Why do international money transfers require time to complete?
Payments
Asked by Question Bot08/Jan/20131 answer
1 Answer
F
Faisal Khan
Answered 08/Jan/2013
There are too many factors, but here are some of them:
- Settlement between exchange company and receiving bank. This can typically take 1-2 days.
- Float on money. For the receiving bank this money has almost a zero cost of funds associated to it. So if the bank can hold on to this money for a day or two, they lend it overnight, earning money on it.
- ACH debit - Takes 2.5 days minimum to clear, before funds are sent across.
- Receiving country requires no-pre-funding. This means, money received from Remitter in the US, has to digitally snake its way across to the receiving bank. If this is done via SWIFT, you have 1.5 days delay between both ends, and for final credit you will see 2 days delay.
- If no money is being made on the transaction and FX, then the bank will most likely keep the money for float, for 3-4 days before releasing it into the account.
- Antiquated batch processing systems and settlement.
- Correspondent banks involved - which would delay the impeding transaction further.