Bank Transfers: What are they, and how do they work?

A bank transfer, or “money transfer,” is a way to move money from one bank account to another. It can either be in the same country or to different countries. There are two types of bank transfers: domestic and international.

Domestic transfers involve sending funds within the same country. Examples of domestic transfers are paying bills or transferring money to a friend.

International money transfers involve sending funds to a different country. They usually need currency exchange. An example of an international money transfer is receiving payments for exporting goods to foreign clients.

How does the payment work via bank transfer?

When initiating a bank transfer, the sender provides the bank with the necessary details. This includes the recipient’s bank account number, bank name, and routing number. The sender’s bank then verifies the availability of funds in the sender’s account. Once they receive authorization for the transfer, the sender’s bank permits them to take money from the sender’s account. Instructions for the transfer are sent to the recipient’s bank. The recipient’s bank then credits the transferred amount to the recipient’s account.

International bank transfers vs Domestic bank transfers

Domestic bank transfers are convenient and cost-effective for moving money within the same country. Each country has its own name for these transfers. For example

1. In the United States, they are called ACH transfers, which are processed through a centralized system.
2. The United Kingdom uses CHAPS transfers, although there may be a fee.
3. SEPA payments are used for domestic transfers within the European Union and usually take a day to process.
4. Interac e-Transfers are popular in Canada, allowing quick and secure money transfers using email addresses or mobile phone numbers.

International bank transfers involve more complexity. They generally use wire transfers and the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network. The SWIFT network allows banks to communicate and ease international transactions. But, international transfers often come with extra fees, including exchange rate margins, fixed charges, commissions, and other bank fees. These fees vary and may sometimes be as high as 10-15% of the transferred amount.

Hidden Bank Transfer Charges

When you’re receiving money from abroad, you must be aware of hidden charges that can quietly take a bite of the money sent to you. Let’s explain it in simpler terms.

First, there’s something called exchange rate margins. It’s the difference between the “official” exchange rate and the rate banks offer. This difference can affect how much money the lucky recipient gets. So, keep an eye on those exchange rate margins! But wait, there’s more!

Banks may also charge additional fees for transferring your money internationally. These sneaky costs can quickly pile up and lessen the value of the money you’re sending. So, before you go ahead and opt for receiving money through bank transfers, keep a lookout for these hidden charges.

Looking for ways to safeguard your hard-earned money?

Several low-cost currency exchange providers and fintech companies now provide a better solution. They use a super-savvy network of international bank accounts to sidestep the SWIFT network entirely. And you know what that means? It means they can bring down the fees to at least 2% for their customers!

Winvesta is a platform that simplifies receiving your foreign funds in India. With Winvesta, you gain access to your own local US, UK, CAD receiving account and SEPA IBAN account number, enabling you to receive international payments effortlessly.

With these local accounts, you can receive your payments quickly through domestic bank transfers. Once your funds are received, Winvesta will transfer them to your bank account. Withdraw your funds to INR in as less as 1 day at charges starting at $3 + 0.99%.

Conclusion

Bank transfers are a vital way to move money within and across countries. Domestic transfers are easy and cheap, but international transfers can be tricky and have hidden charges. These hidden charges, like exchange rate differences and extra fees from banks, can take much money away from your transfer. Luckily, low-cost options like Winvesta use special bank accounts to cut down on fees. By getting a Winvesta account, you can save money and make international transfers faster and easier.

Open your Winvesta account today!