Bank Transfers: What Are They, & How Do They Work?
A bank transfer moves money electronically from one bank account to another. Whether you're paying suppliers, receiving payments from overseas clients, or sending money to family, understanding how bank transfers work helps you choose the fastest and most affordable option for your needs.
Bank transfers fall into two main categories: domestic transfers within the same country and international transfers across borders. Each type uses different payment networks with varying speeds, costs, and requirements. In 2026, instant payment systems have transformed what's possible—many transfers that once took days now complete in seconds.
How bank transfers work
When you initiate a bank transfer, the process follows a standard pattern regardless of which system you use. You provide your bank with the recipient's details: their account number, the bank's identifier (routing number, sort code, or SWIFT code), and the amount to send.
Your bank verifies that your account has sufficient funds and authorizes the transfer. The bank then sends payment instructions through the appropriate network—ACH for US domestic transfers, SWIFT for international payments, SEPA for European transfers, and so on.
The receiving bank processes these instructions and credits the funds to the recipient's account. For batch-processed systems like ACH, this happens at scheduled intervals. For real-time systems like UPI or FedNow, settlement occurs within seconds.
Domestic bank transfers around the world
Each country has developed its own domestic payment infrastructure. Understanding these systems helps you navigate the options available when receiving payments from different regions.
ACH transfers in the United States process through the Automated Clearing House network, handling 33.6 billion payments worth $86.2 trillion in 2024. Standard ACH transfers settle within 1-2 business days. Same-Day ACH, which processed $3.2 trillion in 2024, settles within hours for transactions up to $1 million. Fees typically range from $0.20 to $1.50 per transaction, making ACH one of the most economical options for US domestic payments.
FedNow, launched by the Federal Reserve in July 2023, brings instant payments to the United States. Over 1,500 financial institutions now participate, with the transaction limit increased to $10 million in November 2025. Settlement occurs within seconds, 24 hours a day, 365 days a year.
UK Faster Payments processed 5.09 billion transactions worth £4.24 trillion in 2024. Transfers arrive within seconds and are available around the clock. The system handles payments up to £1 million, and most UK banks offer Faster Payments free to consumers. CHAPS handles larger same-day payments but costs £17-35 per transfer.
SEPA payments serve 36 European countries with standardized Euro transfers. Standard SEPA Credit Transfers arrive within one business day. SEPA Instant settles in under 10 seconds—and as of October 2025, EU regulations require all eurozone banks to offer instant payments at no additional cost compared to standard transfers.
Interac e-Transfer dominates Canadian domestic payments, processing 1.4 billion transactions in 2024. Transfers arrive within minutes using just an email address or phone number. Personal limits range from $3,000 to $10,000 depending on your bank, with most premium accounts offering free transfers.
India's UPI has become the world's largest real-time payment system, processing 172 billion transactions worth approximately $2.95 trillion in 2024. UPI alone accounts for 49% of global real-time payment transactions. The system operates 24/7, handles 85% of India's digital payment volume, and is now expanding internationally to Singapore, UAE, and other countries.
Brazil's PIX achieved the fastest adoption of any payment system in history. Launched in November 2020, it processed over 64 billion transactions in 2024. An remarkable 93% of Brazilian adults now use PIX, which is free for individuals and costs businesses just 0.33%—compared to 2.34% for credit cards.
International bank transfers and SWIFT
International transfers typically use the SWIFT network, connecting over 11,500 financial institutions across 224 countries and territories. SWIFT processed 13.4 billion messages in 2024, with 12.1% growth—the fastest in 15 years.
Traditional SWIFT transfers could take 1-5 business days, but SWIFT gpi (global payments innovation) has dramatically improved speeds. Today, 90% of cross-border payments reach the destination bank within one hour. Nearly 60% are credited to beneficiaries within 30 minutes. Over 4,450 financial institutions use gpi, processing $530 billion daily.
The challenge with international transfers remains cost. World Bank data from Q1 2025 shows that traditional bank transfers average 14.55% of the transfer amount—the highest of any transfer method. This includes visible fees and hidden costs like exchange rate markups.
For detailed guidance on receiving funds, see our guide to receiving international wire transfers.
Understanding hidden transfer charges
International transfers carry costs that aren't always obvious when you initiate the payment. Knowing these hidden charges helps you estimate the true cost of receiving money from abroad.
Exchange rate margins represent the largest hidden cost. Banks quote exchange rates that differ from the mid-market rate—the real rate you see on Google or financial news sites. This markup typically ranges from 1.5% to 4% for traditional banks. On a $10,000 payment, that's $150 to $400 lost before any other fees.
Intermediary bank fees apply when your payment passes through correspondent banks between the sending and receiving institutions. Each intermediary may deduct $15-30 from your payment. Most international transfers involve one or two intermediaries; complex routes may involve more.
Receiving bank fees vary by institution but typically range from $5-25 for incoming international wires. Some banks charge flat fees; others charge a percentage of the transfer amount.
