For years, wire transfers were the default payment mechanism for international payments. While wire transfers were reliable, they were expensive to send and expensive to receive. International banks transfers are a cost effective alternative to wire transfers. Any company that is sending or receiving money globally will find it worthwhile to consider adding international bank transfers as a highly efficient payment option.
International bank transfers are sometimes referred to as global ACH. However, strictly speaking, the specific term ACH, which stands for the Automated Clearing House network, refers to electronic funds transfers only in the United States and Canada. But, functionality, International Bank Transfers are analogous to ACH.
As with ACH, international bank transfer files are submitted in a specified file format. The file is bank-to-bank through the international bank transfer network for clearing in the country where the payment will be made. As a result, international bank transfers are handled as inexpensive local payments rather than as expensive international money transfers.
International bank transfers streamline the complicated process of handling cross-border and in-country disbursements and collections. Globally, each country has a different clearing system with its own rules and regulations. Maintaining multiple banks accounts and complying with country-specific payment formats is expensive and time-consuming. Payment delivery and timing is uncertain.
They eliminate the need to maintain multiple, country-specific payments formats and to juggle bank relationships in every country. Instead, payments are collected and disbursed securely through local payments systems in countries around the world via a single electronic connection.
Low-cost international bank transfers deliver substantial savings because clearing and settlement is done on a local level. Delivery times become more standardized. And currency conversion fees apply less often.
For payouts they work best when payment due dates are known in advance. Using them is good for applications such as payroll, dividends, affiliate and vendor payments where more than 100 payments being made at one time.
Recurring payments where payee information files can be set-up one time and used over and over work well for international bank transfers. Also, the payment method works best when a great deal of remittance information does not need to be sent along with the payment.
They are not good for time sensitive payments or for payments of large amounts. Depending on the country, it takes from one to five days for payments to settle. Hence, a million dollar payment which needs to arrive at a particular time is still best sent via wire transfer.
Some companies have accounts with banks that can handle these type of transfers and may choose to use the bank for the service. The choice on which to use depends upon a number of factors including the amount; number and frequency of payments; where payments are being sent; and the technical infrastructure and expertise of the company sending payments.
Compare the abilities and costs offered by your corporate bank with consolidators. Consolidators may offer more functionality and lower rates than banks. If your company does not have dedicated internal financial expertise, it is often easier to use a consolidator account which is already set up to handle all aspects of these type of transfers. Ultimately, the decision how to best implement them is based on the specific business operations of your company.
In summary, the benefits are:
-Cost and savings from the elimination of multiple country-specific payment formats and multiple bank relationships.
-Single electronic interface creates a faster and more effective method of sending, managing and tracking disbursements.
-International Bank Transfers can save you up to 90% over sending and receiving wire transfers Streamlined operations, increased productivity, and more effective systems management.
-Decrease in currency conversation requirements and costs.