Individual financial institutions (FI) control internal transfers. When you move money from one account to another within the same financial institution, the FI determines the fees and the processing time. The FI also decides if transfers to accounts you hold at other institutions are classified as internal or external transfers.

External bank transfers can be divided into the following groups:

• National

• Regional

• International

National bank transfers

Most countries have some sort of domestic payment processing system. 

In the U.S., it’s called ACH. In the UK, it’s BACS. Canada, New Zealand, and Australia each have their own unique names for their processing systems. Suppose a Barclays customer has set up online payments for a home mortgage. When it is time to pay the bill, Barclays debits the customer’s account and generates a credit to a NatWest account where the mortgage is held. The credit may be sent to one of three processing systems:

• The BACs payment system is used for high-volume, but regular payments in the UK. However, it can take up to three days to process a transaction.

• CHAPS. Payments are processed on the same date if received by the cut-off time. Users are charged close to $47 EUR per transaction, and the transaction cannot be revoked.

• Faster payments. The system offers real-time transfer of funds made in sterling among participating financial institutions. For consumers, there is typically no fee; however, payment values are capped and are irrevocable. 

Businesses are not exempt from processing fees set by their financial institutions, and not all FIs participate in all three systems. Without a national system, FIs would have to use an international or regional payment system.

Regional bank transfers

A good example of regional payment processing is the EU’s SEPA system, which was developed to facilitate cross-border payments in Euros. The system provides C2C, B2C, and B2B payment products.

SEPA offers two methods for transaction processing to residents of participating countries.

• SEPA Credit Transfer. Allows consumers and businesses to perform credit transfers usually on the same day.

• SEPA Direct Debit. Allows consumers and businesses to make direct debit payments within two days.

The Direct Debit product has two options. The Core Direct Debit solution targets private and retail customers, while the B2B Direct Debit component allows enterprise-to-enterprise transactions. Not all financial institutions support the B2B solution as it is not mandatory to participate in SEPA.

Regional payment systems such as SEPA allow the transfer of funds across borders without incurring internal transaction fees. The cost for a regional bank transfer should be the same as for a domestic transfer; however, the financial institution determines the per-transaction fee. 

International bank transfers (or wire transfers)

The usual time for international bank transfers, often called wire transfers, is between one and four business days.

Since 1973, wire transfers have been processed exclusively by SWIFT. Individuals can transfer money without using a bank via services such as Western Union, Revolut, or Wise. Financial institutions offering SWIFT transfers may charge for incoming and outgoing wires. If currency conversion is needed, they may charge a percentage of the transaction amount. Using Deutsche Bank as an example, wire fees are around 1.5% of the total plus 25€ if an intermediary bank is involved. The person transferring and the person receiving can share the fees or the person transferring can pay all of them. 

In addition to the fees, wires require the recipient’s name, international banking number, a banking identifier, a SWIFT code, currency, recipient’s address, bank, and account information. The time required for a transfer to arrive in the recipient’s account can vary widely depending on which two countries and currencies are involved as well as which intermediary bank, if any.