Is Your Bank Telling You The Truth About Bank Wires?
April 24, 2018
When ordering a bank wire, your bank will often assure you that it’s the safest, fastest, lowest priced, and the only way for your small business to transfer money.
This is especially the case when you want to order an international transfer, since the possibility of sending cash or a cheque to your international business partner is out of the question.
But is your bank telling you the truth?
Banks send international wire transfers through the SWIFT system. This is a network of banks that forward your small business’ payment request from your bank to the recipient’s.
Hackers are able to intervene in the process and hijack your bank wire
The system was invented in the 1970s. Back in its day, the SWIFT network certainly had its perks, but by today, its technology is outdated and unsafe.
Hackers are able to intervene in the process and hijack your bank wire. Another problem is that the recipient is not verified. If your initial request had a typo in it, the whole transfer can go astray.
And since the route your transfer takes isn’t mapped out ahead of time, you can’t track your bank wire.
Which means that nobody knows where your money is.
Because the SWIFT system sends your bank wire through a previously undisclosed chain of intermediary banks, the arrival time of your transfer is uncertain.
Since nobody knows which route your money takes and how many intermediary institutions will handle it, your bank wire may take over a week to arrive. Bank holidays, time difference, and varying office hours all add to the level of uncertainty.
Imagine this scenario. You business partner eagerly awaits your bank wire. You assure them that you sent it a couple of days ago. You ask your bank and they say that your transfer will arrive sometime within the next few days.
Since nobody knows which route your money takes and how many intermediary institutions will handle it, your bank wire may take over a week to arrive
That’s not very helpful information.
But in reality, none of you know that the funds are actually parked in a Spanish bank that’s going to be closed for two whole days because of a national holiday. And then it’s the weekend, so the earliest day your funds can arrive is next Monday.
Unless it happens to be routed to Italy, where a different national holiday begins.
Banks make money through several ways, including charging their customers various fees. Account fees, foreign exchange fees, and transaction fees are just a few examples of the myriad of reasons you have to pay them to handle your money.
So it comes as a surprise to nobody that you’re charged a fee when ordering an international bank wire. Unfortunately, your bank won’t be the only one charging you.
You’re charged a fee when ordering an international bank wire. Unfortunately, your bank won’t be the only one charging you.
The recipient’s bank will take its cut (called landing fee), and any intermediary banks that handle your transfer may deduct a sum from it to compensate themselves for the trouble of forwarding your bank wire.
This means that you’ll have to send more money to cover all those charges.
But how much more? Your bank won’t be able to tell you, since they’re not aware of the exact amount the other banks will levy upon your payment.
And anyway, why do you have to pay for these?
The Only Way?
Bank wires were indeed the only way to send international transfers back in the 1970s. But luckily, the situation has changed.
Thanks to the evolution of financial technology (FinTech), small businesses have more options for sending money abroad.
Like Veem, the global B2B payments platform.
Veem allows you to send and receive international transfers with just a click. Veem charges no wire fees and offers competitive foreign exchange rates, which saves your business a considerable amount of money.
In addition, you can track all your transactions through your dashboard, which lets you know exactly when your money arrives.
Sign up for a free Veem account to click, save, and grow.