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Intermediary banks are essential in maintaining the free flow of international payments. When one bank does not have a direct relationship with another, these banks act as a link between the payer's bank and the payees. Finding intermediary bank information is thus crucial in sending payments to suppliers overseas or receiving payments from clients abroad.
If correct details are not provided or understood, transactions can, at the very least, face delays, and incur some undetected fee while at worst, fail to go through at all.
In this guide, let us look at intermediary banks, how their details matter, and how to get the intermediary bank information so that your payments are streamlined and up to date.
An intermediary bank, known as a correspondent bank, acts as an agent for the sender’s bank while remitting transactions internationally. This type of banking exists because a sender's bank and recipient's bank do not maintain a relationship, or the two are situated in different countries lacking bilateral agreements.
Intermediary banks enable the transmission of assets across borders using the following methods:
Processing transactions: They conduct the money transfer through their network of accounts with other banks.
Converting currencies: They also do the conversion of currencies.
Ensuring compliance: They assist in the adherence of policies.
Intermediary banks primarily get involved in cross-border transactions between banks that do not directly deal with each other. For instance, the remittance of funds from an Indian bank to a small unknown bank in Africa that has no established relationships. An intermediary will assist in this situation.
In short, intermediary banks are a vital cog in the machinery of international banking, ensuring that money moves securely and efficiently across borders, even when the originating and receiving banks are worlds apart. However, they do charge fees which can be confusing for businesses unfamiliar with international transactions.
Finding details concerning intermediary banks is useful in international payments. Below are some ways to obtain this information:
- If you require details regarding an intermediary bank, then your own bank is the most credible source. You may contact their customer care executives or relationship managers and ask for the relevant details like the intermediary bank’s SWIFT or IBAN. An MT103 document is the more technical term, you can ask for a SWIFT MT103 document and it will contain all the details of your international payment, including intermediary bank information. A lot of these financial institutions will advertise this information on their website or send it by email on request.
Look up websites that specialize in listing intermediary bank codes. These websites should allow you to enter the name of the banking institution or financial organization to receive the relevant SWIFT information. This strategy is mostly useful when you are aware of the account’s recipient and their respective bank but require the intermediary information to perform the transaction.
It is possible that the recipient’s bank already has an intermediary bank for these kinds of transactions. Request the recipient’s bank information to check if it has a corresponding bank and SWIFT code or other specific routing instructions. That way you can be sure the payment will reach its destination without delays.
Occasionally, some bank documents like invoices, payment confirmations, and statements may have the intermediary bank’s details. Ensure you check the documents for details like the routing number, SWIFT code, or the names of intermediary banks. If the recipient is the same, this will be helpful if you wish to make payments repeatedly.
Payment Service Providers, like Karbon, do not require you to worry about intermediary banks, as they tend to take care of that. PSPs tend to focus on intermediary payments and will have a network of banks to work with. So, instead of manually searching for intermediary bank details, with Karbon, you can feel confident knowing the transactions get routed properly.
Using these approaches can help maintain the efficiency and effectiveness of your international payments whilst reducing unnecessary hurdles.
For businesses engaged in global trade, especially those based in India, understanding intermediary bank charges can seem daunting—but it doesn’t have to be.
Karbon is made specifically for businesses that don't want the hassle of managing international payments not only because it is streamlined but it is also cost-effective. We also provide free FIRA and SWIFT MT103 copies which enable you to get a bird’s eye view of your international transaction.
With Karbon, you can simplify the entire process. From ensuring proper payment routing to eliminating unnecessary complexities, Karbon is the trusted partner for Indian businesses seeking efficient and reliable cross-border payment solutions.
You will need an intermediary bank if the sender's and recipient's banks do not have a direct relationship or if the payment is made through smaller or regional banks. This also occurs in currency conversion transactions where an intermediary bank facilitates the conversion and transfer. In any case, it is always best to confirm with your bank or the recipient's bank regarding payment instructions. They can clarify if an intermediary bank is needed and provide the required details.
An intermediary bank cannot often be avoided; it's mainly the case for international payments from one bank to another without having any direct link with each other. You can however reduce your use of intermediary banks, either by choosing bigger global banks or using a payment service provider like Karbon to help you deal with transactions much more easily.
If your payment is delayed, the first thing you should do is contact your bank to confirm the details of the transaction including the intermediary bank's information. If errors are found, request updated payment instructions. At the same time, inform the recipient so they can check with their bank if there are any issues on their side. Double-check all intermediary bank details before making a transaction to avoid future delays or rely on trusted payment solutions like Karbon, which manage intermediary bank requirements for you.
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