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International Payments

Overview

Contrary to popular belief, there is no worldwide clearing arrangement for payments (except for credit card payments).  There is a series of ad-hoc alignments between banks.  So if my small bank in Ireland wants to transfer funds to a small bank in central Argentina, the transfer depends upon a chain of relationships.  My bank may have a relationship with a big bank in Ireland, which may have a relationship with a big bank in Argentina, which may have a relationship with another big bank in Argentina, which may have a relationship with the destination bank.  There is a worldwide secure messaging system between banks called SWIFT (Society for Worldwide Interbank Financial Telecommunications)

To address the options, let's construct a series of scenarios:-

Scenario

Best option

Alternatively

Avoid the following

Sending funds to an individual or business in a European country

Immigrant in Ireland sending funds home

Parent funding son/daughter in european country

Gift to an individual in Europe

Business payment for imported goods

SEPA Cross-border credit transfer directly into the destination account in the destination country.  You must have the IBAN & BIC numbers for the payees account.  Charges will be minimal for transactions under €50,000, and is denominated in euro.  If the payee is in a non-euro country, higher charges will apply

If the payee has an account in an Irish bank, lodge funds to it and draw the funds in cash from an ATM in the destination country.  Charges will apply

Consider services from An Post, Western Union, etc

Irish Cheque - An Irish cheque will not be accepted for lodgment in another country.  A bank may (reluctantly) accept the cheque for collection.  This will lead to delays in payment and high bank charges in the destination country.

Draft - You can get a draft drawn on Dublin or on the capital city of the destination account.  However, clearing of drafts is a slow process in many countries and involves high charges to the payee

Purchase goods online

Paypal, if both you and the online retailer have paypal accounts

Credit card

Cross-border credit transfer, if accepted by the online retailer

Any other option

Sending funds to an individual or business in a non-european country

International credit transfer directly into the destination account in the destination country.  Some countries use IBAN & BIC account numbers – others have local numbering systems.  You will need the name and address of the payee, and of his bank

 Consider services from An Post, Western Union, etc

Draft - You can get a draft drawn on Dublin or on the capital city of the destination country.  However, clearing of drafts is a slow process in many countries and involves high charges to the payee.  Drafts for smaller countries may be denominated in US Dollars, euro,  or other strong currency

Expecting incoming payment from another country

If you are exporting goods/services you should provide your account details and/or IBAN & BIC to the payer.  Ideally you should show this on your invoice.  The payer will pay the amount by cross-border credit transfer. You can request that the charges be paid by you, shared, or by the recipient.  In the latter case, the recipient will receive an amount less all charges.  These options are referred to in banking jargon as OUR, BEN, and SHA

If you are a private individual, you should provide your account details to the payer.  You will find both of these on your bank statement

 

 

Selling goods online into another country

Become a credit-card acquirer.  Consider joining Paypal as a seller

 

 

Cross-border credit transfer

You can create a SEPA credit transfer or an International credit transfer by completing a paper form at your bank or by completing an online form (not all online banking systems have such capability).  At a minimum, you will require the IBAN & BIC numbers and the name of the destination account for European countries.  You may need more details for other countries. For large payments, your bank may require evidence of the purpose of the payment to satisfy money laundering legislation