Read more to understand what are correspondent fees and how they are applied
When you send money to a bank account outside of its originating currency — like sending USD outside of the US, GBP outside of the UK, or EUR outside of Europe — we typically move it via the SWIFT network. Before you make the payment, you will be able to see if the payment will be made using SWIFT.
What are correspondent fees?
Correspondent fees refer to charges imposed by intermediary banks within the SWIFT network during the process of transferring funds to the payee.
Sending money via SWIFT is akin to embarking on a journey from one airport to another. Much like the need for connecting flights in certain instances, the transmission of funds through SWIFT may require traversing various correspondent banks when direct relationships do not exist between the sender's and recipient's banks.
In such cases, these intermediary banks, known as correspondent banks, may levy their own charges, termed correspondent fees, thereby influencing the final amount received by the intended recipient.
Understanding how correspondent fees operate:
1. Initiating a transfer from your bank prompts the transmission of a payment instruction via Swift.
2. In instances where direct relationships between your bank and the recipient's bank are absent, the funds navigate through correspondent banks, which facilitate the transfer and charge fees for their services.
3. Upon reaching the recipient's bank, there is a possibility of the payee incurring an incoming transfer fee for processing the funds.