July 11, 2022

How Long Do International Payments Take?

While domestic money transfers are now instant in many regions, international payments still tend to be delayed, sometimes significantly. Why is this?

First of all, cross-border transactions are sent either from bank to bank via wire transfer using the SWIFT network or, more recently via online e-wallets. While very secure, SWIFT transfers tend to be costly and take an especially long time. E-wallets developed by third-part fintechs, (think PayPal or Wise), essentially address these problems by offering several ways to send money overseas online more cheaply and quickly. If the e-wallet service is available in both regions, both parties are signed up, and you’re exchanging a popular currency pair, this can be quite straightforward and fast. If not, there can still be complications. Depending on the service, security can also be a concern.

So, how long do international payments take?

International payments typically take between 1 and 3 business days. However, depending on the currency and the banking infrastructure in the origin and destination countries, they can take up to 7 days. Delays are usually due to regulatory controls at either end of the transfer or processing times at the banking institutions. 

Why Do International Payments Take Longer Than Domestic Payments?

Alas, while e-wallets and digital banking solutions have dramatically simplified and sped up international transactions, (gone are the days of hobbling a hundred miles through the jungle to collect a wire at the local Western Union outpost only to find out its days away),  cross-border banking still take much longer than domestic payments.

Why is this?

Reason 1: Fraud Prevention

Probably the most common reason international payments, in particular traditional bank wires, take so long is the fraud prevention procedures required when moving money across borders. Banks as well as electronic money institutions (everything from Paypal to Payset) are required to follow strict fraud prevention and anti-money-laundering regulations. While the regulations are put in place in whatever country the bank or EMI is registered in, they’re fairly universal across most developed countries. 

While they do slow down transactions, most institutions, and their client, are happy these regulations are in place. No one wants to be facilitating cross-border payments that fund terrorism or criminal activity or defraud other clients and so its in everyone’s best interest to have robust security and fraud prevention protocols. That said, there are newer e-wallets with strong fraud prevention that are much faster than banks.

Reason 2: Currency Conversion

Currency conversion is usually quite quick if it’s between two oft-used currencies like the United States Dollar or Euro. This is less true when you’re trying to convert a rare currency or trade between an unusual currency pair. Depending on the bank or institution you’re using, you may also run into a shortage in their store of any given currency, regardless of popularity. In order for them to pay out the currency you’ve converted into, they have to have it on hand or got get it. For some e-wallets and digital banks, this often means they have to be storing the currencies in traditional bank accounts, which leaves them susceptible to the same kinds of delays as old school institutions. 

Reason 3: Intermediary Banks

Lots of domestic banks do not keep large quantities (or any quantities at all) of foreign currency on hand. This means when someone wants to make an international transaction and the bank sets out to facilitate they can’t do just a simple one-to-one transfer. This is where intermediary banks come in. These are either larger institutions with enough volume to have numerous foreign currencies on hand, or banks in a location where the given currency pair is more common. Smaller banks come to them to facilitate transaction they can’t conduct on their own. Sometimes this means more than one intermediary bank. For example, SWIFT network transactions sometimes need to go through up to three different intermediary banks before going to their final destination. Long story short, the more banks a transaction has to go through the more potential delays there are.

Reason 4: Time Zones, Bank Holidays, & Weekends

Banks are among the most consistent of all commercial institutions to close their doors on a holiday. It isn’t a holiday unless the bank is closed. While this is easy to plan for within one’s own country, just when all the holidays fall in various countries can be hard to keep track of. Some countries also have extended holidays, for instance, Eid in Muslim countries, Passover and various other unique Jewish holidays in Israel, or the Golden Week around New Year and The National Day in China. 

In addition to holidays, there are weekends and time zone differences to contend with. These two factors combine to make Friday and Monday as tricky as the actual weekend to make global transfers as you run into work days beginning and ending as much as a full day apart. While this is all of course avoidable it does limit the sweet spot to three days midweek and it can mean some transfers get delayed into the next week.

How Can You Speed Up International Payments?

Any business operating across borders, which, let’s be real, is the vast majority of web-based businesses today, is going to encounter complications and headaches due to tardy international payments. For one thing, delayed payments lead to reporting, accounting, and taxpaying mixups. For another, suppliers, contractors, employees are none-too pleased when your payments are overdue or lagging. By the same token, delays when sending or receiving payments to/from clients can get everyone off on the wrong foot. 

So how can you speed up international payments? 

Method 1: Skip the Bank, Use a Digital Wallet 

For many people, especially in their business roles where the stakes and the transfer volumes are higher, trust in traditional banks is still much higher than in third-party e-wallets. This is not surprising. Banks were conducting secure international transactions longer before the earliest tech bros even had (wet) dreams of digital banking. The trouble is, banks still use outdated technology to move money, they still rely on numerous partner banks to facilitate transfers (in some case an international transfer needs to go through 3 or 4 intermediaries before it gets to the destination bank), and they are still subject to stricter security and regulatory controls. Long-story short, if you need to move money quickly, skip the bank, get an account with a digital wallet. 

