Whether to meet the demands of the international business community, the foreign
traveler, or the occasional need of one family member to send money to another,
international payments are the most widely used international banking product. Payments
can take the form of electronic transmission, written instruction, or negotiable
instruments such as checks. To this extent, international payments can take the
same form as domestic payments. It is important, however, to understand the process
of international payments in order to have realistic expectations when sending or
receiving payments.
Understanding International Payments
Funds transfers within the United States generally occur through the Federal Reserve
system and local clearing organizations. Every country has a central bank which
may or may not provide the same service as the Federal Reserve. However, an international
system for payments exists between few countries other than the European union.
Those must rely on their correspondents to obtain these services.
All payment requests consist of two parts: a message which contains the payment
instructions and the settlement information.
- Payment instructions. These include the name, address and account number
of the payee, the name of the bank to which the payment is destined, and other pertinent
facts that will allow the payee to apply the funds. Payees within a member country
of the European Union have International Bank Account
Numbers (IBAN). Digits identifying the country, bank, and check verification
have been added to the payee account number. This allows for straight through payment
processing. Without the complete number, payments are delayed and additional charges
are assessed. The IBAN can be obtained from the payee.
- Settlement information. This information identifies the account to be debited
or one which will be credited to cover the amount of the transfer and any applicable
fee.
Correspondent banks do not require reciprocal accounts in order to process a request
for a funds transfer, but each payment message contains information for the receiving
bank which details the means by which the bank will be reimbursed. Most banks exchange
standard settlement instructions as a matter of course when their correspondent
relationship is established and/or reviewed.
Settlement usually occurs in the country of the currency named in the payment order.
For example, if INTRUST Bank were to send a wire transfer denominated in British
pounds to HSBC plc, London, settlement instructions would include authorization
to debit INTRUST's account.
However, if a wire transfer request denominated in US dollars were sent to Barclays,
settlement would occur by a credit to Barclay's account with their New York branch
or some other named correspondent in the United States. This would usually be accomplished
by wire transfer through the Federal Reserve.
Forms of Remittances
International funds transfers can take various forms. The most common are checks,
drafts, and international wire transfers.
- Checks and drafts. The oldest and simplest method of remitting funds is by
check, draft, or money order. All exist in paper form. This kind of remittance has
its limitations, for the authenticity of the item may be of question since it either
arises from or passes through third parties. To obtain a foreign draft, the remitter
need only contact INTRUST with the request, and provide payment.
- International wire transfers. The most expedient method for transferring
funds is remittance by teletransmission. A wire transfer is an electronic message,
usually via SWIFT (Society for Worldwide Interbank Financial Telecommunications)
to the receiving bank requesting them to effect payment in accordance with the instructions
given. The message also includes settlement instructions. A wire transfer is virtually
instantaneous, requiring no longer for transmission than a telephone call.
Processing Time
Wire transfer requests are documented with a Request for International Wire Transfer,
and if received prior to 3:00 p.m., the message is sent the same day. If the request
is received after that time, it is processed on a “best efforts” basis, or on the
next business day.
Wires that are destined for countries roughly within our time zone (three zones
plus or minus) can be transmitted with a value date that corresponds with the date
of the wire.
Banks in other destinations cannot reasonably be expected to process payments outside
of their normal business hours. For these destinations the value date is the next
business day for U.S. dollar payments and two days for foreign currency payments
(Canadian dollar excepted).
Banks which are fully automated with straight through processing have no difficulty
effecting payments when they have a full day in which to do so, especially if the
receiving bank is instructed to credit an account on its books. Otherwise, the payment
is likely to require more than one day for processing. See also
Foreign Exchange.
Delays
Delays can occur for many reasons. The most common are listed below:
- When the payee's bank is a small bank located in a remote area, it is unlikely that
the bank will have a direct correspondent relationship with the sending bank. Therefore,
it becomes necessary to send the message to an intermediary bank with instructions
to credit the account of the payee's bank for further credit to its customer (the
payee). This often results in manual handling which always slows the process.
- If the information provided on the Request for International Wire Transfer is incorrect
or incomplete, especially with regard to IBAN, the payment may be delayed. This
is a very common occurrence, one that can easily be avoided.
- Cultural differences with respect to time account for most delays. In fact, using
the term delay for what some consider reasonable time can be called a “cultural
bias.” Americans have come to expect fast service from their banks, so when a foreign
bank takes several days to process a payment order, the remitter often becomes alarmed.
Before requesting a tracer, the remitter should consider cultural norms in the country
of the payee.
Verifying Receipt of Funds
A remitter who determines that the payee has not been credited should make every
effort to verify the information provided to the sending bank. If this is found
to be in order, he should encourage the payee to research the matter with the receiving
bank, taking care to quote any reference numbers associated with the transaction.
If a payment goes awry because of incomplete or incorrect remittance instruction,
or if alternate instructions must be issued, it is imperative that INTRUST be contacted
at the earliest opportunity. If the payee claims non-receipt, the remitter may request
a tracer.
INTRUST will send one tracer without charge but impose a fee for subsequent inquiries.
Before requesting a tracer, the remitter should consider the characteristics of
the transfer. If is important to have realistic expectations about the length of
time that similar transactions typically require for processing.
If the remitter decides to recall the funds, a request to do so may be submitted
to the sending bank. However, the funds will not be returned to the remitter until
they are actually received from the bank to which they have been sent. It must be
noted that funds transferred outside of the United States are sent at the remitter's
risk, and such transactions are subject to the commercial laws of the payee's country.
Directing Inward Remittances
When funds are expected from foreign locations, it is important to provide the remitter
with adequate information about the receiving bank and the routing necessary in
order to prevent delays. In addition to the payee's name, it is essential that the
complete and accurate name of the payee's bank be given, along with a physical address,
any branch codes if known or necessary, and the account number. Including a U.S.
bank's ABA routing number is helpful, though not essential.
If the funds are destined for a bank with a foreign correspondent network, it is
also important to include that bank's telex number and SWIFT address.
To properly direct inward remittances to accounts with INTRUST, the remitter should
be provided with the following information:
INTRUST Bank, N.A.
105 North Main
Wichita, KS 67201
USA
ABA Routing No: 101100029
SWIFT Code: TRSTUS44
Customer Name
Address
Account Number
To direct remittances denominated in a foreign currency, additional information
can be obtained by contacting INTRUST's International Banking department.