Lifting Fee

A lifting fee is a charge made by a bank for processing an incoming international payment. It is usually taken by the beneficiary's bank or by an intermediary bank in the chain, and it is most often deducted directly from the payment, so the recipient receives less than the sender transferred. The name comes from the idea of the bank "lifting" the funds from the incoming message and crediting them to the customer's account. The fee is common in correspondent banking and appears frequently in trade, remittance and freelance payments.

Lifting fees sit alongside other cross-border charges, such as the sender's own outgoing wire fee and the intermediary bank fee taken by correspondents along the route. Some banks use the term narrowly for a commission on foreign currency receipts, calculated as a small percentage of the amount, while others use it for any flat handling charge on incoming wires. Because definitions vary, banks set out the fee in their published tariffs.

An international wire transfer rarely travels directly from the sender's bank to the beneficiary's bank. Instead it often passes through one or more correspondent banks, each holding accounts for the next bank in the chain. Each bank does work on the payment: receiving the message, screening it against sanctions lists, converting currency if needed, and posting it to the right account. Banks recover the cost of this work through fees, and the lifting fee is the beneficiary-side version.

Where a payment arrives in a currency different from the account's currency, the beneficiary bank may also earn money through the exchange rate, so a recipient can face both a lifting fee and a conversion margin.

Who bears the lifting fee depends largely on the charge instruction chosen by the sender. In SWIFT payments, the customer credit transfer message carries a charges field with one of three codes:

• OUR. Under the OUR fee option, the sender pays all charges, and the beneficiary should receive the full amount, although some banks still deduct local fees.
• SHA. Under the SHA fee option, the sender pays its own bank's fees and the beneficiary pays the receiving side, including any lifting fee.
• BEN. Under the BEN fee option, the beneficiary bears all charges, which are deducted from the amount along the chain.

Even where OUR is chosen, intermediary and beneficiary banks do not always honour it fully, which is a frequent source of complaints. A payment that arrives short because of deductions is known as a short-paid payment, a particular problem for businesses settling invoices that must be paid in full.

For small payments, a flat lifting fee can be a large share of the amount, which makes traditional wires expensive for remittances and small exports. Businesses receiving many foreign payments may find that the amounts credited do not match the invoices, which complicates reconciliation and can leave balances apparently unpaid. Freelancers and small exporters in emerging markets often cite lifting fees as one reason they prefer specialised money transfer providers or local collection accounts.

International efforts to improve payment transparency have focused partly on fees like these. SWIFT gpi lets banks in the scheme report the fees deducted at each step, so senders and recipients can see where money was taken. The G20 programme to enhance cross-border payments has set targets for lower costs and clearer disclosure. In the United States, the remittance transfer rule requires providers to disclose fees and the amount the recipient will receive for consumer remittances, including certain third-party fees, while in the European Union regulation on cross-border payments has pushed charges for euro transfers down to domestic levels.

Recipients and senders use several approaches to reduce or avoid lifting fees:

• Local collection. Receiving funds into a local account in the payer's country, so the payer sends a domestic transfer instead of a wire.
• Specialist providers. Using money transfer operators or payment platforms that hold pre-funded nostro accounts and pay out locally.
• Negotiated tariffs. Agreeing reduced or waived lifting charges with the receiving bank for regular, high-volume incoming flows.
• Clear instructions. Agreeing the charge code in advance and stating the expected net amount on invoices.