Bank transfer 2025: explain and review

What are bank transfers?

Bank transfers, such as the Faster Payment System (FPS) and electronic Direct Debit Authorisation (eDDA), are  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.

How do bank transfers work?

Here is a general overview of how bank transfers work:

1. Initiation: The sender initiates the bank transfer by providing their bank with the recipient's account details, including the account number, bank and branch code (for Hong Kong local transfers) or SWIFT/BIC code (for international transfers), and the transfer amount.

2. Verification and authorization: The sender's bank verifies the transaction details and authorises the transfer. This may involve security checks such as one-time codes to ensure the legitimacy of the transfer.

3. Processing: The sender's bank processes the transfer instructions and debits the sender's account for the transferred amount, including any associated fees.

4. Interbank communication and settlement: The sender's bank communicates with the recipient bank through secure networks like the Society for Worldwide Interbank Financial Telecommunication (SWIFT) network to facilitate the transfer. The recipient bank then receives the funds and credits the recipient's account with the transferred amount. Settlement times can vary depending on factors like the type of transfer (e.g., domestic or international) and the banks involved.

6. Notification: Both the sender and recipient typically receive notifications confirming the transfer, either through online banking platforms, email, or SMS.

7. Completion: Once the funds are credited to the recipient's account, the transfer is considered complete. The recipient can then access and utilise the transferred funds as needed.

Processing time for bank transfer

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 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 transfer?

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.

Differences between bank remittance and bank transfer?

Bank remittance and bank transfer are terms that are commonly used interchangeably, but they carry subtle differences. While both are modes of transferring money, understanding these distinctions can help you choose the service that best suits your business needs.

Bank remittance involves sending funds internationally to another account for personal transfers or payments for services or goods. This process typically entails two account holders based in different countries.

On the other hand, a bank transfer (also interchangeably called a wire transfer), is a broader term that encompasses various types of movement of funds between two accounts.  These transactions can be local or international transfers.

Limitations on bank transfer

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.

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

How to send a bank transfer?

Sending a bank transfer is quite straightforward.  Whether using mobile or online banking or visiting a local branch, initiating a transfer requires the following details of the recipient:

• The account holder’s name 

• Bank and branch code and account number

• The country/region of the designated bank account

• The transfer amount

• The preferred date for payment (if not immediately).

Here is a step-by-step guide on how to send a bank transfer online.

1. Access your online banking platform via the official website or mobile app.

2. Select the “Transfer” option and input the recipient's details listed above.

3. Choose the account from which the funds will be debited, especially if you have multiple accounts.

4. For unregistered payees, there may be limitations on the transfer amount; consider adding them as a registered payee for larger transfers.

5. Preview the remittance charge and estimated arrival time after entering the transfer information.

6. Optionally, provide details in the "Purpose of transfer" and "Message to payee" fields.

7. Verify your transfer instructions, and tap “Confirm” to submit the instructions.

8. The bank will process the transfer, typically completing it within 1 to 3 working days, considering factors like currencies, bank locations, and cut-off times.

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.

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 January 2025 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.

Alternatives to traditional bank transfers: Airwallex

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 companies that offer these services. Airwallex is an excellent option.

Global transfer service

Unlike traditional banks, Airwallex FX & Transfers offers a unique advantage to corporate clients by establishing local rails bypassing the complex processes of telegraphic transfers, and ultimately avoiding the layering of fees by remitting banks, intermediary banks, and recipient banks. Businesses are able to send 60+ currencies to 150+ countries and regions. Payments are received in as little as one business day with the full amount on delivery guaranteed.

Cost-effective international transfers

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

Sign up now to streamline payments to suppliers and employees around the world.

Sources:

Information on banks was retrieved as of January 2025, from below sources. Information provided is for reference only. Please refer to the official website of banks for the most up-to-date details

1. https://www.hsbc.com.hk/ways-to-bank/branch/express-banking/

2. https://www.bochk.com/en/crossborder/remittance/faq.html

3. https://www.business.hsbc.com.hk/zh-hk/regulations/services-cut-off-time

4. https://www.hangseng.com/content/dam/hase/en_hk/personal/banking-services/pdf/ortt_timetable.pdf

5. https://www.sc.com/hk/bank-with-us/remittance/

6. https://www.bochk.com/en/crossborder/remittance/charges.html

7. https://www.business.hsbc.com.hk/hk/regulations/commercial-tariffs

8. https://av.sc.com/hk/content/docs/hk-service-charges-en.pdf

9. https://www.citibank.com.hk/english/citibusiness/about-us/?lid=HKZHCBLCZLNTLABOUTUSCZLN

10. https://www.hangseng.com/en-hk/business/your-business-essentials/transfer-outward-remittance-faq/

Disclaimer: The information was based on our own online research and we were not able to manually test each tool or provider. The information is provided for educational purposes only and a reader should consider the specific requirements of their business when evaluating providers. This research is reviewed every 6 months. If you would like to request an update, feel free to contact us at [email protected].