Transfering money to Europe. What am I not understanding?
Jul 13th, 2005, 04:40 PM
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Transfering money to Europe. What am I not understanding?
Certainly there must be Fodorites out there with an understanding of how to transfer money from the States to Europe in Euros. Evidently I am too inept to grasp the concepts involved. Please explain.
My story is that I needed to trnsfer deposit money to Holland to pay for a boat rental. The chap needed the funds in his account in Euros. I went to my tiny local bank and sent a wire order. Cost me $30 to (I thought) transfer a fixed Euro amount. The amuont depositied in his account was short of the amount required. My bank explained that the receiving bank charged a fee that came out of the amount sent.
The Dutchman explained that I should have had my bank choose the "OUR" option, (cost paid by sender) that would have the fees deducted from my account. He would add the shortage to my next installment.
My friends who are going on this trip with us said, "We will do the next transfer, as our banker does these all the time and knows just what to do". They did, and the transfer came up short again.
The Dutch chap again explained in detail how I should proceed -- in terms usually reserved for fourth graders. He said our bank must be using the SHA (Cost shared by sender and recieiver). He had never had this sort of problem with transfers from anyplace in the world, he said.
Armed with all the relevant instructions from the Netherlands, I went to the largest bank in which I have accounts and told them exactly what I wanted. Surely Bank of America would know how to proceed. They patiently explained that the kind of transfer I wanted was "impossible" because the recieveing bank would charge a fee and B of A had no way of knowing what that amount would be.
I responded that it seemed crazy to me. "Surely thousands upon thousands of international transfers happen each day and the seller expects to have the correct selling price creditied to his account in the currency of his choice, I said. I just assumed that banks were now connected electronically and if my bank wanted to know what fees applied they would JUST ASK THEM, and then debit my account appropriately".
Nope, couldn't be done.
I gave up, added an arbitrary amount to the transfer in hopes it covered the fees, and emailed my long suffering Dutch friend that if the payment was insufficient I would promise to use the old fashoned method of putting Euro notes into an envelope and sending them to him.
At the risk of sounding and feeling even stupider, what am I not understanding here?
My story is that I needed to trnsfer deposit money to Holland to pay for a boat rental. The chap needed the funds in his account in Euros. I went to my tiny local bank and sent a wire order. Cost me $30 to (I thought) transfer a fixed Euro amount. The amuont depositied in his account was short of the amount required. My bank explained that the receiving bank charged a fee that came out of the amount sent.
The Dutchman explained that I should have had my bank choose the "OUR" option, (cost paid by sender) that would have the fees deducted from my account. He would add the shortage to my next installment.
My friends who are going on this trip with us said, "We will do the next transfer, as our banker does these all the time and knows just what to do". They did, and the transfer came up short again.
The Dutch chap again explained in detail how I should proceed -- in terms usually reserved for fourth graders. He said our bank must be using the SHA (Cost shared by sender and recieiver). He had never had this sort of problem with transfers from anyplace in the world, he said.
Armed with all the relevant instructions from the Netherlands, I went to the largest bank in which I have accounts and told them exactly what I wanted. Surely Bank of America would know how to proceed. They patiently explained that the kind of transfer I wanted was "impossible" because the recieveing bank would charge a fee and B of A had no way of knowing what that amount would be.
I responded that it seemed crazy to me. "Surely thousands upon thousands of international transfers happen each day and the seller expects to have the correct selling price creditied to his account in the currency of his choice, I said. I just assumed that banks were now connected electronically and if my bank wanted to know what fees applied they would JUST ASK THEM, and then debit my account appropriately".
Nope, couldn't be done.
I gave up, added an arbitrary amount to the transfer in hopes it covered the fees, and emailed my long suffering Dutch friend that if the payment was insufficient I would promise to use the old fashoned method of putting Euro notes into an envelope and sending them to him.
At the risk of sounding and feeling even stupider, what am I not understanding here?
Jul 13th, 2005, 04:43 PM
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Couldn't you send him US dollar travelers cheques made out to him - assuming he gave you the bank rate he got for changing them maybe cheaper. Most places like this it seems should take charge cards - at least running it through as a charge but not finalizing it until you show up and giving you option of paying in Euros and not the card. I've done this many times with hotels.
Jul 13th, 2005, 04:49 PM
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A recent question that has arisen here, but with no actual experience(d) answers yet - - does the funds transfer available at xe.com help in situations like this? cost?
It's fairly new.
Best wishes,
Rex
It's fairly new.
