Understanding International Payments: Currencies, Bank Details, and Common Pitfalls

International transactions are a core part of a global economy, but they come with complexities that can lead to delays and failed payments. Understanding the mechanics of these transfers, the specific information required, and the common errors that can occur is crucial for a smooth process. This guide breaks down everything you need to know.

Payment Currency vs. Bank Account Currency

When making an international payment, it's important to distinguish between the currency of the payment and the currency of the recipient's bank account.

• Payment Currency: This is the currency in which the funds are sent. For example, a company in Norway might send a dividend payment in Norwegian Kroner (NOK).
• Bank Account Currency: This is the native currency of the recipient's bank account (e.g., USD for an American bank account, INR for an Indian bank account).

If the payment currency does not match the bank account's currency, the receiving bank (or an intermediary bank) will perform a currency conversion. This can often incur additional fees and may not offer the most favorable exchange rate.

Best Practice: Whenever possible, choose a payout currency that matches the recipient's bank account currency to avoid unexpected conversion fees. If your bank can directly accept foreign currencies like EUR or USD, selecting one of those can also be a good alternative.

How to Provide Correct Bank Details for International Transfers

Providing complete and accurate bank details is the single most important step to ensure a successful international transfer. While requirements can vary by country and bank, the following details are commonly required.

The best approach is to contact your bank directly and ask for the full details required to receive an international wire transfer.

Key information typically includes:

• Full Name of Account Holder: Your full legal name as it appears on your bank account.
• Full Bank Name: The official name of your bank.
• Bank Account Number: Your specific account number.
• IBAN (International Bank Account Number): A standardized international number to identify a bank account, primarily used in Europe but adopted by many other countries.
• BIC/SWIFT Code: A global code that identifies a specific bank in an international transaction. This is crucial for routing the payment correctly. Most banks have a BIC/SWIFT code.
• Routing Code/Number (e.g., ABA in the US, IFSC in India): A code used to identify a specific bank within a domestic clearing system. Some international transfers may require this in addition to a SWIFT code.
• Correspondent (or Intermediary) Bank Details: If your bank cannot directly receive payments in a foreign currency (like NOK), it may use a larger, "correspondent" bank to process the transaction. In such cases, you will need to provide the SWIFT/BIC code of this intermediary bank.

After a successful international transfer, your bank can provide a SWIFT MT103 document. This acts as a detailed receipt and confirmation of the transaction, containing all transfer details, including any fees applied.

Common Errors and Issues in International Payments

Even with careful preparation, transfers can fail or be delayed. Here are some of the most common reasons:

1. Incorrect or Incomplete Bank Details: This is the most frequent cause of payment failure.
   • Incorrect Account Number: A simple typo can cause the payment to be rejected.
   • Incorrect Beneficiary Name: The name on the transfer must exactly match the name on the bank account. Using a different name, such as the bank's name instead of the account holder's, will lead to rejection.
   • Missing Information: Forgetting to include a SWIFT code, IBAN, or other required details can cause the transfer to fail.
2. Missing Correspondent Bank Details: A payment sent in a currency the recipient's bank doesn't directly handle (e.g., NOK to an Indian bank) will be rejected if intermediary bank details are not provided.
3. Deactivated or Closed Accounts: Attempting to send funds to a bank account that has been closed or deactivated will result in an error. This can happen if a user changes banks and forgets to update their details.

By understanding these key areas, both senders and recipients can better navigate the world of international payments, reducing the likelihood of errors and ensuring funds arrive safely and on time.