Are urgent payments worth the additional costs?

Fast and efficient payments are essential in business, especially when consumer expectations are rising. But what is the cost of instant or urgent payments, and do expedited transfers make a tangible difference?

Why do regular payments take so long?

It is not unusual for banks to take up to five business days to process international payments. Slow transfer speeds can cause delays and increase customer frustration.

In addition, processing times can be considerably longer when the currency is deemed as ‘niche’ or payments are being made to an account outside of the Single Euro Payments Area.

Here are some of the most common payments methods used when transferring money:

• SWIFT international – Society of Worldwide Interbank Financial Telecommunication (SWIFT) payments are used when a UK bank needs to send money to an overseas bank account. Payment times vary between different banking institutions, as do the associated transfer fees.
• SEPA payments – Single Euro Payment Area (SEPA) payments allow customers to make cashless payments – via credit transfer and direct debit – to anywhere in the EU, as well as several non-EU countries.
• Faster Payments – These are designed to speed up the process of transferring money in the UK. They are ideal for customers who need to move a small amount of money quickly. Payments are typically processed the same day, often within a few hours. There is usually a fee associated with sending Faster Payments from business accounts.
• Target2 – This payment system is owned and operated by the Eurosystem. Banks can submit payment orders to the platform where they are processed in Euro in real-time. Target 2 supports the smooth flow of euros across borders.

How do international payments work?

International transfers are sent in stages. If you instruct a bank to process your payment, the transfer will be moved between different intermediary banks before arriving at its final destination – with your intended recipient.

This method is commonly known as SWIFT payments or international money transfers. SWIFT payments are the most common method that UK banks use to process international payments.

The major drawback of this method is that the payment will be transferred between different intermediary banks before reaching its destination. The funds may fall under the scope of the bank’s Anti Money Laundering (AML) and Known Your Customer (KYC) processes at various points along the transfer journey. This would delay the transfer speed and could stop the payment from being processed in some cases.

These requirements are in place to identify and prevent any fraudulent or money laundering transfers.

What about urgent transfers?

Urgent international payments push payments delivered to the SWIFT network faster to expedite the money transfer process. Most of the transfer process is automated, although manual processes may be required if the payment falls under the scope of the bank’s AML and KYC checks. At PayAlly, payments are given urgent status so we are prompted to complete these checks quickly. This helps to avoid unnecessary delays in the transfer process.

There is no guarantee that urgent payments will be received the same day, but they should arrive within two working days rather than five.

There is also a cost associated with urgent international payments. You should expect to pay your bank anywhere between £25-£40, plus any fees added by the intermediary banks, any exchange rate markups, and a possible fee by the recipient’s bank. These additional fees can increase the cost of the international transfer significantly.

Why would you use urgent payments?

A faster method of making an international payment is to instruct a payment institution, rather than using your traditional business banking provider. Some wire transfer companies offer faster payment delivery times, but their transfer fees are typically higher. Additionally, there are often limitations on which currency and country you can transfer to when using a wire transfer company.

PayAlly offers an alternative to traditional banks and wire transfer companies. We have a more efficient network on the payments chain than the majority of wire transfer companies and even some established banks. This allows us to process payments faster in most scenarios. Furthermore, if both you (the sender) and your recipient have a PayAlly account, your transfer will be instant and free in the majority of cases.

If your receiver does not have a PayAlly account, you can still send them a fast and secure payment via your PayAlly account. We offer our customers a convenient multi-currency account and we can also arrange multi-currency payments.

The receiver can be located anywhere in the world, and their business does not have to be registered in the UK to receive the payment.