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What is an Intermediary Bank Transfer?

What is an Intermediary Bank Transfer?

International bank transfer often called an intermediary bank transfer, is a formal banking activity where a client sends payment to a central or main bank. Then this centralized or main bank will forward the fund to the receiving party’s account. The receiving party can be one person, business organization, or government.

Typically the service is used by people who are moving or spending an extended period in another country, either because they live abroad or for business purposes. What it does is allows you to send your money directly to a bank account in another country.

When you make the transfer, it will arrive in US dollars, and the cash can be withdrawn by someone else using it or deposited into their accounts. This is very convenient because they don’t need to go through any conversion process, had you handed them the money directly, and there’s no risk that your cash or card will be stolen from you when you make the transfer.

So, for instance, suppose if someone wanted to send money from their US bank account to a friend’s bank account in Australia to pay rent every month, they would have to do it through an intermediary bank transfer because they can’t just walk around with all of that cash on them.

Benefits of Intermediary Bank Transfer

This service is cost-effective and very convenient because it cuts out the conversion time for foreign currency when you exchange in person, so you can be sure your recipient will have access to the money they need within their own country’s banking system on time.

Moreover, this service provides value to people who spend an extended period abroad because it allows them to send money directly to other people instead of carrying cash or using another service, like Western Union. The funds are delivered quickly and safely because they are sent through the bank transfer system instead of other avenues.

Let’s explore some more benefits in detail:

  1. Low cost: 

Compared to debit cards and credit cards, an intermediary bank transfer is a much lower cost option. With a bank transfer, you can send money abroad for a relatively low fee.

  1. Control

The main benefit of using an intermediary bank transfer is, banks can control or regulate money flow from one country to another. It means, by using the services of the top two or three banks for international trade financing, businesses can easily find out their payments as well as trading transactions.

  1. Fast processing time: 

The whole process takes only five days from the initiation of the transaction to complete a transfer process. Banks provide 24 x 7 services to their customers.

For example, suppose a company wants to send an amount of100 dollars from country A to country B. In that case, there are many hurdles between this transaction– with chances of a delay and extra cost incurred during the transfer process. Due to time and cost constraints, many companies and banks prefer intermediary bank transfers for international trade financing.

  1. Security:

Multiple steps are involved in transferring money from one country to another– making payment, putting in a request with the receiving bank, etc. But due to security reasons, most of the banks prefer intermediary bank transfer for international trade financing.

Moreover, Banks can easily control and monitor transferring money from one country to another using an intermediary bank transfer system.

Disadvantages of Intermediary Bank Transfer

The most common method of transferring money between two bank accounts is by an intermediary or intermediary bank. Still, many people do not realize that there are disadvantages to this type of transfer, even if it may be the cheapest option available.

It costs you absolutely nothing to deposit your money into an account at a local branch, but you will be charged a substantial fee when they send it to the branch in another country. The receiving bank will not accept the transfer because they have to pay one of their own employees to process your deposit, so you receive an invoice.

The transaction can take up to about five or ten business days, depending on how much money you are sending and how busy both branches are.

The bank will send you this money as an intermediary, which means they do not carry out the transaction directly. This means it is more expensive than a direct transfer and takes more time because you have to pay two more banks and their employees before your money finally gets into the correct account.

Conclusion

The intermediary bank transfer process is very important to many people. The fee is minimal, so it’s a great option for users who are used to transferring money frequently. Furthermore, the transfer takes only one day, making this method much more preferable to waiting weeks or even months for international wire transfers.

In conclusion, intermediary bank transfers are a great way of transferring money from one country to another. The process is easy, the transaction fee is low, and it’s almost as fast as wire transfer– which takes about 3 days.

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