Lifting fees occur when banks deduct charges directly from the payment amount rather than billing separately. This means the recipient receives less than the sender intended to send.
The World Bank tracks remittance costs across 365 corridors worldwide. The global average cost stands at 6.49% in early 2025—more than double the UN's 3% target. Costs vary dramatically by corridor: South Asia averages 4.8% while Sub-Saharan Africa averages 8.78%, with some African corridors exceeding 20%.
Smarter alternatives for receiving international payments
The fintech revolution has created alternatives that dramatically reduce international transfer costs. Digital-only providers now average just 3.55% in total costs—roughly 75% less than traditional banks.
Services like Wise use mid-market exchange rates with transparent, upfront fees. Payment platforms with local infrastructure can bypass SWIFT entirely for many corridors, routing payments through domestic rails instead.
Multi-currency accounts offer another powerful solution. Rather than receiving each payment via international wire, you get local account numbers in multiple countries. When a US client pays you, they send a domestic ACH transfer to your US account number. A UK client sends a Faster Payment. A European client sends a SEPA transfer. Each arrives quickly and cheaply through the local payment system.
Winvesta provides exactly this capability—global collection accounts with local US, UK, Canadian, and SEPA IBAN account numbers. Receive payments from 180 countries in over 30 currencies, then withdraw to INR in as little as one day at rates starting at $3 plus 0.99%. You eliminate the $25-50+ per transfer your clients would otherwise pay via SWIFT, making it easier for them to pay you on time.
The future of bank transfers
The global payments landscape continues evolving toward instant, low-cost transfers. Project Nexus, led by the Bank for International Settlements, aims to connect domestic instant payment systems across borders. Initial participating countries include India, Malaysia, Philippines, Singapore, and Thailand, with the European Central Bank expressing intent to join.
ISO 20022, a new messaging standard for international payments, became mandatory for SWIFT messages in November 2025. This richer data format enables faster processing, better compliance, and fewer payment errors.
The G20 has set ambitious targets for 2027: 75% of cross-border payments should reach recipients within one hour, and remittance costs should fall below 3%. While current progress falls short—only about 35% of retail payments meet the speed target and costs remain above 6%—the trajectory points toward faster, cheaper international transfers.
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial or legal advice. Winvesta makes no representations or warranties about the accuracy or suitability of the content and recommends consulting a professional before making any financial decisions.
Get paid globally. Keep more of it.
No FX markups. No GST. Funds in 1 day.
A bank transfer moves money electronically from one bank account to another. Whether you're paying suppliers, receiving payments from overseas clients, or sending money to family, understanding how bank transfers work helps you choose the fastest and most affordable option for your needs.
Bank transfers fall into two main categories: domestic transfers within the same country and international transfers across borders. Each type uses different payment networks with varying speeds, costs, and requirements. In 2026, instant payment systems have transformed what's possible—many transfers that once took days now complete in seconds.
How bank transfers work
When you initiate a bank transfer, the process follows a standard pattern regardless of which system you use. You provide your bank with the recipient's details: their account number, the bank's identifier (routing number, sort code, or SWIFT code), and the amount to send.
Your bank verifies that your account has sufficient funds and authorizes the transfer. The bank then sends payment instructions through the appropriate network—ACH for US domestic transfers, SWIFT for international payments, SEPA for European transfers, and so on.
The receiving bank processes these instructions and credits the funds to the recipient's account. For batch-processed systems like ACH, this happens at scheduled intervals. For real-time systems like UPI or FedNow, settlement occurs within seconds.
Domestic bank transfers around the world
Each country has developed its own domestic payment infrastructure. Understanding these systems helps you navigate the options available when receiving payments from different regions.
ACH transfers in the United States process through the Automated Clearing House network, handling 33.6 billion payments worth $86.2 trillion in 2024. Standard ACH transfers settle within 1-2 business days. Same-Day ACH, which processed $3.2 trillion in 2024, settles within hours for transactions up to $1 million. Fees typically range from $0.20 to $1.50 per transaction, making ACH one of the most economical options for US domestic payments.
FedNow, launched by the Federal Reserve in July 2023, brings instant payments to the United States. Over 1,500 financial institutions now participate, with the transaction limit increased to $10 million in November 2025. Settlement occurs within seconds, 24 hours a day, 365 days a year.
UK Faster Payments processed 5.09 billion transactions worth £4.24 trillion in 2024. Transfers arrive within seconds and are available around the clock. The system handles payments up to £1 million, and most UK banks offer Faster Payments free to consumers. CHAPS handles larger same-day payments but costs £17-35 per transfer.
SEPA payments serve 36 European countries with standardized Euro transfers. Standard SEPA Credit Transfers arrive within one business day. SEPA Instant settles in under 10 seconds—and as of October 2025, EU regulations require all eurozone banks to offer instant payments at no additional cost compared to standard transfers.
