Need a bank to send money abroad? It’s faster to take a suit­case of cash on a plane

It can take weeks us­ing the Swift trans­fer sys­tem, as many have found to their cost. Anna Tims re­ports

The Observer - - Cash -

Elaine and Mal­colm Thomp­son’s char­ity, St Paul’s Chil­dren’s Project, pays school fees and ex­penses for 36 or­phans in Zam­bia. In Oc­to­ber they made a pay­ment us­ing the Swift sys­tem of £11,000 from the char­ity’s Bar­clays ac­count to its des­ig­nated bank in Zam­bia, but it never ar­rived.

“Bar­clays stated that they have not re­ceived a re­sponse from the ben­e­fi­ciary bank and were there­fore un­able to pur­sue the mat­ter fur­ther,” says Elaine. “The money is ur­gently needed to pay school fees which are due in De­cem­ber. The loss of such a huge sum would mean we could no longer con­tinue and 36 young peo­ple would lose their ed­u­ca­tion.”

Af­ter the Ob­server in­ter­vened, Bar­clays re­turned the funds, blam­ing the ben­e­fi­ciary bank in Zam­bia for the de­lays. The acro­nym Swift (So­ci­ety of World­wide In­terBank Fi­nan­cial Telecom­mu­ni­ca­tions) proved to be a mis­nomer, as many peo­ple have found. The sys­tem trans­fers money be­tween banks in dif­fer­ent parts of the world but while elec­tronic pay­ments within the UK are now al­most in­stan­ta­neous, Swift trans­fers can take days – some­times weeks – to reach their des­ti­na­tions and banks rarely warn cus­tomers of the po­ten­tial timescales.

Martin Fin­negan* was told the £2,450 sent from his Na­tion­wide ac­count to his mother-in-law in Rus­sia would take an es­ti­mated three days. Three months later it was still in tran­sit, lo­ca­tion un­known.

“Ac­cord­ing to Na­tion­wide, it is our re­spon­si­bil­ity to re­quest up­dates on the in­ves­ti­ga­tion,” he says. The money was even­tu­ally re­turned af­ter con­tact from the Ob­server, along with £400 com­pen­sa­tion.

Elaine Thomp­son is cer­tain her is­sue would still be un­re­solved but for the threat of pub­lic­ity. Sev­eral other read­ers, mostly Na­tion­wide cus­tomers, have con­tacted us to re­port bank in­er­tia af­ter their Swift pay­ments got lost in limbo. Each time the money was only re­cov­ered when the Ob­server got in­volved.

In June, Jane Collins* nearly lost the home she was buy­ing af­ter mov­ing to Canada be­cause the £54,000 de­posit trans­ferred from her Na­tion­wide ac­count went miss­ing. It even­tu­ally ar­rived six weeks later. Na­tion­wide blamed poor com­mu­ni­ca­tions along the chain of banks.

Na­tion­wide ex­plains that, as it is not an in­ter­na­tional bank, all over­seas pay­ments are pro­cessed by an agency bank. “The in­dus­try uses Swift mes­sag­ing as time dif­fer­ences and lan­guage bar­ri­ers can some­times make it dif­fi­cult to con­tact banks in other coun­tries by phone,” it says.

Swift, a world­wide co-op­er­a­tive of banks, does not ac­tu­ally send money. The 45-year-old sys­tem is a se­cure mes­sage-send­ing ser­vice be­tween its 11,000 mem­bers, which then re­lies on man­ual in­put to trans­fer funds.

If the send­ing and re­ceiv­ing banks do not hold com­mer­cial ac­counts with each other, a pay­ment has to travel be­tween one or more in­ter­me­di­ary banks, each of which might deduct an un­spec­i­fied fee and any of which might de­lay or lose the funds. Se­cu­rity and reg­u­la­tory checks can hold things up still fur­ther.

When money goes miss­ing, the send­ing bank has to li­aise with all the banks along the chain to trace it.

The re­sult is that, de­spite the revo­lu­tion in tech­nol­ogy, it’s still quicker to take a suit­case of money by plane to many parts of the world. More­over, be­cause of the charges levied by each bank along the way, com­bined fees of over £50 can be charged for a sin­gle pay­ment. Poor ex­change rates and fluc­tu­at­ing cur­ren­cies can shave off an ex­tra chunk.

Ac­cord­ing to the Fi­nan­cial Con­duct Author­ity, which reg­u­lates UK banks, an online pay­ment should reach its des­ti­na­tion by the end of the next work­ing day. Bank web­sites tend to leave it open-ended, how­ever. Na­tion­wide’s guide­lines ad­vise that while pay­ments within the Euro­pean Eco­nomic Area should take one work­ing day, those sent to the rest of the world “may take longer”. San­tander reck­ons a pay­ment will “usu­ally” take up to four work­ing days, TSB up to 12 work­ing days and Lloyds and its brands state it “should” take no more than 14. None spec­ify the to­tal cost.

Pay­ments tend to take longest – and cost more – when sent to, or from, poorer parts of the world with less de­vel­oped in­fra­struc­ture.

Laura Fulcher waited five months for a £500 hol­i­day de­posit to reach her Ghana­ian tour op­er­a­tor. It was even­tu­ally re­funded af­ter the Ob­server con­tacted her bank, TSB. It also re­paid as­so­ci­ated ex­penses and added in­ter­est and £50 in com­pen­sa­tion.

“Un­for­tu­nately, the pay­ment was sub­ject to the pro­cess­ing sys­tem in Ghana,” it says. “This type of de­lay is not un­com­mon in some coun­tries with less so­phis­ti­cated and re­li­able bank­ing sys­tems than the UK.”

Un­der Fi­nan­cial Con­duct Author­ity rules, UK banks are li­able for pay­ments un­til they reach their des­ti­na­tion un­less the cus­tomer made a mis­take with the ac­count de­tails. They are ex­pected to make “im­me­di­ate ef­forts” to trace miss­ing funds and up­date the cus­tomer, and they must re­fund a failed trans­ac­tion in full with­out “un­due de­lay”.

Cus­tomers who are stalled by their bank can com­plain to the Fi­nan­cial Om­buds­man Ser­vice, which will con­sider whether the bank was as­sid­u­ous enough in chas­ing an er­rant pay­ment.

Banks earn $200bn a year glob­ally from trans­ac­tion fees and ex­change rate rev­enues, a fig­ure that’s ris­ing 6% a year. At the same time, an­ti­money laun­der­ing rules, cy­ber­crime and volatile pol­i­tics are slow­ing the progress of trans­fers to some parts of the world.

Last year, a new, vol­un­tary panEuro­pean scheme, SEPA In­stant Credit Trans­fers, was launched, al­low­ing pay­ments of up to €15,000 to be com­pleted within 10 sec­onds, 24 hours a day. How­ever, the prospect of a sim­i­lar global sys­tem with a sin­gle set of rules re­mains a pipe dream be­cause of po­lit­i­cal and tech­no­log­i­cal ob­sta­cles.

*Names have been changed

‘The money is ur­gently needed. The loss of such a huge sum would mean 36 young peo­ple would lose their ed­u­ca­tion’ St Paul’s Chil­dren’s Project


De­spite the revo­lu­tion in tech­nol­ogy, is this quicker than the Swift pay­ment sys­tem?

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