How can I accurately anticipate wire transfer fees from intermediary banks?

Question

When sending an international wire transfer, the transmitting and receiving financial institutions both (usually) assess fees associated with the transfer. These fees can be accurately anticipated by clearly asking the banks, providing examples of dates and amounts, etc. Prior to executing a transfer, the sender is asked to approve the transaction with clear disclosure of the fees that the sender must pay to have the amount conveyed to the beneficiary.

However, the amount that the beneficiary actually gets is notably less (in examples I've heard about, about USD$65 to USD$130 less) than what should have been received after accounting for previously disclosed fees charged at both ends. Presented with the sender's receipt showing the full amount reaching the recipient, the recipient financial institution blames an unspecified intermediary or correspondent bank for taking the missing money. These intermediary fees are sometimes hefty enough that the transaction would not have been ordered if the sender had been fully informed about the costs, and in the relevant cases the sender made every effort to fully learn about the costs in order to make an informed decision about the transaction.

This violates the model of paying a supposedly-trusted pair of financial institutions a clearly discussed and disclosed fee for conveying value between parties (which, if the bank is making a profit on the fee, should also cover the costs of any service providers these financial institutions choose to work with to deliver the service; banks may choose to lower or waive fees as a convenience to customers so as to incentivize customers to generally keep deposits with them where the bank can earn interest on lending those deposits). If they cannot be trusted to deliver the full amount, but instead keep an unpredictable portion along the way, the customers might prefer to choose alternative means of transacting.

What can a sender do to find out about these extra fees, in advance of having to pay them?

For this question, it's OK to assume the sender has an honest and completely cooperative beneficiary.

Answer 1

For what it is worth, my experience with OFX between USA and Japan has been that they will give that disclaimer about possibly end and intermediary fees, but in 5 transfers to 4 different banks, no extra fee/charges were made even at the destination bank.

This actually causes a different type of problem, since the recipient (a business) is expecting an exact amount and has to show the bank the bill/reason for receiving funds from the USA due to tighter banking restrictions.

So even though tacking on an extra 2500Yen (OFX actually suggested 2200Yen) doesn't sound like a big deal, it is not the amount that matters, it is that the documentation does not match the amount actually received.

TLDR again, the terminology used by OFX and other sites as well as experience is that this is not a predictable amount. How you try to deal with it is up to you (send more or send exact and be ready to deal with the consequences).

Answer 2

Your question asks how to prove a negative, and that's not possible.

The assumption that there are 'extra' fees popping up is based on rumors, and probably incorrect. Yes, it is sometimes difficult to find all fees listed in the fine print of the bank's fee schedules, but it is not impossible; and banks don't change their fee schedule five seconds after you send a wire, just to get you.

I have sent dozens of international wires between several major US banks and varying European banks, and have rarely encountered any surprise fees (and they were my fault, for not reading the fee schedule). For example, JPMorgan Chase and Bank of America do not charge more than the ~40$ flat they list in their fee schedule (for online submittal - in person or on the phone is higher).

One important point is to chose 'SPLIT' for the fees, meaning that each bank takes their fee themselves; that is typically cheapest, as they are both locked to their fee schedule. If you chose either bank to handle all fees, they likely take a huge chunk, pay the remote fees, and keep the rest 'for their efforts'.

Another critical thing to watch for is the currency conversion - most banks are eager to convert for you, and use an 'adjusted' conversion ratio, which gives them a painful chunk of your money. Read both banks' details about it, before you decide.
My experience is that it is best to let the receiver do the currency conversion and get the exact market exchange ratio, with no fees at all; but that might not apply to all cases.

Here a list of potential fees (read the fee schedule to find if either bank has them, and how much they are):

• sending bank's 'outgoing wire transfer fee'. Varies probably depending on how you request it, online typical cheapest.
• receiving bank's 'incoming wire transfer fee'. Can be even zero, should be generally lower than the outgoing fee.
• currency conversion fee. Typically, higher at the sending bank, often zero at the receiving bank. This is the worst piece for large amounts of money, because it is a percentage, not a flat amount.
• intermediary bank's 'handling fee'. If either of the banks has no international presence/activity, it will need to use an intermediary, and they take a fee (worst case, both sides need one, so two fees). I have seen 20$ for this, but it could be anything. This part is hardest to know upfront, as the sending bank won't tell you whom they work with, and they often have no idea what it will cost - it doesn't matter to them. This fee can be avoided by using larger banks.

Answer 3

Here is the answer I've received from one of the major international money transfer services in reply to my question about intermediary fees.

Depending on what route the payment takes and the relationship between the correspondent banks, an intermediary bank and/or the receiving bank may deduct a fee from the payment amount, prior to crediting funds to the beneficiary account. This fee can vary in amount and we cannot predict whether it will occur or, if it does, what amount will be deducted.

This is not a comprehensive answer to your question, just an anecdotal one, but maybe it can shed some light nonetheless.