Intermediary bank fees: why an international wire arrives short of what you sent

A wire left your account in full and arrived short. Often the gap was taken in transit. A SWIFT payment can pass through one or more correspondent banks, and each one may deduct its own charge before forwarding the rest. The deduction does not always come from your own bank.

What actually happened: the correspondent chain

Two banks in different countries often do not hold accounts with each other. When they do not, a SWIFT payment travels through one or more correspondent banks: banks that hold accounts for other banks in a given currency and pass the funds along. A USD payment from a bank in Asia to a bank in Europe, for example, typically settles through a bank that holds USD accounts for both sides, sometimes through two.

Each bank in that chain does work: it receives the payment message, screens it, moves the funds between the nostro and vostro accounts it keeps for other banks and sends the payment on. Under the most common charge instruction, each of them may take its fee out of the amount it forwards. The sender sees the full debit. The beneficiary sees the credit after every deduction on the way.

This is why the difference often looks random from the outside. Neither the sender nor the beneficiary chose the intermediaries. The sending bank picks the first one from its own correspondent relationships, and that bank may pass the payment to another.

Who deducted it, and how to find out

Start with the arithmetic. Compare the amount on the sender's payment confirmation with the amount credited to the beneficiary, in the same currency. If the payment was converted along the way, the gap mixes a fee with a conversion rate, and the two have to be separated before anyone can say who charged what.

Then ask the right party. The sending bank can usually see which correspondent it used, and the receiving bank can usually confirm what arrived before its own charge. A short request to each side, quoting the payment reference, usually answers the question faster than a general complaint to either.

The three places a charge can appear: sending bank, intermediary, receiving bank

A receiving bank's fee for incoming international payments is set in its own tariff and is the easiest one to check. The intermediary charge is the one that surprises people, because neither party usually has a contract with that bank.

How to check: the debit on your statement, the MT103, the UETR

Three documents settle most disputes about a short wire.

1. The sender's debit. The payer's statement shows the amount that left and any separate charge from the sending bank.
2. The payment message. For a SWIFT transfer this is traditionally the MT103, and many banks now carry the same data in the ISO 20022 format. It shows the instructed amount, the charge code and the banks on the route. Ask the payer to request a copy from their bank.
3. The UETR. The unique end-to-end transaction reference identifies one payment across every bank it passes through. Where the banks on the route take part in Swift gpi tracking, the sending bank can see each hop and the amount deducted at each one.

When asking a payer for these, be specific: the payment date, the amount and the invoice number. A request for "proof of payment" often returns a screenshot of an online banking screen, which shows the debit and nothing about the route.

Before any of this, check the account details themselves. A wrong BIC or a mistyped IBAN can send a payment the long way round or get it returned with charges taken. The free IBAN checker validates both formats.

Why the same route costs differently each time

Finance teams often notice that one client's payments arrive with different deductions from month to month. Several things can change between two payments that look identical on an invoice:

• The sending bank may route through a different correspondent, depending on the currency, the amount or its own arrangements on that day.
• The payer may use a different account, or a different bank, for this payment.
• The charge code may differ, because it is often a default in the payer's online banking that someone changed or did not notice.
• A conversion may happen at a different point on the route, so part of the difference is a rate and not a fee.

Because the route belongs to the payer's bank, the beneficiary cannot fix it alone. What the beneficiary can control is what it asks the payer to do and which account details it gives them.

What changes the outcome: the charge code, the rail, the currency

Three choices made before the payment is sent can change much of what arrives.

The charge code. Every SWIFT payment carries one of three codes: OUR, SHA or BEN. Under SHA, the common default, the sender pays their own bank and intermediary charges come out of the amount. Under OUR the sender agrees to cover them. How to choose and how to write it on an invoice is covered in OUR, SHA and BEN: who pays the wire charges.

The rail. A payment that stays on a domestic rail in its own currency usually does not pass through correspondents at all. The next section explains when that is possible.

The currency. A payment sent in one currency and credited in another adds a conversion step, and with it a rate decided by whichever bank converts. Invoicing in the currency your account holds keeps the conversion on your side, where you can see its cost.

Free worksheet: calculate the full cost of your route →

When a route can avoid correspondents

Correspondents exist to bridge banks that do not share a payment system. When the payer and the beneficiary can use the same local rail, there is nothing to bridge.

A payer whose bank is in the United States can pay USD to ACH or Wire details as a domestic transfer. A payer in the SEPA area can pay EUR by SEPA transfer. In both cases the credit usually arrives without an intermediary deduction, although the receiving account may still apply its own charge. SWIFT remains the route for payers who cannot use either local rail, and that is where the charge code matters most.

ArtPay provides a multi-currency business account in USD and EUR with account details for each of these rails, so the beneficiary can give each payer the details that suit the payer's country and currency. The rail comparison explains the four in more depth. The cost of receiving, converting and paying out on each route is a transparent fixed fee, confirmed in a written quote before activation.

Who this is for, and who it is not for

This guide is for finance teams at registered companies that receive or send international payments in USD or EUR and want each payment to arrive at the amount on the invoice. If your clients, partners or contractors sit in several countries and you want to compare what each route costs, request a written quote and describe where the money comes from and where it goes.

Sources: Swift — about the network, Swift — gpi and payment tracking, Nacha — what ACH is, European Payments Council — SEPA schemes and clearing and settlement mechanisms.

This guide is general information, not legal, tax or financial advice. Payment rules and timings vary by bank and country; confirm the details for your route with your provider.