Best wishes,
Rex
Jul 13th, 2005, 04:59 PM
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Well. I have no idea what he meant by the different kind of transfers, but I do know what happened to us.
We sent three deposits for apartment rentals to Portugal to three accounts. We sent them exactly the same way from our bank to the SWIFT account numbers the owners provided me with.
We paid exactly the same amount for the International transfer and sent $100 in each case. It cost us $17 for our bank to do the transaction
Two of the accounts said they received about E77 deposited in their accounts. In fact, one person provided me with a copy of the transfer. The third person insisted that she did not receive E77. She said that she had to pay almost E20 to her bank for them to make the deposit.
Now, why was she charged and the others not? But she insisted her bank always charges her when an international transfer is made.
They were all Portugese banks, but I don't know if they were different banks and I was not going to argue with her.
I haven't tried xe.com as Rex suggested, but I will tell you that I will never make arrangements like this again, although I was happy with two of the apartments.
We sent three deposits for apartment rentals to Portugal to three accounts. We sent them exactly the same way from our bank to the SWIFT account numbers the owners provided me with.
We paid exactly the same amount for the International transfer and sent $100 in each case. It cost us $17 for our bank to do the transaction
Two of the accounts said they received about E77 deposited in their accounts. In fact, one person provided me with a copy of the transfer. The third person insisted that she did not receive E77. She said that she had to pay almost E20 to her bank for them to make the deposit.
Now, why was she charged and the others not? But she insisted her bank always charges her when an international transfer is made.
They were all Portugese banks, but I don't know if they were different banks and I was not going to argue with her.
I haven't tried xe.com as Rex suggested, but I will tell you that I will never make arrangements like this again, although I was happy with two of the apartments.
Jul 13th, 2005, 05:40 PM
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Why not just set up a special account, get an ATM card, express the card to the guy, and let him go and draw out euro notes over there? You end up paying about 1% plus the cost of the shipment.
Sounds cheaper to me than what I am hearing.
The other option is to buy euro denominated traveler's checks. These cost about 4% to 5% over the bank wholesale rate. But they are good and safe. I have done that caper, too.
Sure beats what I am hearing.
Not every business in Europe is smart like Backroads Touring. They set up a US bank account with a little bank in Seward, Nebraska, and people paying for Backroads Tours (a UK company) sends dollars that are converted to pounds sterling at a good rate.
Sounds cheaper to me than what I am hearing.
The other option is to buy euro denominated traveler's checks. These cost about 4% to 5% over the bank wholesale rate. But they are good and safe. I have done that caper, too.
Sure beats what I am hearing.
Not every business in Europe is smart like Backroads Touring. They set up a US bank account with a little bank in Seward, Nebraska, and people paying for Backroads Tours (a UK company) sends dollars that are converted to pounds sterling at a good rate.
Jul 13th, 2005, 05:43 PM
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I just did a deposit on an apartment in Rome and the owner suggested I do it by credit card. I don't care if my card is now charging 3% to do so, it sounds like a steal compared to these other headaches.
Jul 13th, 2005, 06:06 PM
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I've sent lots of wires to different countries around the world, but not to Holland. I have never heard of "different kinds of wires", so I asked a friend who is an international banker and does this all the time, all around the world. Her answer: there is only one type of wire transfer from the US. End of story. There is no opportunity to do what your Dutch colleague says (specify the type of wire). It's impossible, at least in the US. On this point, they are wrong.
Unfortunately, it becomes difficult to untangle many of these stories, partly because
(1) your bank, doing the sending, will deduct some fees...they should be able to tell you immediately what these fees will be
(2)some banks, especially smaller banks, will use a correspondent bank as an intermediary...and these banks may help themselves to fees too! So the amount they pass on to the recipients bank may be less than you and your bank calculated. However your bank should be able to tell you ahead of time (and certainly afterwards, if worse comes to worse) what fees were deducted by the intermediary. Lesson here: inquire in advance, and if your bank is using a correspondent bank for the transfer, you may want to find a bank that is big enough to deal direct. How many hands do you want in the cookie jar?
(3) The recipient bank may charge a fee to "receive" a wire. This, of course, is rather ridiculous, but what can you do, tell the recipient to change banks?
It is normal in the business world for the recipient to absorb this cost (you got the right amount of money to the bank they instructed and they should pay fees on their own account. But for something like this (where the recipient may be doing you a favor doing business with you ) they might demand that they receive a certain number of $/Euro. That should be part of the price negotiation, and included in any contract.
And oh yes: many banks have different charges for both sending and receiving wires--typically higher for international ones.
