Why Traditional Bank Transfers Experience Delays

September 3, 2021

The main reasons why traditional bank transfers are often delayed and what you can do about it.

Waiting a long time to receive a payment or waiting for a payee to confirm receipt of funds is frustrating. Delayed payments or missing funds can incur fines, strain business relationships, and cause you to miss your financial targets. Yet, lengthy delays and simply not knowing when funds will arrive is a common phenomenon in banking. Until recently, businesses had no option but to endure delays and tolerate the fact that there is no official timeframe for bank transfers.

Below are the typical reasons why traditional bank transfers suffer delays and the alternative digital banking options available to businesses.

Bank cutoff times

The time when you initiate a bank transfer has a significant impact on how long the transfer will take. Chances are if you start a transfer late in the day, your bank will wait until the next working day to initiate it. Add to this the difference in time zones for international transfers and the situation gets more complex. For payments within Europe, the difference in time zones is not such a large issue. But a payment from Europe to Asia or to the Americas can potentially add an extra day to processing due to time zone differences and local bank cutoff times. When calculating payments, always factor in the time of day and time zones.

Bank working days, bank holidays, and weekends

Banks operate on business days, meaning they do not operate their payments networks over weekends and public holidays. This means that only business days matter for bank transfer times and it’s important to factor this into your payment calculations. Add to this the different holidays (and even different weekends) around the world and things get complicated. For instance, many Arabic countries work Sunday to Thursday, meaning that a payment sent from a European country late Wednesday afternoon may not arrive until early next week.

The SWIFT network

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the network underpinning international bank transfers. Established in 1973, it transfers your payment information as a payment order via its network of banks to the destination account. Payments often pass through several intermediary banks along the way, with each one potentially taking its own transfer fee from the transferred amount. As a result, SWIFT payments can take anything from one to five business days to process (not including weekends, holidays, and bank cutoff times).

Incorrect or missing documentation

Countries have different transfer regulations and extra paperwork can be required before a payment is processed. For instance, Chinese regulations require proof that transferred funds are legal and have been legally obtained through income. Extra paperwork is done by human operators, so this adds to the complexity of bank cutoff times and non-working days (as well as human error).

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