SWIFT is the most common payment network used to transfer funds between banks and other financial institutions. So, if your business needs to send an international wire transfer, chances are that you’ll do so via the SWIFT network. This network connects more than 11,000 financial institutions, each of which agrees to pay SWIFT transfer fees in order to use it.
These SWIFT fees include fees charged for each message sent over the SWIFT network. But each member must also pay annual membership fees, as well as other recurring costs associated with maintaining network connectivity. Most banks and financial institutions gladly pay to use the SWIFT network — not only because it offers a secure and standardized way to send money internationally, but because they can pass on many of the per-transfer costs to their customers.
In this guide, we’ll explain the basics of SWIFT transfer fees and why banks charge them. We’ll also show you what to look out for when making a SWIFT payment, so neither you nor your recipient is surprised by the amount that ends up in their bank account.
The global cooperative known as SWIFT, or the Society for Worldwide Interbank Financial Telecommunications, provides a messaging network that connects banks and financial institutions around the world. In the cooperative’s own lofty words, it aims to be “a common language for international financial messaging.”
It does so, in part, by allowing its member institutions to send and receive international wire transfers (sometimes simply called “SWIFT payments”) to each other. If you’re a customer of one of these member institutions, you can send or receive SWIFT payments to bank accounts in more than 200 countries worldwide, and in a wide variety of different currencies.
The key players in a SWIFT payment include the person transferring the money, i.e. the sender, and the person receiving the money, i.e. the recipient.
Of course, the originating bank and the recipient bank are also important players, as they facilitate the transaction across the SWIFT network. In cases when one or both of the financial institutions involved in a SWIFT transaction don’t have a pre-existing SWIFT agreement, they may depend on a third-party or intermediary bank to help process the transaction.
Each of the banks involved in a SWIFT payment has an 8–11 character SWIFT/BIC code that helps to identify that bank as well as the country in which it’s located.
The country identifier in a SWIFT/BIC code is a crucial piece of information, as most SWIFT payments are used for transferring money between international banks.
SWIFT payments can also be used to send money domestically, but they may not be the most efficient or cost-effective way to do so. Many countries, such as the United States, United Kingdom, and Canada use local payment rails to send money domestically. These local systems and networks often offer a cheaper solution than the SWIFT network, as they don’t require an international infrastructure, international regulatory compliance, and currency conversion mechanisms.
Some countries may depend heavily on the SWIFT network for domestic transfers, but this isn’t typically the case. So, when we talk about SWIFT fees, we’re usually talking about the fees associated with an international wire transfer.
SWIFT member institutions typically pay a per-transfer or per-message fee for the privilege of using the SWIFT messaging network. All or a portion of this fee may be passed onto the person or business sending or receiving the SWIFT payment.
How much of a SWIFT fee is passed on to the customer is usually left up to the bank. This is frustrating, as it means that there isn’t a single figure we can point to as a universal reference point. Different banks charge different fees.
It gets more complicated than that, because fees may be charged by the originating bank, the recipient bank, and/or the intermediary bank involved in a transaction. The good news is that most banks can let you know ahead of time what to expect in terms of fees.
In our experience, incoming international wire transfer fees may vary greatly but tend to fall in the $10–$30 range. Outgoing international wire transfer fees may be more expensive (up to $50 or more), but these may also vary based on the financial institution, the country, and possibly other details related to the transfer.
SWIFT fees may be:
The specific method for collecting fees depends, in part, on a system of payment processing codes that help to determine who pays what. These codes are specified in field 71A of the SWIFT payment form (“Details of Charges”). They include OUR, BEN, and SHA.
Knowing what these codes mean is crucial, especially if you’re a business that must regularly pay contractors or clients for services rendered. If you get the code wrong, the recipient might receive less money than they expected or be asked to pay additional fees they aren’t expecting. That is not usually a recipe for strong relationships.
So, what does each of these processing codes mean?
The OUR code means that the sender’s bank will pay all of the transfer fees prior to the completion of the wire transfer.
In practice, this often means that the sender pays the fees to their originating bank, and the bank ensures that all of the fees are covered from there. This is usually your best option, as it ensures that the recipient will receive the full amount you specify in your transfer.
BEN stands for “Beneficiary.” The BEN code means that the receiving bank or financial institution will cover any fees associated with the SWIFT transfer.
If you must use a BEN SWIFT transfer for some reason, make sure you contact the recipient’s bank prior to the transfer and clarify any fees they will deduct from the transfer amount, if possible. You can then adjust the transfer amount accordingly, so that your recipient actually receives the money they expect.
SHA stands for “Shared.” The SHA code means that the transfer fees will be shared between the sender and the recipient. Some of the fees will typically be paid prior to the transfer, and the rest will be taken out of the transferred amount.
Sharing is not always caring. As is the case with BEN transfers, SHA transfers often result in the beneficiary not receiving the full amount they expect.
We’ve reviewed the basic aspects of SWIFT transfer fees, but “fees” is a broad term. It may also encompass other expenses and commissions that affect how much money ultimately lands in the recipient’s bank account.
With that in mind, look out for the following:
If your bank offers “free” international wire transfers from one currency to another, be wary. While the transfer itself may not incur any direct fees, the bank may still be passing along its costs in the form of an unfavorable foreign exchange rate.
This is a bit tricky, because a bad exchange rate doesn’t technically count as a fee, but it can cost you even more. Always compare a bank’s stated exchange rate with the interbank rate (also known as the mid-market rate), which can give you a helpful benchmark for a fair or competitive rate.
Note that the exchange rate you’ll get is almost never exactly the interbank rate. Whichever bank is responsible for converting the currency will charge a commission for the conversion, which is typically added on top of the interbank rate.
Cross-currency transfers may also incur a currency conversion fee, especially if the receiving bank does not accept payments in your bank’s local currency.
Usually, the only sure way of knowing if this rate will apply is to contact the recipient’s bank directly. If it does apply, you’ll likely be better off sending a transfer in the receiving bank’s local currency.
Intermediary banks may charge handling fees if they’re involved in processing a SWIFT payment. These fees are often passed on to the originating bank, which will then pass them on to you.
This is why it’s important to learn ahead of time whether your bank has a pre-existing SWIFT agreement with the recipient’s bank. If it does, an intermediary bank will usually not be required, and this fee can be avoided.
Levro takes care of the costs and complexities involved with international business banking. Our platform is built for businesses with a global reach, offering the ability to receive, hold, and send more than 34 currencies across 80 countries — all from one seamless interface.
Oh, and about those transfer fees. Ours are competitive and remarkably easy to understand, with clearly published rates and an FX markup of only 0.25% FX fees when you send your money via wire.