International Transfers: How Money Actually Moves Between Countries

When you send an international transfer, your bank doesn't pack up cash and ship it overseas. Instead, banks maintain relationships and accounts with each other. Your bank reduces your balance and sends a message to the recipient's bank saying, effectively, 'pay this person.' The recipient's bank increases their customer's balance, trusting that the sending bank will settle the debt through their correspondent banking relationship.

This system works because banks maintain accounts with each other, often through intermediary banks that specialize in connecting financial systems. A transfer from a small credit union in the US to a regional bank in Portugal might pass through two or three intermediary banks before arriving. Each bank in the chain can charge fees and takes time to process.

The complexity varies by corridor. Transfers between major banks in common currency pairs (USD, EUR, GBP) tend to move through well-established channels. Less common combinations may require more intermediaries, take longer, or cost more. This is why the same transfer service can be fast and cheap for one route but slow and expensive for another.

Bank wires (SWIFT transfers): The traditional method. You instruct your bank to send money to an account at another bank, identified by SWIFT/BIC code and account number or IBAN. Your bank handles the routing. This works for almost any bank-to-bank transfer but typically costs more ($15-50 in fees plus exchange markup) and takes 1-5 business days. Intermediary banks may deduct additional fees from the amount in transit.

Transfer services (Wise, Remitly, OFX, etc.): Specialized companies that handle international transfers, often at lower cost than banks. They work by maintaining their own accounts in multiple countries—your money goes to their local account, then they pay out from their account in the destination country. This can be faster and cheaper, but availability depends on the specific currency pair and corridor. Each service has different strengths.

Multi-currency accounts: Some services let you hold balances in multiple currencies. You convert when rates are favorable, then spend or transfer from that currency balance. This works well for people who regularly deal in multiple currencies but requires planning ahead. The conversion still has costs, but you control the timing.

Card-based methods and ATM withdrawals: Not exactly transfers, but relevant for accessing money abroad. Using a debit card abroad involves currency conversion at whatever rate your card issuer offers, plus potential fees. Some cards offer better rates than others. ATM withdrawals let you access cash but involve similar conversion costs plus ATM fees on both ends.

Explicit fees: The fee you see when initiating a transfer. Banks often charge $25-50 for outgoing wires. Transfer services may charge less ($1-10) or calculate fees as a percentage. This is the visible cost, but usually not the largest one.

Exchange rate markup: The bigger cost for most transfers. When you send USD and the recipient gets EUR, someone converts the currency. The mid-market rate (what you see on Google or XE.com) is the baseline. The rate you're offered is marked up from that baseline. A 2% markup on a $5,000 transfer is $100—often more than the explicit fee. Some banks mark up 3-4% or more.

Intermediary bank fees: For SWIFT transfers, banks in the middle of the chain may deduct fees from the amount. You send $1,000, but $985 arrives because an intermediary bank took $15. This is often unpredictable and may not be disclosed upfront.

Receiving bank fees: The recipient's bank may charge for incoming international wires. This varies by bank and account type. The recipient might receive less than expected or face a separate fee.

Comparison approach: To understand true cost, compare what leaves your account to what arrives in the recipient's account. Calculate the effective exchange rate (amount sent divided by amount received) and compare to the mid-market rate. The difference is your total cost percentage.

Business days matter: Banks process transfers on business days in both the sending and receiving countries. A Friday transfer to a country with different weekends might not process until the following week. Holidays in any country along the chain can add delays.

Cut-off times: Banks have daily deadlines for processing transfers. Miss the cut-off and your transfer goes out the next business day. These times are often earlier than you'd expect, sometimes mid-afternoon.

Compliance review: Transfers that trigger fraud or money-laundering checks take longer. Large amounts, new recipients, certain countries, or unusual patterns can flag review. This adds hours to days of delay, often without clear communication about what's happening.

Typical timelines by method: Bank wires commonly take 1-5 business days. Transfer services range from near-instant to 2-3 days depending on the corridor and funding method. Same-day transfers are possible for some routes but may cost more or have limits. The specific corridor matters more than the general method.

What you can control: Initiate transfers early in the day, early in the week. Provide complete and accurate recipient information (errors cause delays). For large or time-sensitive transfers, verify the specific route's typical timing before committing.

Transfer limits: Most services have daily, weekly, or per-transfer limits. These may vary by verification level, account age, or transfer history. New accounts often have lower limits. Limits may differ by destination country. Exceeding limits requires splitting transfers or using a different method.

Compliance holds: Financial institutions must monitor for money laundering and fraud. Certain triggers cause transfers to be held for manual review. Common triggers include: large amounts (thresholds vary but $10,000+ often gets attention), transfers to certain countries, new recipients, unusual patterns compared to your history, and incomplete documentation.

Documentation requests: For large transfers or certain destinations, you may be asked to provide documentation about the source of funds or purpose of the transfer. This might include pay stubs, tax documents, sale contracts, or a simple written explanation. Being prepared to provide this speeds up processing.

Account restrictions: Problems with compliance checks can lead to account restrictions or closures. This is more common with transfer services than traditional banks, and more common when transfer patterns look unusual. Using services as intended and responding promptly to requests helps avoid problems.