Understanding what happens when you do a bank transfer

Have you ever wondered what the reason behind bank transfer processing times was? Maybe your colleague got their salary 5 hours before you did? Is their bank really faster than yours? What’s the difference between working days and business days? Why are inter-bank transfers slower?

Read on as we shed light on what really happens behind the scenes when you initiate a bank transfer.

First things first, there are two main types of bank transfers:

• Intra-bank transfers: this is when the two stakeholders in the transfer have accounts at the same bank. These are the most straightforward bank transfers for banks to handle.
• Inter-bank transfers: when the stakeholders have accounts at different banks, these transfers are called inter-bank transfers. The money has to flow from one bank to another.

Let’s dig into both kinds of transfers.

Let’s say you and your supplier both have a Qonto account. This is the ideal scenario because the funds don’t have to leave the bank.

Simply put, when you initiate an intra-bank transfer, the money stays in the same bank and just changes accounts. Thanks to that, the bank transfer happens automatically, and so, pretty much instantly.

Ever moved money from your checking account to your savings account and noticed it was instant? That’s because that kind of transfer is also an intra-bank transfer.

At Qonto, this translates to:

• you set up a transfer to your favorite supplier;
• we update the balances of both accounts in real-time:
  • we debit the amount from your account,
  • and it gets credited to your supplier’s account immediately.

When you and the person you’re transferring money to don’t have accounts in the same bank, then banks need to get in touch with each other to set up an inter-bank transfer. There are several steps to this process - that’s why it takes time.

When you initiate an inter-bank transfer, your bank first needs to send a transfer order to the transfer recipient’s bank. This transfer order usually is carried out within a business day.

Then, the recipient (i.e. the person you wanted to send money to) receives a credit notification, which confirms the money was credited to their account.

Overall, this process can take up to 3 days for some banks. So don’t worry if it takes over 24 hours for the money to arrive in your transferee’s account. That’s entirely normal and a typical timeframe for a Euro bank transfer within the SEPA zone.

Now you know what happens behind the scenes for inter-bank and intra-bank transfers. Let’s talk about the newcomer in the banking sector: instant transfers.

Instant transfers are as quick as an intra-bank transfer, regardless of which bank you and the other party belong to. With an instant SEPA transfer, you can send money to someone else in less than 10 seconds.

In addition to working in a flash, they have the added advantage of not depending on work or business days: they work every day, any time, even on a bank holiday or the weekend.

So when you’re in a pinch and really need to pay that supplier invoice on time, sending instant transfers can be useful.

They’re also included at no extra cost in your Qonto business account (the exact number of instant transfers you’re allowed depends on your plan). At Qonto, you can instantly send up to €50,000 or receive up to €100,000 via an instant transfer. Above those limits, you’ll need to go through a regular transfer instead.

What about international transfers? Do they work the same as domestic transfers? That depends on where your transfer is going or where it’s coming from.

International transfers inside the SEPA zone are the easiest to handle. That’s because the SEPA network was created for this very reason: to allow SEPA transfers to be as simple and fast as domestic transfers. As such, timeframes for SEPA transfers are the same as inter-bank domestic transfers.

Within the SEPA network, transfers are mainly in Euros and initiated across the Eurozone. Some European countries that are not part of the Eurozone also belong to SEPA, as do certain non-EU countries with special monetary agreements (such as the UK or Monaco).

Let's imagine you need to send a transfer to pay a foreign supplier outside the SEPA network. They don’t have Euros as their currency in their country, so an international transfer is needed.

Also known as a SWIFT transfer, you can initiate an international transfer directly from your Qonto account in up to 30 currencies from virtually any location in the world.

As with an inter-bank transfer inside the SEPA zone, several steps are involved. This is why an international transfer takes time. Usually, this process takes around 5 business days, giving both banks (the sender’s and the receiver’s) the necessary time to communicate and process the transfer.

Of course, bank closing times (such as weekends) and bank and public holidays can also impact the timeframe for an international bank transfer.

For instance, an international bank transfer initiated on a Friday typically takes longer to arrive than one sent out earlier on a weekday. That’s because most banks are closed on weekends, and some are also closed on Mondays, such as in France. So, overall, it is best to be prepared for a longer processing time.

Also, if your transfer recipient uses a different currency than you, banks on both ends will have to process the currency exchange, which may extend the transfer time.

Lastly, some international bank transfers are initiated via postal mail. In that case, in addition to the standard processing time, the time for mail to send out must also be accrued.

Several scenarios could be at play here.

A transfer can be delayed for various reasons.

These could be linked to:

• fraud management - sometimes banks will perform checks to verify a sender or a recipient’s identity before processing the transfer,
• possible technical issues,
• different closing times,
• and currency processing times, especially in the event of an international transfer.

The first thing to do if you’re wondering what’s going on with your transfer is to get in touch with your financial institution and ask if there’s a reason for the delay.

It could also be your transfer won’t be going through because of missing or wrongly entered the information.

Perhaps the IBAN was entered wrong, or another banking detail needs to be corrected. Or maybe, you forgot to enter your supplier’s name. That’s why the bank blocked the transfer.

The good news is that with online bank transfers, this rarely happens: you’re automatically told before the transfer goes out if one of the items entered is incorrect. In fact, you won’t be able to send out the transfer until that mistake is fixed.

With bank transfers initiated in person, at a bank, or via postal mail, however, there are no measures to flag any potential mistakes.

So, if you’ve waited a reasonable amount of time and the transfer still hasn’t arrived, get in touch with your financial institution to understand what’s happening.

There you have it. Everything about the secret lives of bank transfers: hopefully, you now understand why inter-bank and international transfers take longer than intra-bank or instant transfers.

Looking for a business account that handles transfers like a flash? Look no further: with Qonto, say bye to waiting times and hello to instant SEPA transfers.