Interac e-Transfer dominates Canadian domestic payments, processing 1.4 billion transactions in 2024. Transfers arrive within minutes using just an email address or phone number. Personal limits range from $3,000 to $10,000 depending on your bank, with most premium accounts offering free transfers.
India's UPI has become the world's largest real-time payment system, processing 172 billion transactions worth approximately $2.95 trillion in 2024. UPI alone accounts for 49% of global real-time payment transactions. The system operates 24/7, handles 85% of India's digital payment volume, and is now expanding internationally to Singapore, UAE, and other countries.
Brazil's PIX achieved the fastest adoption of any payment system in history. Launched in November 2020, it processed over 64 billion transactions in 2024. An remarkable 93% of Brazilian adults now use PIX, which is free for individuals and costs businesses just 0.33%—compared to 2.34% for credit cards.
International bank transfers and SWIFT
International transfers typically use the SWIFT network, connecting over 11,500 financial institutions across 224 countries and territories. SWIFT processed 13.4 billion messages in 2024, with 12.1% growth—the fastest in 15 years.
Traditional SWIFT transfers could take 1-5 business days, but SWIFT gpi (global payments innovation) has dramatically improved speeds. Today, 90% of cross-border payments reach the destination bank within one hour. Nearly 60% are credited to beneficiaries within 30 minutes. Over 4,450 financial institutions use gpi, processing $530 billion daily.
The challenge with international transfers remains cost. World Bank data from Q1 2025 shows that traditional bank transfers average 14.55% of the transfer amount—the highest of any transfer method. This includes visible fees and hidden costs like exchange rate markups.
For detailed guidance on receiving funds, see our guide to receiving international wire transfers.
Understanding hidden transfer charges
International transfers carry costs that aren't always obvious when you initiate the payment. Knowing these hidden charges helps you estimate the true cost of receiving money from abroad.
Exchange rate margins represent the largest hidden cost. Banks quote exchange rates that differ from the mid-market rate—the real rate you see on Google or financial news sites. This markup typically ranges from 1.5% to 4% for traditional banks. On a $10,000 payment, that's $150 to $400 lost before any other fees.
Intermediary bank fees apply when your payment passes through correspondent banks between the sending and receiving institutions. Each intermediary may deduct $15-30 from your payment. Most international transfers involve one or two intermediaries; complex routes may involve more.
Receiving bank fees vary by institution but typically range from $5-25 for incoming international wires. Some banks charge flat fees; others charge a percentage of the transfer amount.
Lifting fees occur when banks deduct charges directly from the payment amount rather than billing separately. This means the recipient receives less than the sender intended to send.
The World Bank tracks remittance costs across 365 corridors worldwide. The global average cost stands at 6.49% in early 2025—more than double the UN's 3% target. Costs vary dramatically by corridor: South Asia averages 4.8% while Sub-Saharan Africa averages 8.78%, with some African corridors exceeding 20%.
Smarter alternatives for receiving international payments
The fintech revolution has created alternatives that dramatically reduce international transfer costs. Digital-only providers now average just 3.55% in total costs—roughly 75% less than traditional banks.
Services like Wise use mid-market exchange rates with transparent, upfront fees. Payment platforms with local infrastructure can bypass SWIFT entirely for many corridors, routing payments through domestic rails instead.
Multi-currency accounts offer another powerful solution. Rather than receiving each payment via international wire, you get local account numbers in multiple countries. When a US client pays you, they send a domestic ACH transfer to your US account number. A UK client sends a Faster Payment. A European client sends a SEPA transfer. Each arrives quickly and cheaply through the local payment system.
Winvesta provides exactly this capability—global collection accounts with local US, UK, Canadian, and SEPA IBAN account numbers. Receive payments from 180 countries in over 30 currencies, then withdraw to INR in as little as one day at rates starting at $3 plus 0.99%. You eliminate the $25-50+ per transfer your clients would otherwise pay via SWIFT, making it easier for them to pay you on time.
The future of bank transfers
The global payments landscape continues evolving toward instant, low-cost transfers. Project Nexus, led by the Bank for International Settlements, aims to connect domestic instant payment systems across borders. Initial participating countries include India, Malaysia, Philippines, Singapore, and Thailand, with the European Central Bank expressing intent to join.
ISO 20022, a new messaging standard for international payments, became mandatory for SWIFT messages in November 2025. This richer data format enables faster processing, better compliance, and fewer payment errors.
The G20 has set ambitious targets for 2027: 75% of cross-border payments should reach recipients within one hour, and remittance costs should fall below 3%. While current progress falls short—only about 35% of retail payments meet the speed target and costs remain above 6%—the trajectory points toward faster, cheaper international transfers.
Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial or legal advice. Winvesta makes no representations or warranties about the accuracy or suitability of the content and recommends consulting a professional before making any financial decisions.
Get paid globally. Keep more of it.
No FX markups. No GST. Funds in 1 day.