Why do banks charge money orders
International transfer - all information and tips
You have to take this into account when making international transfers:
- EU or world transfer: If money is transferred within the EU, the SEPA transfer is used. Different rules apply to transfers to other countries.
- Transfer fees from both banks: Transfers to non-EU countries may incur fees that are charged by both the recipient's bank and your bank.
- Exchange rate: If you are transferring money in a different currency, you must take exchange rates into account.
SEPA transfer in other European countries
In order to initiate a SEPA transfer to an inner-European country, the sender and recipient must have an account within the EU or the EEA. In order for the payment to be made, the transfer amount must be shown in euros.
IBAN and BIC
IBAN and BIC stand for the account number and bank code of the sending and receiving banks.
- The IBAN (International Bank Account Number) replaces the account number: The 20-digit number consists of the code of the respective country, the bank code and the account number.
- The BIC (Business Identifier Code) consists of eleven to twelve digits. It is made up of the abbreviation for the bank, the country code and a letter combination for the branch.
For a transfer within the euro area and the EEA, consumers need both the IBAN and the BIC. However, the BIC is often filled in automatically for online transfers. EU transfers can only be carried out using the SEPA procedure.
In this way, money can be transferred to other European countries
The introduction of the SEPA procedure has significantly simplified the transfer of money within the EU. Consumers can make the transfers in the following ways:
- Online banking: SEPA transfers can be carried out easily via the online bank access.
- Self-service transfer counters: SEPA transfers can also be started in the service terminals of the banks.
- Transfer form: If you need a receipt for your transfer, you can make the SEPA transfer directly in the branch.
SEPA stands for Single Euro Payments Area. This designates a uniform payment area in Europe. The introduction of SEPA is intended to simplify the transfer of money and payments within the euro zone.
Transfer to non-European countries
Different rules apply to transferring money outside of SEPA. As with all other transfers, you also need the recipient's bank details for transfers outside of Europe.
That is needed
In contrast to the SEPA transfer, you have to select the currency in which the amount is to be transferred. The SWIFT number may be required instead of the BIC of the recipient bank.
For transfers outside of the SEPA area, you must expect fees.
Obligation to report for international transfers
If transfers abroad exceed the sum of 12,500 euros or if the equivalent value of the foreign currency corresponds to this amount, the transfers must be reported within the framework of the reporting regulations in foreign trade (AWV).
One also speaks of the AWV reporting obligation. The report is made using a separate form that notifies the Bundesbank of the transfer. The report has been online since 2013. Anyone who disregards the duty risks a fine.
Most banks therefore always provide transfer orders abroad or incoming funds from abroad with a reference to the AWV reporting obligation.
Export revenues, import payments and some payments for short-term loans are exceptions to the reporting requirement.
For statistical purposes only
The reported data are only collected for statistical purposes in order to calculate the foreign trade balance of the Federal Republic. The report has no tax consequences.
Duration of international transfers
The so-called "one-day rule" applies to SEPA transfers. According to EU regulations, such a transfer may not take longer than one bank working day. If the transfer is still delayed, the bank customer has the option to charge interest for each day of delay.
However, the one-day rule only applies to transfers in euros. If money is transferred in a foreign currency, it can take up to four days for the recipient to receive the money.
Fees for transfers abroad
Since the introduction of the SEPA transfer, there are hardly any fees for intra-European transfers. The prerequisite for this is that the amount is transferred within the EEA and shown in euros.
When fees may apply within the EU and the EEA
However, fees may apply for higher transactions. Standard SEPA transfers cannot be used for amounts of EUR 50,000 or more.
The bank can also charge fees if information was missing on the transfer slip and the bank therefore had increased administrative costs.
Costs for a transfer outside of Europe
If consumers transfer money to an account outside the EU and the EEA, they must expect fees.
These are usually made up of the following items:
- Exchange rate for the foreign currency: Here banks can charge fees for the conversion and the buying and selling of foreign currency. In addition, a less favorable rate at the time of the transfer can result in higher costs overall.
- Transfer fees: For the transaction itself, SWIFT fees are due, which vary depending on the bank. The fees can be charged by both the transferring bank and the recipient bank.
Usually, all fees due for international transfers are clearly listed by the credit institutions so that no nasty surprises arise.
Overall, the fees for transfers to non-EU or EEA countries can amount to up to ten percent of the transfer amount. For example, if 1,000 euros are transferred, consumers must expect fees of up to 100 euros per transfer.
Options for sharing fees
The fees for bank transfers to non-European countries can be handled in different ways. The person who orders the transfer has a choice and can specify how the fees for the transaction should be divided.
- OUR: With this option, the sender bears the costs of the transfer himself. For this he pays the fees incurred to the recipient bank in advance.
- SHARE: In this case, the fees for the transfer are shared between the recipient and the sender. The client of the transfer pays the fees incurred by his bank, the recipient bears the costs for the transfer charged by his bank. As a rule, this variant is most often chosen for international transfers.
- BEN: In this case, the recipient of the sum pays all applicable fees.
Alternative providers for international transfers
Consumers do not necessarily have to resort to banks to transfer money abroad. There are various providers on the market who transfer money to foreign accounts.
Benefits of the money transfer service provider
The advantage of these so-called transfer providers is that, depending on the provider, the sender does not necessarily need an account for the transaction, but can also transfer cash. Some money transfer service providers can also transfer the money to their own escrow accounts, so that the recipient does not need an account either, but can receive the money directly at a branch of the provider.
A huge advantage of the providers is the speed of the transaction. The money is usually available on the recipient's side within a few minutes.
Security and Trust
Basically, the providers can be trusted, but the service providers can pay for their service with sometimes high fees. For example, up to 15 percent of the transferred money can be withheld as a fee for money transfers.
This is how the money transfer works
While the bank only acts as an intermediary between the accounts of the recipient and the sender in a transfer, money transfer service providers are trustees. The sender gives money to the service provider. He pays it into his own account and pays it out to the recipient elsewhere.
Money transfer provider
- Western Union: With Western Union, consumers can send money almost anywhere in the world. The company has locations all over the world. Often the services of the provider are used by refugees without an account who send cash to their relatives.
- PayPal: The payment service provider offers its customers the option of transferring money. However, an account or credit card is required to use PayPal.
- Moneygram: The service provider based in the USA offers, for example, the online sending of money without the need for an account.
- TransferWise: This provider is an online money transfer using the peer-to-peer method, in which money is transferred directly from sender to recipient.
Retrieve transfers from abroad
Since the introduction of the SEPA area, banks are no longer obliged to check the transfer details of the senders. Therefore, senders are responsible for the information themselves. However, with the introduction of the IBAN, transfer errors caused by entering incorrect account numbers are as good as impossible.
Because the recipient can be clearly assigned through this number. For example, an incorrect number will result in an immediate error message when making online transfers.
If you want to get a transfer back, you have to expect extra work for domestic transfers. In principle, however, it is possible that a wrong transfer can be retrieved abroad. However, consumers must expect additional fees. In any case, it is important that the sender act quickly so that the incorrectly transferred money can be booked back at all.
In the case of smaller amounts of money, it may even be worthwhile to make the transfer again, as the charges for the chargeback exceed the amount of money transferred.
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