|
What is an International Payment?
Whether to meet the demands of the international business community, the foreign traveler, or the occasional need of one family member to send money to another, funds transfers are the most widely used international banking product. Money transfers can take the form of electronic transmission, written instruction, or negotiable instruments such as checks. To this extent, international payments can take the same form as domestic payments. It is important, however, to understand the process of international transfers in order to have realistic expectations when sending funds or receiving payments.
Understanding International Funds Transfers
Funds transfers within the United States generally occur through the Federal Reserve system and local clearing organizations. Every country has a central bank which may or may not provide the same service as the Federal Reserve; however, an international system for payments does not exist between countries. A notable exception is the euro clearing system used in the European Monetary Union. Banks, therefore, must rely on their correspondents to obtain these services.
All payment requests consist of two parts: a message which contains the payment instructions and the settlement information.
- Payment instructions. These include the name and address of the payee, the name of the bank to which the payment is destined, and other pertinent facts that will allow the payee to apply the funds.
- Settlement information. This information identifies the account to be debited or one which will be credited to cover the amount of the transfer and any applicable fee.
Correspondent banks do not require reciprocal accounts in order to process a request for a funds transfer, but each payment message contains information for the receiving bank which details the means by which the bank will be reimbursed. Most banks exchange standard settlement instructions as a matter of course when their correspondent relationship is established and/or reviewed.
Settlement usually occurs in the country of the currency named in the payment order. For example, if Teacher's Credit Union were to send a wire transfer denominated in British pounds to Barclays Bank PLC, London, settlement instructions would include authorization to debit Teacher's Credit Union account.
However, if a wire transfer request denominated in US dollars were sent to Barclays, settlement would occur by a credit to Barclay's account with their New York branch or some other named correspondent in the United States. This would usually be accomplished by wire transfer through the Federal Reserve.
Forms of Remittances
International funds transfers can take various forms. The most common are checks, drafts, and international wire transfers.
International Checks and Drafts
The oldest and simplest method of remitting funds is by bank draft. Mail payment orders are typically slow because international postal procedures and schedules differ from country to country. Moreover, mail destined for remote locations may be delayed for weeks in some places.
The mail payment order has fallen into disuse, owing to the delay inherent in its delivery and the attendant expense of handling paper requests when superior electronic methods of delivery are more reliable and less costly to process. The draft, however, is still in use and is usually denominated in the currency of the country.
International Wire Transfers
The most expedient method for transferring funds is remittance by wire transfer. As with a mail payment order, a wire transfer is a message to the receiving bank requesting them to effect payment in accordance with the instructions given. The message also includes settlement instructions.
If you need to send money to a foreign account, OrderWires.com can assist you. We have facilities to execute bank-to-bank wire transfers to over 100 different countries. Our experience and foreign exchange knowledge will make sending funds internationally a painless process so that you can concentrate on your business.
Electronic transfers are excellent for larger transactions. The currency is transferred directly into a bank account and the funds are quickly available to your beneficiary.
This payment form is excellent when you have an order of supplies or merchandise that needs to be paid for, before being released by your supplier.
When you send via International Wire Transfer, there is no need for postage and mail service.
How to order a wire transfer
By phone: Call us toll free at 877-663-8309. Our representatives are standing by to answer any questions you might have or to assist you with an order.
By Internet: You can submit an online request for a wire transfer.
Existing Customers: Can fax orders or can order online
Steps
1. Contact OrderWires.com by phone or via the Internet and provide the following information: the name of the person or firm you are wiring money to, the bank's routing number (which can be obtained from the recipient's bank), the recipient's account number, the address of the bank, and the name of the person to whom questions can be addressed.
2. Determine the amount of money you wish to wire and when it needs to be in the recipient's account.
3. Complete the transaction by faxing in the Order Form.
Tips for sending Internatioal Wire Transfers
- The information you give for your wire transfer should be in writing to minimize errors.
- An international wire transfer can be released the same day, provided you initiate it prior to our daily cut-off time.
- Make sure the funds are in the account you are wiring from, or the wire will not go through.
- Wire transfers are not immediate. Allow time for the payment to arrive into the foreign account.
Processing time
Wire transfer requests are documented in the same way as a mail payment order, using an Application for Foreign Remittance and are processed on a "best efforts" basis, or as soon as possible. When problems arise from wire transfers, they usually relate to the day on which the payee's account is credited by the receiving bank.
Other destinations cannot reasonably be expected to process payments outside of their normal business hours. For these destinations the value date is longer.
Banks which are fully automated have no difficulty processing payments when they have a full day in which to do so, especially if the receiving bank is instructed to credit an account on its books. Otherwise, the payment is likely to require more than one day for processing.
Delays
Delays can occur for many reasons. The most common are listed below:
1. When the payee's bank is a branch or a small bank located in a remote area, it is unlikely that the bank will have a direct correspondent relationship with the sending bank. Therefore, it becomes necessary to send the message to an intermediary bank with instructions to credit the account of the payee's bank for further credit to its customer (the payee). This results in manual handling which always slows the process.
2. If the information provided on the Application for Foreign Remittance is incorrect or incomplete, the payment may be delayed. This is a very common occurrence, one that can easily be avoided.
3. Cultural differences with respect to time account for most delays. In fact, using the term delay for what some consider reasonable time can be called a "cultural bias." Americans have come to expect fast service from their banks, so when a foreign bank takes several days or weeks to process a payment order, the remitter often becomes alarmed. Before requesting a tracer, the remitter should consider cultural norms in the country of the payee.
Verifying Receipt of Funds
The remitter who determines that the payee has not been credited should make every effort to verify the information provided to the sending bank. If this is found to be in order, he should encourage the payee (beneficiary) to research the matter with the receiving bank.
If a payment goes awry because of incomplete or incorrect remittance instruction, or if alternate instructions must be issued, it is imperative that OrderWires.com be contacted at the earliest opportunity. If the payee claims non-receipt, the remitter may request a tracer.
OrderWires.com may impose a fee for tracers or inquiries. Before requesting a tracer, the remitter should consider the characteristics of the transfer. If is important to have realistic expectations about the length of time that similar transactions typically require for processing.
If the remitter decides to recall the funds, a request to do so may be submitted to the sending bank. However, the funds will not be returned to the remitter until they are actually received from the bank to which they have been sent. It must be noted that funds transferred outside of the United States are sent at the remitter's risk, and such transactions are subject to the commercial laws of the payee's country.
Receiving International Wire Transfers
When funds are expected from foreign locations, it is important to provide the remitter with adequate information about the receiving bank and the routing necessary in order to prevent delays.
Incoming Payment Instructions
To prevent delays in receiving payment from foreign locations, provide the remitter with the proper wire information. To direct remittances denominated in a foreign currency, please call us at 877-663-8309 for instructions.
|
