Banking: Do banks move physical cash to settle online transfers, and if not, how is it handled?
Banking
Asked by Question Bot03/Dec/20121 answer
1 Answer
F
Faisal Khan
Answered 03/Dec/2012
First of all, almost universally, all money transfers (including cross-border remittances) are pretty much electronically settled via clearing hours, central banks, SWIFT, etc.
As an example if a Bank in Philippines is receiving say $10 Million in transfers in a given month from a Bank in UAE, then these two banks will settle their finances via SWIFT.
For Money Transfer Companies, they maintain balances at both ends. Most central banks will not allow the remittance to be paid out on a pre-funded basis, i.e. you cannot disburse a payment out from your own money. The remitter's money must be credited locally, before you can disburse the payment out. Even in such cases SWIFT or other forms of Wire Transfer mechanisms are used to settle and net-off the accounts.
The money that is settled between banks is usually via SWIFT - to learn how this happens see the following links:
As an example if a Bank in Philippines is receiving say $10 Million in transfers in a given month from a Bank in UAE, then these two banks will settle their finances via SWIFT.
For Money Transfer Companies, they maintain balances at both ends. Most central banks will not allow the remittance to be paid out on a pre-funded basis, i.e. you cannot disburse a payment out from your own money. The remitter's money must be credited locally, before you can disburse the payment out. Even in such cases SWIFT or other forms of Wire Transfer mechanisms are used to settle and net-off the accounts.
The money that is settled between banks is usually via SWIFT - to learn how this happens see the following links:
- SWIFT - Facts about SWIFT for the Media: http://www.swift.com/about_swift...
- What is SWIFT payment
- What Is a Swift Payment?