Money transfer and cost selection

[TheCruncher]

I have to do a significant money transfer to Thailand. It will be USD transferred from my home country to a USD account in Thailand.

My bank charges a fee of 15 Euro + 0.10% on the amount ( with a limit of 125 Euro for both fees ) + the fee for the intermediate bank they use to make the international transfer.

They say that they don't know upfront how much the correspondent bank charges in fees, but I have the choice to select Shared costs - All costs for receiver or all costs for sender.

If I select all costs for sender the cost for the correspondent bank will be 42 Euro flat, while with both other choices they can not tell me the fee upfront.

I have called the customer support line a few times, but they fail to explain what is actually meant with " correspondent" or " intermediate" bank.

So I understand that 42 Euro is an acceptable fee for the amount I will send, if I select all cost for sender, but I doubt that my bank would offer me this option if they risked to be short changed.

Can someone explain what option I should select and why?

[Sophon]

If you are transferring to your own account, you should always use the "shared" option with regards to costs. If you select that sender will pay all costs, then sending bank will do one of two things:

1. Sending bank will estimate how much the costs will be at intermediary and receiving bank, and charge you a total fee to cover those charges. Obviously, your bank doesn't want to loose money by charging you less than the actual costs, so they will be conservative and charge you more than the actual costs.
   It sounds like this is the option your bank uses.
2. Sending bank will ask intermediary bank and receiving bank to report back how much their charges are, and will then subsequently make a separate charge on sender's account. This creates more work and costs for all banks involved, and it is sender who will be paying for that (i.e. you will pay more in costs than if you had selected "shared".

Only use the "sender pays" option if it's vital that a specific amount is received on beneficiary's account such as when paying for some goods or services.

Correspondent/intermediary bank is used if sending and receiving bank don't have accounts with each other. In that case the transfer has to be covered in a third-party bank where they both hold accounts. Intermediary bank can also be used where sending bank is a small, regional bank that don't do much international business. In such a case it's cheaper for sending bank to have another bank in their country process the payment for them rather than paying themselves for the expensive infrastructure needed to be able to send international payments.

Sophon

Edit: If you are going to to multiple transfers it might be worth it opening accounts with banks in your country and/or Thailand that have Loro/Nostro (interbank) accounts with each other, so you save the correspondent bank fees.

Edited December 23, 2015 by Sophon

[Cloggie]

Please delete, wrong answer

Edited December 23, 2015 by Cloggie