Topic: International bank / wire transfers and SEPA credit transfers  (Read 176254 times)

We want to offer wire transfer as a payment method to all participants. How can we avoid that we will have to pay charges for receiving cross-border payments?

When your participants make an international wire transfer, they can usually choose who will pay the transfer charges.

Most international wire transfers are done via the SWIFT network, and this network offers the payer three different expense regulation methods, which are called OUR, SHA and BEN (SWIFT standard field 71A "Details of Charges"):
  • OUR (“Remitter pays all fees” or "Sender bears all transaction fees") means: All fees will be charged to the sender of the transfer and the receiver gets the full amount submitted by the sender. These fees include the charges levied by the sending bank and any charges applied by intermediary (correspondent) banks (see *explanation below).
    Usually, the sending bank will levy a flat fee for third-party charges and the senders will know the cost before they transfer the money. (Normally, the receiving bank does not charge fees; you can find more information in the terms of your bank.) However, our experience shows that in practice it can still happen from time to time that some intermediary bank charges a fee and deducts it from the amount transferred. Unfortunately, the overall process is non-transparent and it is hard to figure out who charged these fees and when this happens (or even get this unpermitted deduction back), but based on our experience it seems advisable to provide as detailed information for the transfer as possible (e.g. also your intermediary bank details) to reduce this risk.
  • SHA (shared costs) means that charges are split between sender and beneficiary. The sender's bank will charge the sender a fee for the payment orders, while the beneficiary pays the charges of any intermediary bank (and those of his / her own bank, if there are any). The intermediary bank fees are deducted from the amount transferred.
  • BEN (beneficiary pays costs) means that the sender does not pay any charges. Any intermediary banks and the sender’s bank deduct their charges directly from the amount being transferred. This means that the recipient will receive an amount that is lessened by the fees applied by all parties involved. The sender should therefore add the amount of these fees to the original transfer sum so that the recipient will receive the full payment. As a rule of thumb the fees of international transfers are around 25 - 35 Euro/USD. In this case, you can say that for fees below 500 Euro, receiving payments via PayPal or Credit Card is usually cheaper than via bank transfer.

In general, we would advise you to inform your participants that for cross-border wire transfers you expect them to use OUR as the expense regulation. It is a good idea to include this information in the terms of payment. Please note that you can commonly see in the transfer details which method was used by the payer if you look for the codes OUR, SHA and BEN.

Exception: Payments made within the Single Euro Payments Area (SEPA) will automatically use the shared charges (SHA) expense regulation and sender and receiver will benefit from fast transaction times and no charges levied (SEPA Credit Transfer). You will only have to provide the International Bank Account Number (IBAN) and the Business Identifier Code (BIC).

*The intermediary bank / correspondent bank is the bank that receives the bank transfer for your bank in the country of the sender. Example: If someone wants to transfer money from Wells Fargo (US) to Deutsche Postbank (Germany) the money is first transferred to Deutsche Bank in New York, and they transfer the money to Postbank Frankfurt, and they route the money to your Postbank account. In this case, the intermediary bank is Deutsche Bank in New York.