(4) Wires from US financial institutions are in $. So there may be a currency exchange fee-- typically charged by the recipients bank. Again, subject to negotiation, but if the price was denominated in Euro...I suppose they have the right to receive Euro and you should pay, unless the negotiated contract says otherwise.
(5) Finally, there is a brief time when exchange rates could change...so between the time you calculate how many dollars to send, and the bank actually makes the exchange the rate could change. Could be in your favor, could go against you...
So as you can see, this is rather messy. Bestt thing to do is (1) understand all fees in advance, including those charged by correspondent banks and (2) hope for the best.
My guess is that your Dutch associate doesn't receive wire transfers very often-- at least from the US. So they were surprised by the fees, and someone at their bank tried to make it your fault instead of just saying "yes, we received that higher amount, but we helped ourself to a nice chunk of it, thank you very much".
Unfortunately, it becomes difficult to untangle many of these stories, partly because
(1) your bank, doing the sending, will deduct some fees...they should be able to tell you immediately what these fees will be
(2)some banks, especially smaller banks, will use a correspondent bank as an intermediary...and these banks may help themselves to fees too! So the amount they pass on to the recipients bank may be less than you and your bank calculated. However your bank should be able to tell you ahead of time (and certainly afterwards, if worse comes to worse) what fees were deducted by the intermediary. Lesson here: inquire in advance, and if your bank is using a correspondent bank for the transfer, you may want to find a bank that is big enough to deal direct. How many hands do you want in the cookie jar?
(3) The recipient bank may charge a fee to "receive" a wire. This, of course, is rather ridiculous, but what can you do, tell the recipient to change banks?
It is normal in the business world for the recipient to absorb this cost (you got the right amount of money to the bank they instructed and they should pay fees on their own account. But for something like this (where the recipient may be doing you a favor doing business with you ) they might demand that they receive a certain number of $/Euro. That should be part of the price negotiation, and included in any contract.
And oh yes: many banks have different charges for both sending and receiving wires--typically higher for international ones.
(4) Wires from US financial institutions are in $. So there may be a currency exchange fee-- typically charged by the recipients bank. Again, subject to negotiation, but if the price was denominated in Euro...I suppose they have the right to receive Euro and you should pay, unless the negotiated contract says otherwise.
(5) Finally, there is a brief time when exchange rates could change...so between the time you calculate how many dollars to send, and the bank actually makes the exchange the rate could change. Could be in your favor, could go against you...
So as you can see, this is rather messy. Bestt thing to do is (1) understand all fees in advance, including those charged by correspondent banks and (2) hope for the best.
My guess is that your Dutch associate doesn't receive wire transfers very often-- at least from the US. So they were surprised by the fees, and someone at their bank tried to make it your fault instead of just saying "yes, we received that higher amount, but we helped ourself to a nice chunk of it, thank you very much".
Jul 13th, 2005, 09:01 PM
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I thank everyone for your thoughtful replies -- even though it seems one cannot simply send a European merchant his required fee from the States in a sensible manner, even in these days of instantaneous secure electronic communication between banks.
Hell of a way to run a railroad!
:-<
Hell of a way to run a railroad!
:-<
Jul 14th, 2005, 01:00 AM
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A short explanation from Holland: on our international bank transfers to Euro-countries, the costs are automatically charged to the sender. To a recipient outside of the Eurozone, the sender chooses either "OUR" (I pay the costs), "SHA" (we share the costs) of "BEN" (the beneficiary pays the costs). If we do not specify anything, the costs are automatically shared. It's easy to see why a Dutchman receiving money would assume that "SHA" would either have been specified or used by default - even though it sounds like you don't have that option in the States.
It's very confusing and annoying that international transactions have no worldwide standard. Ridiculous that the fees are not standardized as well - if the post office can do it, why can't banks?
One suggestion (which I have yet to try): open a Paypal account (connected to your credit card) and you can send money online to anyone with an e-mail address. Does anyone out there use Paypal for deposits or travel-related payments?
It's very confusing and annoying that international transactions have no worldwide standard. Ridiculous that the fees are not standardized as well - if the post office can do it, why can't banks?
One suggestion (which I have yet to try): open a Paypal account (connected to your credit card) and you can send money online to anyone with an e-mail address. Does anyone out there use Paypal for deposits or travel-related payments?
Jul 14th, 2005, 05:34 AM
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When I asked about PayPal a couple of weeks ago here, I got the response that there is both the usual 1 to 3% or more fee from your credit card and in addition a fee from PayPal. I forget how much, but it didn't seem cheap. I was sure glad "my" apartment in Rome was set up to just take credit card direct.
