Did You Tweet About Late Money Transfers? But Are You Sure It Wasn’t Because Of These 5 Reasons!

Online money transfer services are near perfect. However, on some occasions, money transfers may be delayed, especially if the transactions are carried out across the borders. Here are the 5 most common reasons for such delays:

1. Incomplete KYC Documentation

All over the world, financial institutions are required to adhere to the local regulations and laws of the countries they operate in. Overseas money transfer firms, in particular, have to be extra careful about their procedures to ensure that all transfers are genuine and that frauds are prevented. This is why when users sign up for a remittance service, they are asked to submit some documents so the service provider can:

• Verify the customer’s identity: Are they who they say they are?
• Check the customer’s source of funds: Are the funds traceable? If not, this may be a sign that the money is ‘black’ and that the remittance firm is being used to ‘launder’ this money. This is obviously illegal.

This verification process is known as Know Your Customer (KYC). To complete the KYC process and ensure that one’s transactions are completed, a customer may be asked to provide copies of one or more of the following documents:

• Passport
• National identification or social security number
• Bank statements
• Address proof: utility bill, phone bill, etc.
• Photographs

If the remittance firm doubts the accuracy or authenticity of any of these documents, your money transfer may be delayed while they take the time to confirm the necessary details. Finally, remittance firms like InstaReM are extra careful about maintaining on file the most recent copies of customers’ documents. If these documents have expired or are close to expiry, customers are required to share updated (or the most recent) copies.

These rules are not in place to make the money transfer process more cumbersome for customers, but to help keep their money safe and to ensure that the probability of fraudulent transactions is minimised.

2. Weekend Or Bank Holiday In The Sending Or Receiving Country

If all the documents and mandatory checks are in place, a remittance service provider would process the payment as soon as funds are received from the sender. Depending on the sending and receiving countries, a transaction can be processed as quickly as 1-3 days. This is much faster than the transaction speeds offered by traditional banks (several days to a couple of weeks). In fact, the speed of transactions is one of the biggest advantages of transferring money through an online remittance service.

However, most remittance services have a daily cut-off time. If the transfer instructions and funds are received before the cut-off time, the transaction is usually processed on the same day. However, if a customer (sender) misses the cut-off time, the transaction will be processed only on the next business day. In addition, if transfer instructions are provided just before the weekend, say on a Friday afternoon, or on the day before a bank holiday in the sending or receiving country, the processing is held back until the next working day, thus delaying the transaction.

Finally, time zones can also affect transaction times. For example, if the sender is located in the US and the beneficiary is in India, the time difference means that there is very little overlap between the 2 countries’ working hours. Therefore, the transfer request may not be processed immediately, causing delays in receipt in India.

3. Missing Or Incorrect Instructions

If the sender provides incorrect instructions or misses providing some instructions entirely, the transfer may be delayed. Even worse, the money may end up going to the wrong recipient. Tracing this money can be a complicated process. Also, reversing the transaction may not always be possible, leading to a loss for both the sender and the intended beneficiary.

What’s Holding Up Your Money Transfer? – Could Be You!

• Not providing recipient’s correct name, mobile phone number, physical address, email address, etc.
• Entering the transfer amount in an incorrect format or in the wrong currency.
• Not selecting the purpose of transfer or choosing a purpose that is not supported by the remittance firm. Not selecting the correct relationship with the beneficiary.

In addition, most remittance services will not initiate the transfer until they receive the payment from the sender. For example, if the sender is making a payment through a credit card assuming it is allowed by the service and by the laws in the sender’s country, the transfer may be delayed until the card is verified and authorised.

4. Mandatory Regulatory Checks

In addition to KYC compliance verification, the remittance company may also carry out extra checks related to anti-fraud or anti-money laundering (AML), which can also cause processing and receipt delays.

AML compliance checks may be carried out if the sender’s or beneficiary’s name has been flagged in any database. If a sender’s name is flagged, the remittance firm is not obliged to share reasons for the check or delay with them. If the beneficiary’s name is flagged, the firm may ask the sender to provide additional information to determine if it is the same person who is flagged and if the transfer is to be carried out anyway. These delays can cause some frustration at both the sender’s and receiver’s ends.

Some remittance services (for example Google Pay) put a cap on how much money can be sent or received in a particular time period (say, daily). If the sender or beneficiary has reached their limit for that period, the new transfer may be delayed until the new time period starts.

Some countries also impose minimum and/or maximum limits on inward and outward foreign currency flows. So any transfer amount that flouts this limitation (i.e. less than the minimum allowed or more than maximum allowed) is delayed and in some cases, rejected.

Yet another reason for the delay may be that the remittance provider does not deal with the destination country. Transfers may be delayed and even outright rejected if they originate, terminate or even pass through countries that are ‘blacklisted’ by the firm or its parent country. Examples include North Korea, Iran, Afghanistan, Syria, Lebanon and Iraq, among others.

5. Currencies Involved & Financial Infrastructure In Receiving Country

The banking and/or remittance infrastructure in the beneficiary’s country may not be as well-developed as the sender’s country. Therefore, it can take time for intermediary institutions (if any) to communicate with one another and for the money to reach its final destination. The number of intermediaries can also affect processing and transfer speeds: the more intermediaries there are, the longer it typically takes for a beneficiary to receive the money.

In some receiving countries, KYC norms and AML regulations may be stricter than others. This may cause payments to go through multiple rigorous checks and balances that may slow them down further.

Also, if the funds are to be received in a different currency, assuming it is allowed by the remittance service and the laws of the receiving country, than the one it’s being sent in, the currency conversion can hold up processing and receipt times.

Useful Tips: What You Can Do To Prevent Delays In Your Overseas Money Transfers

As already seen, it is usually faster and cheaper to transfer money overseas through an online remittance firm instead of through a traditional bank-to-bank transfer. Before signing up with a service, try to get some information on their average transfer time.

Many remittance firms publish this information on their websites. This will help you select the service that is most suited to your needs, especially if you’re in a rush to get your money to its destination.

Here are a few ways to prevent your overseas money transfer from being delayed:

Stop Your Money Transfers From Being Delayed

• Provide all documentation and double check the transfer instructions
• Time your transfers keeping in mind the cut-off time, weekends and holidays in the respective countries.

If your recipient has still not received the money, contact the remittance service provider. Make sure you give them all relevant information such as transaction confirmation, tracking number, etc. that can help them track the transaction and expedite it if required.

Keep in mind that some delays may be out of your control so all you or your recipient can do is wait until the transaction is completed.

Another way to ensure timely money transfers is to InstaReM it!

One of the leading remittance services in the global remittance space, InstaReM offers seamless money transfers to 55+ countries. It facilitates payments to overseas staff, freelancers and suppliers across Asia, Europe, North America and Oceania. To #DoMore with your overseas money transfers, check out InstaReM now!

Disclaimer: This guide has been designed to provide general information only. It is not intended to provide professional or legal advice to anybody considering making an overseas remittance through InstaReM. InstaReM recommends that the reader obtain advice from a specialist before taking any action(s) based on the content of this article.