How International Money Transfers Work in Business

Thanks to technology and the internet, setting up an international business to sell goods worldwide is quite easy.

All you need is an online financial platform to oversee your financial transactions and multiple payment gateways, and you can start an international business.

But have you ever wondered how international money transfers work? Nowadays, there are plenty of different methods to send or receive money from a country thousands of miles away, but what happens to the money? Are they physically traveling to your location?

Methods for Sending Money Internationally

The first and most important thing to understand here is all the different methods for sending money. Today, there’s a toolbox of options, but each is suited to different needs. Some are made for massive supplier payments, while others are better for quick freelancer fees.

The first and most commonly used money transfer method is wiring transfer. These transfers are often routed through the SWIFT network (if payments are international), which is a network of over 11,000 banks all connected to one system, making it work smoothly.

SWIFT transfers can take a couple of days (2-5), but it is often the most secure method of sending large amounts of money. The SWIFT network transfers go through a couple of intermediaries, which is why the process takes so long.

On the other hand, there is no need to initiate a SWIFT wire transfer when we are talking about smaller and recurring payments. Businesses use Automated Clearing House transfers as the cheaper option, but they are slower outside of the U.S.

With that said, many online money transfer services allow you to send smaller sums of money (usually up to $10,000), and they do it super quickly, and with lower fees than traditional banks.

So, if you are looking for the perfect international money transfer for business, you need to consider speed, the amount of money you are sending, and security. Digital wallets are now trending with companies, just because they can send small daily transactions with low fees every day, and most of them are equipped with currency exchanges, making the process even smoother.

The Step-by-Step Transfer Process

Sending money internationally isn’t just hitting “send.” It’s a relay race involving multiple players. Here’s how it works:

1. Initiate the Transfer: You provide recipient details—bank name, account number, SWIFT/BIC code, or IBAN—via your bank’s online portal or a transfer service. Accuracy is key; one wrong digit, and your money’s on a detour. 
2. Currency Conversion: If paying in a foreign currency (e.g., USD to EUR), the bank or service converts at the current exchange rate, often adding a 1–3% markup. You review and lock in the rate.
3. Routing Through Banks: The funds move via correspondent or intermediary banks, which hold accounts for each other to bridge countries. SWIFT facilitates this, but multiple intermediaries can add fees.
4. Settlement: The recipient’s bank credits their account, typically in 1–5 days for wires, faster for digital services. You and the recipient get confirmation.

It’s like mailing a package through several post offices—each stop ensures it gets there, but with a small toll. Why it matters: Understanding the flow helps you avoid delays and hidden costs.

How Do They Work & Challenges To Consider

When you initiate an international money transfer for your business, the process humming in the background is a sophisticated digital relay, not a physical exchange of cash. Once you submit the recipient’s details—like their bank account number and SWIFT code—your bank or transfer service begins the journey. 

The funds aren’t physically shipped; instead, they’re moved electronically through a network of correspondent banks, which act like middlemen holding accounts for each other across countries.

International transfers can feel like navigating a maze, with obstacles that test even the savviest businesses. Fees are a big one—banks often charge $20–$50 per wire, and intermediary banks might pile on more. 

Currency conversion markups, sometimes hitting 3%, can erode a $10,000 transfer by hundreds. Delays are another headache; wires can take up to five days due to multiple bank handoffs or compliance checks. 

Speaking of compliance, anti-money laundering (AML) and know-your-customer (KYC) regulations require banks to scrutinize transfers, which slows things down. Fraud’s on the rise too, with a 15% spike in 2024, making banks extra cautious. Exchange rate swings add unpredictability—if the euro dips, your payment could cost more than planned. 

These hurdles can strain cash flow and frustrate partners, but they’re part of the global game.

Best Practices for Smooth Transfers

Getting international transfers right takes a mix of diligence and strategy, turning potential pitfalls into smooth transactions. Start by meticulously verifying recipient details—SWIFT codes, IBANs, and account numbers—since errors can delay funds for days. 

Don’t just stick with your bank; compare providers, as money transfer services can slash fees by up to 50% compared to traditional wires. To dodge exchange rate volatility, consider forward contracts to lock in rates for future payments, like booking a hotel at today’s price. Automating compliance with platforms that handle AML and KYC checks can cut processing time by 30%. 

Finally, keep tabs on your transfers with real-time tracking through bank apps or alerts, catching issues before they snowball. These habits are like a well-drilled team play—each move strengthens the outcome, building trust with global partners.