Fees and Charges Involved in Using SWIFT for International Transfers

When you incur the cost of sending or receiving an international money transfer on the SWIFT network, you simply think that there is only a single cost that is simple. However, the reality of SWIFT transfer charges can be more complex, involving multiple layers of costs that can sometimes reduce the final amount received. Understanding these various SWIFT transfer fees is crucial for managing your finances and avoiding unexpected deductions.

This guide by EximPe will break down the different types of swift charges you might encounter when using swift money transfer for your cross-border transactions, helping you gain clarity and make more informed decisions.

How SWIFT Transfers Work (and Why There Are Multiple Fees)

Before diving into the fees, it's important to briefly recap what a SWIFT transfer is. SWIFT (Society for Worldwide Interbank Financial Telecommunication) does not even conduct money transfer per se, but operates as a safe international messaging system, which banks utilize to issue payment codes to one another. The physical money is transferred across the banks using the system of correspondent banking relationships.

Because a SWIFT wire transfer often involves multiple banks (your bank, the recipient's bank, and potentially one or more intermediary banks), each institution involved in the chain may levy its own fee for processing the transaction. This multi-bank participation is the main cause of difference in the various chargers you may see.

Breakdown of SWIFT Transfer Fees

Here's a comprehensive look at the common swift transfer fees and charges:

1. Sender's Bank Fees (Outward Remittance Fees)

This is typically the most upfront and visible SWIFT transfer charge. The fee will be charges by your bank as the initiator of the money transfer as it processes and sends the international payment instruction via the SWIFT network.

• Structure: These commissions may be fixed rate (e.g. in India 500 or 1500 Rupee, or in other countries 30 or 50 dollars) or a percentage of the amount transferred with a minimum and maximum level.
• Things that will Influence it: It will depend on the amount to be released, the country where you are sending, and also the policy of fees that you have with your bank. Some banks might offer lower fees for online swift transfer online initiated transactions compared to branch visits.

2. Recipient's Bank Fees (Inward Remittance Fees)

When the SWIFT money transfer reaches the beneficiary's bank, that bank may also When the SWIFT money transfer reaches the beneficiary's bank, that bank may also charge a fee for receiving and crediting the international funds to the recipient's account.

• Structure: These may also be flat prices (e.g. in India 250-1000 rupees, or 10 30 in the US), or a percentage.
• Visibility: The practice of many banks in India to offer a free inward remittance service may imply that they manage to replenish these costs via less attractive exchange rates (see below). The recipient should inquire the policy of his/her bank.

3. Correspondent (Intermediary) Bank Fees

This is often the most unpredictable and "hidden" swift charges. If your bank does not have a direct relationship with the recipient's bank, the SWIFT transfer might pass through one or more intermediary or correspondent banks. Every one of these banks will be able to charge a fee on their part in transferring.

• Effect: The fees are normally charged directly on the value being transferred thus the person receiving the money may not go home with the right amount that he has sent.
• Predictability: It is very hard to know how many intermediary banks are going to be in the transaction and how much each will charge since it depends on the various currencies involved and the countries and banking relations.

4. Foreign Exchange (Forex) Rate Markups

This is often the largest, though often hidden, cost associated with international SWIFT transfers. Banks hardly sell you the mid-market (the real exchange rate shown on Google or Reuters). In place of these they fix a margin, or mark up, over the interbank rate whilst buying and selling currencies.

• Effect: This markup affects a decrease in the quantity of local currency that the recipient gets. A markup as low as 1-3 percent may cause big losses in bigger transfers. As an illustration, say that you sent or received a sum of 10,000 dollars through a transfer that had a 2 percent markup, which means you might lose 200 dollars (or its equivalent in INR) only due to the difference in exchange rates.
• Transparency: This is not usually listed as an item to be paid as a fee per se but can be found embedded in the exchange rate you are being offered.

5. Other Potential SWIFT Charges

• GST/Taxes: In countries like India, Goods and Services Tax (GST) is levied on the service fees charged by banks for SWIFT money transfers and currency conversion. This is another percent (e.g. 18 % in India) besides the mentioned fees.
• Amendment/Cancellation Fees: If you need to change details of a SWIFT transfer after it's been initiated, or if you need to cancel it, your bank might charge an additional fee for this service.
• FIRC/FIRA Fees: On remittances coming into India, a bank might charge a fee which is to be paid in case of a Foreign Inward Remittance Certificate (FIRC) or Advice (FIRA), which is an essential document when compliance and taxation are taken into consideration.
• Tracking/Investigation Fees: In some cases, if a SWIFT transfer is delayed or needs to be investigated, your bank might charge a fee for tracing the payment.

How to Manage and Potentially Reduce SWIFT Transfer Costs

• Choose Fee Allocation Option Carefully: When initiating a SWIFT wire transfer, you often have options for who pays the fees:
  • OUR (Sender Pays All): The sender covers all fees (sender's, intermediary, and recipient's). This ensures the recipient gets the full amount, but the sender pays more upfront.
  • BEN (Beneficiary Pays All): The recipient bears all fees, which are deducted from the transferred amount. This means the recipient receives less than what was sent.
  • SHA (Shared): The sender pays their bank's fees, and the recipient covers the intermediary and their receiving bank's fees. This is a common default.
• Compare Banks: Different banks have different fee structures for SWIFT transfer charges. Compare rates and hidden markups across various banks.
• Consider Alternative Services: For regular or smaller transfers, dedicated online money transfer services (Fintech companies) often offer more transparent pricing, better exchange rates (closer to the mid-market rate), and sometimes lower overall swift transfer fees compared to traditional banks.
• Batch Payments: For businesses, consolidating multiple smaller payments into one larger SWIFT money transfer can sometimes reduce the per-transaction fee.
• Ask for a Fee Breakdown: Always request a clear breakdown of all potential swift charges from your bank before initiating a transfer.

Conclusion

While SWIFT transfers are secure and globally accepted, they come with layered fees that can affect the final amount received. Understanding the structure of SWIFT transfer fees—including intermediary charges and fee-sharing methods—can help you make better, more cost-effective decisions.

Always compare options and read the fine print before initiating your next international transfer.

FAQs: SWIFT Transfer Fees and Charges

1. What are the typical SWIFT transfer charges?

Charges range from ₹500 to ₹2500 (or more), depending on the sending bank, destination, and intermediary banks involved.

2. Who pays the SWIFT transfer charges?

It depends on the fee-sharing option selected: SHA, OUR, or BEN.

3. Are SWIFT money transfers expensive?

They can be, especially with intermediary bank deductions and currency conversion fees. Always review the total cost before sending.

4. How do I know how much my recipient will get?

Choose the OUR fee option, and confirm the receiving bank’s policies beforehand to ensure full delivery.

5. Are SWIFT transfer charges fixed?

No. Fees can vary by bank, amount, currency, and destination country.

6. Is GST applicable on SWIFT transfers from India?

Yes. As per Indian regulations, GST is applicable on foreign remittance service charges.

7. Can I track SWIFT transfer fees deducted en route?

Not in real time. However, you can request a SWIFT copy/MT103 from your bank showing intermediary charges.

8. What is the cheapest way to do a SWIFT transfer?

Using banks with direct SWIFT relationships or opting for fintech platforms that reduce middlemen can help lower fees.

9. Do online SWIFT transfers cost less than in-branch?

Some banks offer lower service charges online, but it varies. Check with your bank.

10. Can I find a SWIFT code online for transfers?

Yes! Use the SWIFT Code Finder by Eximpe to get the correct SWIFT/BIC code for any bank before making a transfer.