If you are wondering how international money transfers work, you’re in the right place. Back in the ‘90s, the quickest way to send money from India to Europe was to physically take cash on a flight, just like in the movies. As you can probably guess, this is not the case now,, but do you wonder how to best send money abroad in 2024? That’s what we are hoping to clear up!

If you are reading this article then we will assume that you have already created your blocked account (if not then click here) and you are planning to transfer the amount to your blocked account.

How does International Money Transfer Work?

International money transfers are basically inter-account transfers, only in this case, the two payment service providers happen to be in different countries, which makes things slightly more complex. The two payment service providers need to have an established relationship in order to facilitate the transfer.

The two most common ways to transfer money internationally are known as a SWIFT and a SEPA transfer.

For transferring money to your blocked account we use SWIFT method 

The SWIFT payment system enables these institutions to securely send and receive information on financial transactions in a standardized way. This ultimately allows money to be sent from one payment service provider to another, virtually anywhere in the world and in many different currencies.

But this system is far from perfect. SWIFT does not actually send money, it simply sends messages between the payment service providers. Because of this, other systems that require more human intervention must be used to transfer the actual funds and this, in turn, makes SWIFT transfers slow. What’s more, the complex nature of these transfers usually incur a fee which nearly always gets passed on to consumers.

Let’s assume Sam wants to send 10000 rupees from his account in India to Anjali’s account held with a payment service provider in Germany. Depending on the provider’s relationship, there are two ways in which this transfer can take place:

Direct Relation Between Service Providers Exists 

If both payment service providers have a direct relationship with each other, or in other words, if provider 1 has a commercial account with provider 2 and vice versa, the transaction would look like this:

Sam’s payment service provider (HDFC Bank) will send a SWIFT message to Anjali’s payment service provider (Germany Europe), informing them of the transfer. Once the message is received, the funds can be transferred directly between the two payment service providers:

1. Sam’s payment service provider (HDFC) will debit Sam’s personal account by €100. 
2. Sam’s payment service provider will credit Deutsche bank commercial account held with HDFC by €100.
3. Anjali’s payment service provider (Deutsche bank) will credit her personal account by €100.

Since the payment service providers have a direct relationship, they are able to easily move the funds across, which keeps fees to a minimum and makes the transfer happen quickly.

No Direct Relation Between Service Providers Exists 

If the payment service providers don’t have a direct relationship, one or more intermediary providers must be found to facilitate the transfer.

So, Sam’s payment service provider (provider 1) will once again send a SWIFT message to Anjali’s payment service provider (provider 2), informing them of the incoming transfer. But since neither provider holds accounts with one another, SWIFT will find an intermediary where both payment service providers have commercial accounts – let’s call it payment service provider X. Once the intermediary is found, the funds can be processed at the end of the day (or based on some other predetermined schedule):

1. Payment service provider 1 will debit Sam’s personal account by €100. 
2. Payment service provider 1 will ask payment service provider X (the intermediary provider) to debit their commercial account (Provider 1’s) by €100 , and credit Provider 2’s commercial account. 
3. Provider X deducts a small fee for acting as an intermediary (let’s say €0.40) from the amount being transferred, and credits Provider 2’s commercial account by €99.60. 
4. Provider 2 will then credit Anjali’s personal account by €9 9.60.

Since there were more operations happening behind the scenes, this transfer is more expensive (notice the hypothetical €0.40 fee) and takes longer to complete (usually between 3 to 5 working days). In this case, there was only one intermediary provider (Provider X), but some transfers can require two or more intermediaries, which introduces even more fees and delays. 

But what if the transfer was from one currency to another? One of the payment service providers would have made the currency exchange, usually at a less than desirable rate, adding to the total cost of the transfer. Adding all the different fees and marked up exchange rates reveals that SWIFT transfers can cost more, simply for moving your money from A to B! 

How to Transfer Money to a Blocked Account

Coming to the root of the reason you are provavly here, how to transfer money to your blocked account.First of all, if you don’t know HOW to open your blocked account, read our explanatory blog here.

So, to transfer your international funds to your blocked account, simply visit the nearest bank in which you have your bank account and you can ask anyone from remittance section regarding this international transfer, they will provide you with the currency rate, taxes and charges in detail, you can also visit any non banking remittance service provider (authorized and genuine) and ask them regarding rates and charges, simply compare both that which is more better for you and go with the one you want. 

Remember, you can also use Digital or Phyiscal Forex companies (especially common in India)

Other digital providers can also transfer your funds to your blocked account such as WISE and TransferGo.

Why is my Transfer Delayed?

In some situations, due to some technical errors while sending SWIFT from the sender’s payment service provider, there is some mistake and while it is with the intermediary provider, they are not able to verify it. So due to this technical error, this SWIFT is not forwarded further which is then reverted back to the sender’s payment service provider. Sometimes this can delay a transfer. 

Tip: Preplan your international transfer at least a week before you need to have your blocked account confirmation in hand. 

What is SWIFT Proof? Why is it Important?

To obtain the information for your transfer when the transfer is made, one can ask the service provider for SWIFT proof in which it will be mentioned when the transfer has been made or when the exchange of currency can take place. But from SWIFT proof one can not make a decision that the transferred amount has been credited to the receiver’s account, because SWIFT proof only shows that the process has been started. We can understand this by the train journey analogy.

For example, if a train is set to go from destination A to destination B, the train has departed from destination A, but it does not mean that it has already reached destination B, it just means that it is on the way, so do not panic, it will reach soon smoothly. 

How can coracle help you in this?

Though we encourage students to always chose for themselves which remitance provider they would like to use, for the convenience of customers, Coracle has partnered with various remittance service providers in different countries worldwide. You can reach out to these service providers from your country, as they are affiliated with Coracle and will assist you accordingly. If your country’s provider is not listed below, please contact Coracle support at support@coracle.de, and the Coracle support team will be happy to assist you.

Korea – MOIN (https://www.themoin.com/)

Turkey – Transfer Go (https://www.transfergo.com/)

Wise (Formerly known as TransferWise)

If your country is not in the list then please reach out to coracle support for assistance in this matter at support@coracle.de