As businesses and people become more interdependent in spite of national borders, the ways of moving money cross-border are advancing. There are two main alternatives, namely, traditional bank transfer and instant international payment. As much as both serve the same rudimentary purpose of money transfer between two countries, these differences are all huge, and they vary in terms of speed, cost, effectiveness, and user comfort.
When you are choosing how to market your business or personal needs, it is important to know the differences between these two systems.
Speed: Instant Wins, Hands Down
Conventional bank transfers via the SWIFT system can take 3-5 working days. Delays can be encountered because of the lines of time difference, bank hours, and the presence of too many intermediary banks in the business.
Unlike such payments, instant international payments fulfill the promise of their name. Transfers and receipt of funds occur in a few minutes or seconds across geographical boundaries. This comes in particularly handy when paying on a time-sensitive basis, whether it be on one of the payment priorities above or any other pressing transaction.
Fees: Hidden vs. Transparent
Transfers in the banks are usually associated with costs. These can be like:
- Bank charges onsite bank makes
- Costs of an intermediary bank
- Markups in this conversion of currency
- Receiving bank revenues
These are fees which can add up very quickly and may not always have a breakdown of the costs at the start.
In contrast, instant payment providers (e.g., Wise, Revolut, Payoneer) usually provide up-front pricing. Most of them offer the real exchange rate and have a breakdown of fees before one makes the payment. This predictability can only be crucial to businesses and freelancers doing business across borders.
Accessibility and Coverage
The conventional banks involve traveling to the brick-and-mortar facilities and using complicated online systems, and working hours are restricted by time zones and locations.
Most instant international payment platforms are also available 24/7 and can be accessed through mobile applications or online dashboards. Multiple currencies and countries are supported. Some of them even facilitate payment to mobile numbers or email addresses that speed the process along and make it easier to use.
Security and Compliance
Traditional and instant payments are similar in being regulated as well as in terms of being designed keeping security in consideration, although they differ in the way they work.
Traditional banks also have more traditional infrastructure, which is the most secure but less adaptive and does not respond quickly. Fast transfer systems have the potential to make direct payments secure, given the power of contemporary encryption, fraud protection systems in real-time, and a sound compliance strategy.
Not to mention, a host of fintech providers are regulated by financial service providers, and operate under anti-money laundering (AML) and know your customer (KYC) policies.
Trust and Transparency
With instant payment services, you can have real-time tracking, which means you always know where the money is. Uniquely, bank transfers often have this transparency, particularly in the case of using more than two intermediary banks. This may cause conflict as well as inaccurate reconciliation.
Conclusion: A Shift in the Right Direction
Traditional transfers via the bank wire are still a part of some high-rolling institutional transfer circumstances, but the instant international payment system is fast becoming the people-first, freelance-friendly choice of individual people and businesses. They are quick, low-cost, more transparent, and have a much improved user experience.
In a world where time and efficiency are of the essence, the future most definitely lies with instant international payments.
