Beginners Guide to International Payments

Payment Delays: Time zone differences, public holidays, and varying processing times between banks can lead to delays in international payments.

Security Concerns: Cybersecurity threats and fraud pose risks to the security of international transactions, emphasizing the need for robust security measures.

Best Practices for Sending and Receiving International Transfers

• Understand Fees and Exchange Rates: Prioritize transparency in fees and exchange rates to ensure that both the sender and the recipient are aware of the costs involved.
• Use Reliable Providers: Choose reputable banks or payment service providers with a track record of secure and efficient international transactions.
• Verify Recipient Information: Accurate recipient details are crucial to avoid payment errors. Verify account numbers, names, and other information before initiating a transfer.
• Consider Timing: Be mindful of time zone differences and cut-off times for processing international payments to avoid unnecessary delays.

Terms used in Transactions

An MT103 is an international standard message format that banks and financial institutions use in the SWIFT network in order to instruct a transfer of funds from one customer to another customer. This is a message from the sending bank to the recipient’s bank, instructing the recipient’s bank to credit the recipient with a certain amount.

Often for SWIFT payments, funds have to move between several different banks before they reach the recipient. The way that the banks in between the sender and recipient communicate the transfer of these funds is with an MT202

SWIFT GPI is an innovative tool that enables financial institutions to track most* payments that are sent through the SWIFT network. GPI allows you to see the dates and times a payment passed through a specific bank, as well as provides other information such as if and when funds were applied to a beneficiary’s bank account, or even advises which bank took a processing charge.

*Not all Financial Institutions and Banks adhered to this service, therefore some payments may not be (fully) traceable.

An amendment is an MT message asking the intermediary banks to amend the payment details i.e account holders name (can be common in China where beneficiary banks require this to match exactly with their records).

A recall is another MT request for the funds to be returned to the remitter. This applies when the payment has been sent to another beneficiary altogether, as in the bank account number, the account holder or the SWIFT code are totally different.

The success of a recall depends on the beneficiary’s collaboration. The beneficiary’s bank will ask the account holder to provide consent to return the funds (commonly known as Debit Authority). Funds typically take 5 or 6 weeks to be returned but unfortunately, banks tend to not provide regular updates.

If after several attempts the bank does not receive an answer from the beneficiary’s bank, the recall will be considered unsuccessful.

An IBAN (International Bank Account Number) is a standard international numbering system developed to identify an overseas bank account. The number starts with a two-digit country code, then two numbers, followed by several more alphanumeric characters.

SWIFT has mandated the inclusion of Unique End-to-End Transaction Reference (“UETR”) number in all payments sent over the network. UETRs work like parcel tracking numbers, allowing payments to be located at whatever point in the processing cycle they are, giving financial institutions and end users greater visibility on the status of their payments.

A UETR is a string of 36 unique characters, in the format xxxxxxxx-xxxx-4xxx-yxxx-xxxxxxxxxxxx (e.g. 16245616-3a27-46e4-8cb3-bb8735af4115).

Be aware of potential fraud! Unfortunately, international payments can be a target for fraud. Be aware of common scams, such as phishing attempts or fake invoice scams, and know how to recognise them.

Payment Fraud Red Flags:

• The beneficiary and beneficiary bank are located in different countries
• The beneficiary requests a sudden change of bank details just before sending a payment
• The beneficiary says the change of bank details is due to “accounts being audited”
• Undue urgency to release a payment

If you receive a request to pay money to a new bank account for an existing supplier, contact the supplier via a secure method to verify the request. 

In summary, successfully navigating the complex realm of international payments demands a thorough grasp of a wide array of methods and systems, spanning from conventional wire transfers to more advanced technology-based solutions like technologies like cryptocurrencies. To ensure a safe and efficient financial journey across borders, it is crucial to give top priority to transparency, using trustworthy service providers, and remain vigilant against potential fraud. By adhering to these best practices one can significantly enhance the reliability and success of cross-border financial transactions.