If you live in the USA or Canada, a wire transfer (also known as an international bank transfer) is one of the most common ways of sending money to overseas bank accounts.
But the problem is that an international bank transfer takes a lot of effort. You’ll need a lot of details, and if you get anything wrong, then the payment will be very likely rejected.
Typically, to send a wire transfer, you will need a lot of details from the payee:
• Bank account number
• Bank Address
• Swift code
• Payee name and address
• Description of payment
Even obtaining the correct details from a European account holder can be problematic.
All European accounts use an IBAN account number. IBAN stands for International Bank Number, a way of standardizing bank numbers across European countries.
Most of Europeans know their own IBAN number, but when asked to figure out their bank’s SWIFT number and the precise receiving address, the chances of gathering incorrect information increase by at least three folds.
The Swift code identifies the paying bank, with every bank in the world having a swift code number. Again, this is often hidden away, and some banks have more than one code.
Even if you get given all these data tells, some payments require the details of an “intermediary bank,” a bank which acts on behalf of the beneficiary bank. So you might even need the intermediary bank name, address and Swift code on top of everything else.
Your Bank is “scamming” you Every Time You Send A Wire
Once you actually get to sending the payment, there is a high chance it will go wrong. This is because things like accounts/SWIFT numbers might not be recognized, requiring the payment to be canceled, so you have to go the whole process again (and pay the associated fees for the mistake).
But worse than the time and effort, is the fact you are literally being “scammed” when you send an international bank transfer.
Firstly, you’re paying high fees.
The average outgoing transaction fee for a wire transfer payment between the USA and Europe is currently about $30.
Think about that.
$30 for someone to spend 10 seconds scanning a payment and hitting a button to authorize it, with the same at the other end. Nowadays, a lot of it is automated, and it doesn’t even require that little effort.
Secondly, banks never use a genuine exchange rate. They basically “skin” money off the top by using their own exchange rates, which never meet the exact mid-market prices you see on Google or XE.com.
An International Bank Transfer Is Slow
Nowadays, people expect, quite rightly, that money should be moved instantaneously through the worldwide network of financial systems.
But you can’t count on the digital age saving you if you send an international wire transfer.
Although domestically a wire transfer can take as little as 24 hours, if you are sending one from the USA or Canada to Europe the whole process can take up to 7 days in some cases.
Think about that. It’s almost a slow as sending a check by priority airmail and getting it cleared in the payee’s bank account!
Wire Transfers: What’s The Alternative?
In the European Union, there is a scheme called SEPA, the Single Euro Payments Area scheme.
It lets participating European nations citizens send international transfers as if they were domestic payments.
Unfortunately, this scheme does not work between the borders of the European Union and USA/Canada.
Yes, there are payment processors like PayPal which allow you to send money internationally.
But they do the same as the banks, using an exchange rate renowned for being incredibly unfair.
On top of that, PayPal charges large fees to send/receive money.
Worse than that, PayPal can freeze payments that they deem suspicious for several weeks, as well as allowing somebody 45 days to challenge the payment.
Here’s your best option
Luckily there is a fantastically simple alternative is an increasingly popular money transfer service called Transferwise.
Transferwise guarantee to use the current mid-market exchange rate (the one showing in sites such as XE.com). On top of that, you can check the current exchange rate your payment would use on their website at any time before sending a payment.
It’s a fantastic idea, which is made even better because you can pay using a debit or credit card, and there is no payment holding, review, or reversal problem to worry about.
Transferwise operates by having a branch in each country their service supports.
For example, if you are sending a payment from Canada to Ireland, Transferwise will use their Irish Bank account to deposit the money to your payee bank account, making it as fast as cost effective as you were an Irish account holder.
With rates as low as 0.6% + $1.00, (GET A FREE TRANSFER BY FOLLOWING THIS LINK) and even the option for a borderless bank account if you send a lot of international payments, Transferwise is definitely an option worth considering if you are sick of the problems and cost of sending a wire transfer from Nothern America to Europe.