What expenses does a bank incur when processing wire transfers?
Payments
Asked by Question Bot04/Oct/20121 answer
1 Answer
F
Faisal Khan
Answered 04/Oct/2012
The cost for a Wire Transfer depends where in the world the wire transfer is being done. Is it being initiated on a domestic network? or an international one? each can be priced differently.
On average, most wire transfers are well under $1 mark (on a per transaction basis), when you look at the price of the transaction itself (as perhaps charged by the payment/financial network).
However, there are other costs to consider, membership fees, infrastructure, HR, insurance, software/hardware, licensing, maintenance of network and system, legal, etc.
When such costs are taken into account, the bank then needs to do a certain number of transactions just to break even.
Most banks are also regulated by their financial regulator as to how much they can charge their end customers, a term commonly referred to as "schedule of charges" - depending on which geographic region you are operating on, SOC can be the limiting factor as to how much money a bank can charge its customers.
Having said that, one should not look at a bank transaction cost as being $1 or less. That would not be an accurate representation of the costs involved. Granted, banks do make a profit in everything they do.
On average, most wire transfers are well under $1 mark (on a per transaction basis), when you look at the price of the transaction itself (as perhaps charged by the payment/financial network).
However, there are other costs to consider, membership fees, infrastructure, HR, insurance, software/hardware, licensing, maintenance of network and system, legal, etc.
When such costs are taken into account, the bank then needs to do a certain number of transactions just to break even.
Most banks are also regulated by their financial regulator as to how much they can charge their end customers, a term commonly referred to as "schedule of charges" - depending on which geographic region you are operating on, SOC can be the limiting factor as to how much money a bank can charge its customers.
Having said that, one should not look at a bank transaction cost as being $1 or less. That would not be an accurate representation of the costs involved. Granted, banks do make a profit in everything they do.