Why Do International Bank Transfers Take So Long? Can It Be Faster?

International bank transfers, also known as SWIFT transactions, are a critical method for moving money across borders. Despite the advancements in financial technology, these transfers can still take a long time, often up to 4-5 working days. This is due to various systemic and procedural reasons, as well as regulatory and operational constraints.

The Role of SWIFT

Society for Worldwide Interbank Financial Telecommunication (SWIFT) is the backbone of international financial transactions. SWIFT was established in the 1980s and continues to serve as a crucial messaging system for financial institutions worldwide. Every SWIFT payment is processed manually, connecting through numerous banks, often referred to as beneficiary banks. Not every bank supports direct SWIFT payments, which means additional steps are required to clear the payment.

Given the complexity of these processes, it is understandable why international transfers take several days. Each bank must clear the payment and verify its legality, while technical requirements must also be met. The phased approach ensures that the money is not being transferred for fraudulent or illicit purposes.

The Process Behind International Money Transfers

International money transfers can take anywhere between one day and one week, depending on the chosen method. Options include traditional bank wire transfers and modern international money transfer services. Let's explore the reasons behind the sometimes lengthy process:

Risk Management

Financial institutions implement stringent checks and balances to comply with regulatory requirements. These measures are put in place to prevent money from being transferred for fraudulent or illicit activities. Sovereign rules regarding the movement of money further slow down the process, ensuring that funds are used appropriately.

The SWIFT System

The SWIFT system, used globally for international wire transfers, operates somewhat like an air traffic control tower. With over 10,000 banks and financial institutions connected to its network, the system handles instructions worth billions of dollars daily. This massive volume of transactions naturally impacts the speed of the process.

Bank and Public Holidays, Time Zone Differences

Apart from the technical and regulatory factors, geographical and operational considerations also contribute to the time it takes to complete an international transfer. State and national holidays across different countries can cause delays in the transfer process. Financial institutions typically do not operate over weekends, which means that transfers during these periods are delayed.

Moreover, the operating hours of different intermediaries can vary significantly, depending on the country of origin and destination. For example, in India and the United States, Saturdays and Sundays are considered non-working days, while many Middle Eastern countries consider Fridays and Saturdays as non-working days. These differences in operating schedules further extend the time required for international transfers.

Why an International Money Transfer Service Can Be Faster

Considering the complexities involved in traditional bank transfers, it is no wonder that international money transfer services offer a faster and more efficient alternative. Services like Western Union have streamlined the process, making it easier and quicker for individuals to send money to loved ones abroad.

How to Use Western Union for Money Transfers

Western Union offers a straightforward, three-step process for transferring money internationally:

Register on the Western Union Website: Provide your details and set a strong password for your profile. This step ensures your identity is verified and secure. Verify Your Profile: To complete the verification, submit your identification documents such as PAN (Proof of Address) or Aadhaar. Confirm the details with an OTP sent to your registered mobile number. Send Money: Enter the recipient's information, specify the destination country and amount to be transferred, provide the recipient's email and bank account information, and add the purpose of the transaction. Once the payment is credited to Western Union, it is immediately transferred to the recipient's account.

Using Western Union, you can track the funds in real-time until they reach your family member's account. This service takes just one business day in most cases, making it a convenient and efficient alternative to traditional bank transfers.

Benefits of Western Union

Western Union has a vast network across the globe, which enables it to offer faster and more reliable money transfers. Typically, it takes only one business day for the funds to be credited, although service times may vary depending on the destination country. Additionally, the widespread network reduces intermediaries, making transfers cheaper and commission-free in many cases.