Method 2: Use a Multi-Currency Account

Whether you’re sending your payments via bank wire or digitally, you still have to deal with currency conversion. This is the cause for more delays, and more extraneous costs than any other factor in cross-border finance. The solution? Get a multi-currency account. Whatever e-wallet you use should allow you to hold, send, and receive funds in the foreign currencies you use most often. Do this and you skip the conversion fees, and skip the delays for processing time, which can reduce payment transfer costs by an average of 10%. The result: you’re happy, your boss or partners are happy, and whoever you’re paying is happy. 

Method 3: Know the Regulatory Rules, Holidays, and Timezone at Your Destination

This should go without saying, but in reality it’s still a hiccup for many businesses. If you’re sending money for personal banking reasons, finding out you’ve missed a deadline due to a timezone difference or holiday you weren’t aware of may not matter much. In business it can be the difference between making a deal and losing a deal. 

Similarly, if you’re moving your business into a new region and aren’t aware of a set of regulatory rules that differ from those in your home country this can lead to a slew of headaches. What happens for instance if you’ve made a big sale then realize you won’t be able to get the money in time to secure the product or pay your own bills because the funds are being held by the governing body in the host country? 

Know the rules, save yourself the headaches.

What Are The Most Efficient International Payment Methods?

As discussed above, there are numerous ways to send money internationally and unique benefits and downsides to each. The most popular are obviously bank wires, e-wallet transfers through services like Paypal, Skrill, Venmo, Payoneer etc., or making credit or debit card payments via online or offline banking portals. The decision as to which  to use depends on your needs. 

Let’s take a look at the three most efficient ways to send money internationally.

Method 1: Bank Wire 

Despite the shortcomings in terms of speed and cost that we’ve documented above, bank wires are still among the most secure and reliable way to make an international payment. For large sums or in cases where speed is not as much of a concern as security, a bank wire might be the most effective solution. Bank wires have a long history and without a doubt still have a future, even if they make up a smaller percentage of the overall transfer volume. 

Method 2: E-Wallet or Digital Bank Transfer

For a large percentage of international payments, e-wallets are going to be the go-to solution for most people in the online and hyperconnected sectors of the global community. At this point, Paypal has been around for twenty three years. While it was once the only option, and a clunky one at that, the field is now as diverse as the traditional banking sector. For companies or individuals sending smaller sums, making a lot of transactions, and sending money to a lot of different locations, digital bank transfers are bound to be the most efficient method for most transactions.

Method 3: Credit or Debit Card

For making a direct international purchase online or over the phone, credit cards and debit cards can be the most efficient way to access funds held in traditional banks. While the fees can be higher in some cases for currency conversion or cross-border transactions, they aren’t always, and even so, for lots of people, it’s hard to beat the convenience of using your Visa for certain transactions. 

Another way to use credit or debit is to use prepaid cards. For instance, using a prepaid card attached to a multi-currency account, businesses are able to preload funds onto the card (either virtual or physical card) as a flexible expense account which can then be used by a client or employee for purchases. 

Payset’s International Payment Solution

Payset is a leading example of what the new wave of international payment solutions has made possible. From the start, we set out to simplify, economize, and perfect the first-generation e-wallet model to get banking up to the speed and scope of today’s business. 

Payset allows you to send and receive up to thirty four different currencies both locally and internationally via a dedicated multi-currency account. Transfers are quick (quicker than just about any e-wallet out there), easy (read effortless, a click away), and cheap (the most affordable in the business). We give you real-time access to the best currency exchange rates and allow you to do business in the currencies you choose.

 

Payset clients have access to a variety of payment networks, including SWIFT, SEPA, Target2, Faster Payments, CHAPS, and more. They enjoy fast execution times, low transfer fees, and excellent instant reporting. 

Here are a few of the key benefits of using Payset to speed up and simplify your international payments.

Benefit 1: Multi-Currency Accounts

A multi-currency account allows you to hold, send, and receive funds in up to 34 currencies within the same account. It therefore saves heaps of time and money that would be spent moving funds from account to account and through various institutions. Payset allows you to transfer funds virtually anywhere in the world with rapid execution and very low transfer fees.

If your recipient also has a Payset account, you can also make free, instant payments in their desired currency from your dedicated multi-currency account

Benefit 2: Multiple Payment Networks

Payset provides access to a diverse array of payment networks including: SWIFT, SEPA, Target2, Faster Payments, CHAPS and more. This means we can always facilitate your international payment via the fastest and most efficient routing saving you money, time, and sweat.

We store all client funds in a segregated client account in one of Europe's leading credit institutions, which ensures that your international payments are secure & regulation compliant. While in transit your funds are secured by our tier-one security features. 

Benefit 3: Fast, Affordable Currency Conversion

Being able to hold, send, and receive up to 34 currencies in the same account means you can minimize conversions fees. A Payset account also gets you access to the best exchange rates. We don’t add any margins to our exchange rates. Low fees are guaranteed and the fees are always displayed prior to finalizing the transaction so you can approve and manage your costs. 

Making rapid, secure, and headache-free international payments is what we do. Come visit us online, chat with one of our account managers, and starting testing out Payset today! You’ll find out why we guarantee to save you time, money, and hassle when moving your money around the world.

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