Bank remittance review 2024: charges, processing time and hidden fees

What are bank remittances?

Bank transfers, such as the Faster Payment System (FPS) and electronic Direct Debit Authorisation (eDDA), are only applicable for transactions between local accounts. On the other hand, bank remittance services come in handy for overseas transfers, where funds are transferred from a local bank account to an overseas bank account. In Hong Kong, the majority of banks offer international remittance services to overseas bank accounts, with some larger international banks like Citibank and HSBC offering free remittance to their overseas branches.

Processing time for bank remittances

Some common bank remittance methods include telegraphic transfers, Demand Drafts, and Mail Transfers. Among the three, wire transfer or Telegraphic Transfer is the most widely used. Both local and overseas banks utilise the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network to exchange telegrams and process remittance instructions. 

The SWIFT network operates in more than 200 countries and regions globally. Upon registration as a SWIFT member, each bank and branch is assigned with a unique SWIFT Code (also known as the Bank Identifier Code, BIC). To transfer funds, simply enter the recipient bank's SWIFT Code and account details, and the funds will usually be credited in 1 to 5 days after sending the instructions. 

Demand Draft and Mail Transfers require remittance instructions to be sent via mail. For Demand Drafts, the remitter submits the funds to the remitting bank, and the bank will then issue the draft. The draft is then mailed to the foreign payee either by the bank or the remitter. 

The time required for the arrival of demand drafts and mail transfers varies depending on factors such as distance and flight schedules. On the contrary, telegraphic transfers eliminate postal transit time and reduce the risks of loss and forgery. Despite having higher fees, telegraphic transfers remain the primary method of international remittance.

What are the advantages of bank remittances?

Secure and convenient

Traditional banks are renowned for their solid reputation, providing a certain level of security for your funds. These banks offer both online and offline services so customers can make remittances through online banking or visit branches in person. Customers can seek face-to-face assistance from staff for any inquiries and also conduct other transactions simultaneously.

Remittance tracking

Some banks offer additional services so customers can track the status of the remittance, and obtain detailed information regarding the status at the remitting bank, intermediary bank, or beneficiary bank. Remitters can also be notified when the funds are received by the recipient (additional fees may apply).

Cost savings

Certain large international banks have branches spread across various countries and regions. When facilitating cross-border remittances, these banks have the advantage of processing transactions within their internal network, so the funds can be credited quickly. Some banks may also offer customers fee-free remittances to their overseas branches.

Limitations of bank remittances

There are certain limitations when using bank remittance services.

Limitation on remittance amount

Bank telegraphic transfers typically have daily limits. For instance, HSBC sets a maximum daily transfer amount of HK$400,000 to unregistered payees*. Corporate clients have different limits based on their account tiers, the currency, the bank they are associated with, and the remittance services they use. If the remittance amount exceeds the designated limit, remitters may be required to provide transaction contracts and invoices as supporting documents.

*Information as of 15 March 2024 and is for reference only. Please refer to official website of HSBC for the most up-to-date information.

Cut-off time

Traditional banks typically process remittance applications only during office hours. Due to time differences and holidays between local and overseas banks, different financial institutions have varying cut-off times for different currencies. If customers miss the cut-off time, they have to wait until the next business day.

The table below* outlined the cut-off times for remitting Canadian dollars (CAD), Euros (EUR), US dollars (USD), and British pounds (GBP) at select banks. Generally, online banking remittances have later cut-off times compared to branch-based remittances.

*Information as of 15 March, 2024 and is for reference only. Please refer to the official website of the bank for the most up-to-date information.

Comparison of bank charges for bank remittances

When corporate clients send money overseas through a bank, they are typically charged a fee* of HK$120 to HK$200 per transaction for online remittances. The charges can vary significantly between different banks, ranging from HK$100 to HK$350. Conversely, the standard fee for receiving remittances into an account is generally HK$65 per transaction, with some banks offering fee waivers.

*Information as of 15 March, 2024 and is for reference only. Please refer to the official website of the bank for the most up-to-date information.

In addition to the aforementioned bank charges, banks may also charge different fees for other remittance-related items, including:

• Intermediary bank charges

• Handling charges for leaving a message to the recipient during remittance

• Additional charges for remittance instructions in Chinese

• Fees for status inquiry of the remittance

• Fees for confirming the remittance with the beneficiary bank

• Fees for making changes, cancellations, and refunds

Moreover, customers should be mindful of hidden discrepancies in exchange rates. Banks typically set their own currency exchange rates for remittance, which are often higher than the market rates. This is why, even if a bank waives the remittance handling fee, it can still generate profits from the exchange differentials, ultimately resulting in higher exchange costs for customers.

Why do traditional banks charge additional fees?

When sending funds overseas, the remitting bank and the beneficiary bank may not have direct communication. Intermediary banks may step in to facilitate telegraphic or remittance message exchange. Typically, one to three intermediary banks are involved in completing a single remittance, each charging a commission or handling fee. Consequently, there are additional fees imposed by intermediary banks on top of the standard bank charges.

Are there any options that reduce the cost of remittances?

If your company requires regular overseas remittances to business partners, or is aiming to expand your operations internationally, selecting a secure and cost-effective remittance service is of paramount importance.

In addition to traditional banks, there is a wide range of specialised remittance companies that offer remittance services. Airwallex is an excellent option – with remittance services in over 60 currencies to 150+ countries or regions.

Airwallex's global remittance service

Unlike traditional banks, Airwallex offers a unique advantage to corporate clients by establishing local currency accounts in over 60 countries or regions worldwide. This feature enables direct transactions using local bank accounts by bypassing the complex processes of telegraphic transfers, and ultimately avoiding the layering of fees by remitting banks, intermediary banks, and recipient banks.

Why doesn’t Airwallex have hidden fees?

Airwallex does not impose account opening fees, monthly charges or hidden fees. Over 90% of remittances utilise local networks without transaction fees, and there are no minimum remittance requirements. Only when foreign currency exchange is involved, Airwallex applies a competitive exchange rate of as low as 0.2% on top of the interbank exchange rate. 

What are the advantages of using Airwallex?

With an Airwallex Business Account, you can quickly set up multiple local currency accounts online. Subsequent receipts and expenditures are directly transacted in local currencies, eliminating unnecessary exchange losses. Additionally, you can manage all your accounts on a single platform, enhancing your efficiency on global fund management.

With Airwallex's foreign exchange transactions covering over 60 currencies, you can save up to 80% on currency exchange and overseas transaction expenses. Funds can be credited to your account as quickly as one business day.