worldwide Interbank Financial Telecommunication).

If there isn’t already a financial agreement in place between the bank that is sending the money and the bank that is receiving it, the bank that is sending the money might hunt through the SWIFT network for a correspondent or intermediate bank that is connected to both banks.

This network provides users with three different options for controlling their expenses, which are as follows:

OUR (Recipient is responsible for all costs)

This instruction indicates that the sender will pay for all of the costs associated with the transfer, and that the receiver will get the full sum. This is the most typical type of arrangement that providers of products and services, like yacht charter brokers or operators, like to use.

SHA (Shared fees) (Shared fees)

With this instruction, the sender will be responsible for paying the fees associated with the transfer only from the bank that issued the funds, and the receiver will receive the payment after deducting the costs associated with the receiving bank’s fee as well as all of the charges from the intermediary bank.

BEN (Recipient pays all fees) (Recipient pays all fees)

This command is to be followed in the opposite manner as OUR. The receiver will receive the money once any and all transfer costs have been deducted.

International Bank Transfers Europe Yacht Charter 4
International Bank Transfers Europe Yacht Charter 4

Fees Charged by Intermediary Banks – A Hidden Cost?

The manner in which the banks carry out their services is influenced both by the size of the banks and the worldwide connections the banks have.

Prior to the posting of funds to the receiving account, a fee may be deducted from the amount transferred by either the receiving bank or an intermediary bank. The amount of the fee is determined by the method by which the payment is made and the connection that exists between the correspondent banks. The amount of this fee is subject to change, and neither its occurrence nor the amount that will be assessed, should it take place, can be easily anticipated.

It is standard procedure for financial institutions to avoid disclosing to their customers the fact that they would be employing an intermediate bank. And a bank that acts as a middleman is free to charge whatever interest rate it chooses without having to get the sender’s consent first.

As a result, ensure that you ask the following questions of your bank before initiating any kind of overseas bank transfer:

  • Is there a direct financial agreement between the bank that issues the check and the bank that receives it?
  • What would the rate of foreign exchange be if the international bank transfer is conducted in a currency that is not the local currency?
  • How much of a fee would I be expected to pay to facilitate the transfer?

However, the issuing bank will be able to show you their fees and let you know whether they need to employ an intermediate bank. The receiving bank, however, will not be able to tell the originating bank what fees they will be charging.

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The conduct of business is becoming increasingly sophisticated and requires an understanding of how international transactions are carried out as we move toward globalization.

Banks are companies, and as such, they will conduct their operations with the intention of making a profit. Keeping this in mind, we need to be inquisitive and keep in mind that there is a cost associated with a lack of information.

Share your thoughts and anecdotes with us in the comments section below.