Sending an international wire transfer requires a lot of time, energy, and most importantly, trust. After all, you trust your financial institution to send your funds to your intended recipient. You (most likely) don’t have a clue how these transfers work, or how safe they are, and it’s your money on the line. Money that your small business has earned through hard work and dedication. No wonder you want to ensure its safety.
In general, banks like to project an image of robust, safe, and honest institutions. Unfortunately, this image may not be strictly true
In general, banks like to project an image of robust, safe, and honest institutions. Unfortunately, this image may not be strictly true (read our blog 3 Secrets That Banks Don’t Want Small Businesses to Know to find out why).
How safe is your money when you send it abroad via traditional bank transfer? First, you need to learn about the basics of international payments.
International Wire Transfers in a Nutshell
When you order an international transfer (which means that you send money to your overseas business partners, for example), your bank deducts the funds from your account. Then it notifies the recipient’s bank and creates a route for the transfer. This route involves other banks and financial institutions that are connected through an international network called SWIFT (Society for Worldwide Interbank Financial Telecommunication).
SWIFT only handles information like account numbers, and no actual funds
However, SWIFT only handles information like account numbers, and no actual funds. Those are processed by the banks involved in the transaction. This means that your money travels through various middlemen, all of whom represent a possible security threat, and a definite increase in fees.
After all, no bank wants to handle your transfer for free.
The Security of Transfers
Although the SWIFT network is considered a safe messaging system, there are numerous vulnerabilities in the process of traditional wire transfers.
First of all, given the sheer amount of data you’re supposed to provide about the recipient, it’s no wonder that you (or an employee of any bank involved) can make mistakes. A wrong number in a bank account, a forgotten digit of the SWIFT code, and the whole transfer gets sidetracked.
It would take weeks of tiresome work to recover your money, and you may not even get the whole amount back
But nobody finds out about this until the last stage, when the funds are supposed to be deposited into the recipient’s account. How come? Nobody contacts the recipient to double-check their information.
Because the tiny mistake stays hidden until the very end of the process, your funds can easily get lost somewhere along the way, and you’d never know. It would take weeks of tiresome work to recover your money, and you may not even get the whole amount back. Even though your funds haven’t reached the recipient, the banks have still handled them, levying their fees and charges left and right.
And what if the funds do land in somebody’s account, just not in the intended recipient’s? Trusting a complete stranger somewhere in the world to return your money seems like a shot in the dark.
On top of that, delayed payments are quite harmful for your business relationship with your overseas suppliers, and chasing your money takes time away from managing your business.
Another problem is malicious intent. Although bank information is encrypted, hackers can find a way. And since your money doesn’t have a direct route but has many “layovers” in various banks, the number of transactions keeps growing. Anybody can do the math: the more transactions, the more vulnerabilities.
If you ask your bank where your transfer is, nobody will be able to give you a straight answer
What’s telling is the fact that if you ask your bank where your transfer is, nobody will be able to give you a straight answer.
The truth is, your bank has no idea.
Your funds may be parked in the UK because of a bank holiday, or processed in Zimbabwe en route to Sri Lanka to end up in Japan. Nobody knows for sure.
Do you want your business’ hard-earned money to travel like that?
A Safe and Low-Cost Alternative to Traditional Wire Transfers
We don’t want to scare you away from doing business internationally. In fact, we know that going global is the only way forward for many US small businesses.
But losing money, time, and manpower while chasing international wire transfers is not an option.
With Veem, your international wire woes are no more.
Veem is the next generation B2B payments platform. Using unique multi-rail technology (including one of the safest technologies on Earth, the blockchain), Veem allows you to send international transfers quickly, securely, and as easily as sending an email.
Instead of relying on middlemen, Veem creates a direct connection between sender and recipient. Veem verifies the recipient before actually sending the funds, putting an end to all misrouted payments. Mistakes don’t have a chance.
To top it off, Veem allows you to track your payment any time through your dashboard. What’s not to love?
Sign up for a free Veem account and enjoy international payments of the future.