Jul 14th, 2005, 06:13 AM
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Thanks Jemviolin, that's exactly the way I now understand it. Armed with the IBAN number, the Account number and the SWIFT address, supplied by the recipient, one should be able to choose the SHA option (I pay the costs) and make a transfer. I did exactly that, but American banks don't seem to be able to follow the logic.
Patrick, the credit card option or Pay Pal seem great too. Actually, for amounts under $1,000 the 3% charges for credit cards would be cheaper than the $35 that the banks charge for a wire transfer. I just wish my guy would have accepted either.
The lack of common procedures in international commerce really puzzle me. You always read in crime novels how our hero makes millions of bucks fly down the internet into multiple overseas bank accounts with the click of a key. Sounds so easy.
Sigh ---
Patrick, the credit card option or Pay Pal seem great too. Actually, for amounts under $1,000 the 3% charges for credit cards would be cheaper than the $35 that the banks charge for a wire transfer. I just wish my guy would have accepted either.
The lack of common procedures in international commerce really puzzle me. You always read in crime novels how our hero makes millions of bucks fly down the internet into multiple overseas bank accounts with the click of a key. Sounds so easy.
Sigh ---
Jul 14th, 2005, 06:40 AM
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I agree with y'all, but it is like this:
The banks don't want to agree to a standard, because they use these fees to plump up their bottom line. They won't do it like, say the post office, because those are either national government institutions or a monopoly like USPS. But with stuff like this, everyone has their hand in the cookie jar and no one wants to let go of the cookies.
I've been wondering about paypal too, but I'm not a big fan of paypal either. They are an unregulated company doing business in financial markets, but they don't have to live up to banking regulations in terms of fairness, privacy protection, etc. There are risks associated with giving them your account info and credit card numbers too. And if you don't already use them, I'm not sure I'd set up an account for one transfer.
I haven't tried this, but I wonder if an international money order might work. For some countries (Japan) the US Postal Service Money Orders work...for others you might have to use Western Union. Anyone know if a Western Union Money Order or other Western Union services might work?
The banks don't want to agree to a standard, because they use these fees to plump up their bottom line. They won't do it like, say the post office, because those are either national government institutions or a monopoly like USPS. But with stuff like this, everyone has their hand in the cookie jar and no one wants to let go of the cookies.
I've been wondering about paypal too, but I'm not a big fan of paypal either. They are an unregulated company doing business in financial markets, but they don't have to live up to banking regulations in terms of fairness, privacy protection, etc. There are risks associated with giving them your account info and credit card numbers too. And if you don't already use them, I'm not sure I'd set up an account for one transfer.
I haven't tried this, but I wonder if an international money order might work. For some countries (Japan) the US Postal Service Money Orders work...for others you might have to use Western Union. Anyone know if a Western Union Money Order or other Western Union services might work?
Jul 14th, 2005, 12:32 PM
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I'm certain if we were dealing in millions of dollars, these transfers would go smoothly. In the US, we had what were called commercial banks, and they dealt only with commercial enterprises, although they would often provide personal banking services to executives of those commercial enterprises.
I think most of us, however, are dealing with personal banks, who are often not very practiced in international transfers. Its complicated, of course, by different governmental requirements, and by banks having some freedom to offer competition. In the US, we see now that some banks offer credit cards that do not impose a fee on foreign ATM use; some impose a percentage based fee; some impose a flat fee; I'm sure some impose both.
So it really should not be a surprise that services offered in one country are not offered in another, nor that banks in the same country may or may not impose a fee on processing an international wire transfer.
I haven't yet used the services offered at xe.com, so I can't really vouch for them, but from what information they give on their web site, they would appear to have the most economical way for the tourist to do an international transfer. If anyone has actually dealt with this company, please advise how it went.
I think most of us, however, are dealing with personal banks, who are often not very practiced in international transfers. Its complicated, of course, by different governmental requirements, and by banks having some freedom to offer competition. In the US, we see now that some banks offer credit cards that do not impose a fee on foreign ATM use; some impose a percentage based fee; some impose a flat fee; I'm sure some impose both.
So it really should not be a surprise that services offered in one country are not offered in another, nor that banks in the same country may or may not impose a fee on processing an international wire transfer.
I haven't yet used the services offered at xe.com, so I can't really vouch for them, but from what information they give on their web site, they would appear to have the most economical way for the tourist to do an international transfer. If anyone has actually dealt with this company, please advise how it went.
