How Businesses Make International Payments

An international payment looks simple on a screen: enter an amount, a beneficiary and a reference, and press send. Behind that screen, the money may pass through several banks in different countries before it reaches the beneficiary. Understanding that journey explains most of the delays and charges businesses encounter.

The route a payment takes

When a business instructs its bank to pay a supplier abroad, the payment generally travels as follows:

1. Instruction. The business submits the payment details to its bank, with the amount, currency and beneficiary information.
2. Compliance screening. The bank checks the payment against sanctions lists, anti-money-laundering rules and its own controls. This happens on every international payment, not just unusual ones.
3. Correspondent banking. Most banks do not hold accounts in every country. They hold accounts with correspondent banks, which act as intermediaries. A payment may pass through one or more correspondents before reaching the beneficiary's bank.
4. Credit to the beneficiary. The beneficiary's bank receives the funds, applies its own screening, and credits the beneficiary's account.

Each bank in the chain may apply its own charges, and each step takes time.

What every international payment needs

Errors in payment details are the most common cause of delay. A complete instruction includes:

• Beneficiary name, exactly as it appears on the account.
• Beneficiary account number or IBAN where the country uses one.
• Beneficiary bank name and address.
• SWIFT/BIC code identifying the beneficiary's bank, and the branch where relevant.
• Amount and currency.
• Payment purpose — many jurisdictions require this for compliance.
• A clear reference so the payment can be traced and reconciled.

For payments to some countries, an intermediary bank and its SWIFT code are also required.

Why payments are delayed

• Incomplete or inconsistent details — a name that does not match the account, a missing branch code, a transposed digit.
• Compliance review — a payment that triggers screening may need manual assessment.
• Intermediary routing — each correspondent adds a step.
• Cut-off times and time zones — a payment submitted after the cut-off moves on the next business day.
• Public holidays in either country, which are often overlooked.

Why payments are returned

A payment may be returned if the beneficiary account is closed or dormant, if the name and account do not match, if the beneficiary bank cannot apply the funds, or if a compliance check cannot be resolved. Returns also take time and may attract charges from each bank involved.

Reducing the risk of problems

• Confirm beneficiary details directly with the supplier, and re-confirm them when they change.
• Send a small test payment before a large one when dealing with a new supplier.
• Submit payments early in the day rather than at cut-off.
• Keep the reference consistent between your instruction, your records and the supplier's invoice.
• Agree in the contract who bears correspondent bank charges.

Key takeaways

• International payments usually travel through one or more correspondent banks.
• Complete, accurate beneficiary details are the single biggest factor in timely settlement.
• Compliance screening applies to every cross-border payment and can add time.
• Agree in advance who bears charges, and keep references consistent.

Frequently asked questions

How long does an international payment take?

Timing depends on the currencies and countries involved and on how many intermediary banks are in the chain. Some payments settle within a day; others take several business days, particularly where a correspondent or a compliance review is involved.

What is a SWIFT code?

A SWIFT code, also called a BIC, identifies a specific bank in the international payment network. It is used to route a payment to the correct institution.

What is correspondent banking?

Correspondent banking is the arrangement in which one bank holds an account with another bank in a different country, so that payments can be settled between countries where a direct relationship does not exist.

Sources & references

• Bank of Uganda — Uganda's banking regulator and source of payment-system oversight information.
• SWIFT — operator of the international messaging network used to route payments.

This article is provided for general educational and informational purposes and does not constitute financial or legal advice. Payment rules and charges vary by corridor. See our International Banking service page for the services available.

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• Foreign Exchange Explained
• Exchange Rate Risk
• International Banking