How Do Bank Transfers Work? What Should Businesses Know?

Bank transfers are considered one of the most secure and cost-effective ways to accept payments. However, every business has experienced a settlement delay, or worse, a payment failure, due to incorrect payment details, which is why bank transfers can also sometimes be slow and unpredictable.

When done right, bank transfers are among the most reliable ways to accept payments directly from customers’ bank accounts.

What is a bank transfer?

A bank transfer, also known as a wire transfer, is a payment method that electronically moves money from one bank account to another.

Bank transfers can happen:

• Between two accounts at the same bank
• Between accounts at different banks
• Within the same country (domestic transfers)
• Across different countries (international transfers).

To initiate a bank transfer, either online (via a banking platform or mobile application) or offline (at a bank branch), the sender must provide specific details such as the recipient’s name, account number or IBAN, and Bank Identification Code (BIC).

Businesses use bank transfers for various purposes, such as receiving payments from customers, paying for services, or paying employees.

What are the different types of bank transfers?

Financial institutions classify bank transfers in several ways. Based on who initiates the payment, bank transfers can be:

• Debit transfers: The payee initiates the transfer after the account holder authorises the merchant to withdraw funds from their bank account. Businesses commonly use debit transfers for recurring bills, subscriptions, or automated payments.
• Credit transfers: The payer initiates the transfer by instructing their bank to send funds from their account to the recipient’s account. Organisations commonly use credit transfers for payroll, supplier payments, or one-time transfers.
• Bank redirects: A business authorises a third-party processor to redirect the customers to the service’s online banking interface to complete the payment. Companies commonly use bank redirect for online bill payments, e-commerce, and account-to-account payments.

Based on where the money is sent, bank transfers can be:

• Domestic bank transfers: Move funds between the sender’s and recipient’s bank accounts within the same country
• International bank transfers: Move funds between bank accounts in different countries and often involve currency conversion.

How do bank transfers work?

How long do bank transfers take?

Bank transfers can take from a few minutes to several days to settle, depending on factors such as whether it is a domestic or international payment, the payment network involved, and the payment method.

Domestic transfers usually settle faster than international transfers. If both the sender and recipient use the same bank, the funds can sometimes arrive the same day because the bank is moving funds within its own ledger. When a transfer is made between different banks via a clearing system, settlement typically occurs within one to three business days.

International transfers usually rely on global networks such as SWIFT, which connect banks worldwide and involve additional processing steps. In most cases, international bank transfers settle within one to five business days.

Banks process transfers only on business days. Transfers initiated late on a Friday may not start processing until Monday. Additionally, weekends and public holidays can add one to two days or more to settlement timelines for both domestic and international transfers.

Are bank transfers better than card payments?

Bank transfers and card payments work in very different ways, and these differences influence costs, speed, reliability, and the customer experience.

Though card payments tend to be faster at checkout, they’re more expensive and prone to chargebacks. In contrast, bank transfers are usually cheaper and more secure.

Pros of bank transfers:

Helps avoid chargebacks

Unlike card payments, most bank transfers don’t support chargebacks. If a customer is dissatisfied with a purchase, they must contact the business directly to request a refund.

Chargeback is a type of payment reversal initiated by a customer through their issuing bank. When a chargeback occurs, the issuing bank temporarily or permanently removes funds from the business’s account while it reviews the dispute.

Many companies incur chargeback fees and higher fraud ratios, which affect their relationships with payment providers and, in worst cases, lead to higher credit card processing fees or account restrictions.

This makes bank transfers especially valuable for companies that process high-value transactions, manage recurring payments, or serve B2B clients.

Offer greater security

To complete a bank transfer, users must:

• Log in to their bank account using secure credentials
• Pass authentication checks, such as passwords, one-time passwords (OTPs), or multi-factor authentication
• Send funds directly from their bank account rather than sharing payment details with third parties.

Sensitive information, such as card numbers, is not exposed or stored, resulting in a lower risk of data theft during a bank transfer. Banks also continuously monitor transfers for suspicious activity and apply anti-money laundering (AML) and know-your-customer (KYC) controls before and after processing transactions. These measures make bank transfers more secure than many other payment methods.

Improves conversion rates

Customers’ payment preferences vary by location and banking habits. The more payment methods a business offers, the more customers they’re likely to convert and retain.

By accepting bank transfers in addition to cards and other methods, businesses can:

• Cater to customers who prefer paying directly from their bank account
• Reach users who hesitate to share card details online
• Support higher-value purchases where bank transfers feel more secure.

Additionally, in markets where businesses compete on features, payment methods can serve as a competitive edge.

Cons of bank transfers:

Higher risk of errors

With bank transfers, the payer is responsible for entering details such as the account number or IBAN, the bank code, the routing number, and the transfer amount. So, there are chances that customers:

• Enter an incorrect amount
• Not include invoice or reference numbers
• Make partial or duplicate payments by mistake.

Even minor errors can cause payment delays, payment failures, or funds being sent to the wrong account. Correcting these mistakes often requires manual intervention by banks, which can disrupt cash flow and reconciliation.

For businesses processing large volumes of transfers or managing cross-border payments, these errors can increase operational workload, generate customer support queries, and slow settlement.

Higher chances of delays

Unlike card payments, which are authorised in real time, bank transfers often depend on:

• Bank cut-off times
• Business hours (banks don’t process transfers on weekends or public holidays)
• Batch processing rather than instant settlement
• Intermediary banks for cross-border transfers
• Compliance and fraud checks.

As a result, a transfer that is initiated today may not be processed until the next business day, and international transfers can take several business days to complete. Any missing information, incorrect details, or additional compliance reviews can further slow the process.

How does Unlimit make bank transfers less challenging?

Unlimit helps businesses simplify payment acceptance through a unified platform that supports bank transfers alongside other payment methods across global markets. Instead of relying on fragmented systems or local workarounds, businesses can leverage Unlimit to:

• Reduce checkout friction and improve conversion rates by accepting more than 1,000 payment methods
• Operate confidently in regulated markets, leveraging our local licenses in more than 200 locations across the EU, India, Africa, LATAM, and APAC
• Minimise errors, reduce delays, and simplify reconciliation by streamlining payment initiation, processing, and settlement
• Predict costs and protect margins with transparent pricing and no hidden fees
• Protect the business and customer trust with top-tier security–PCI DSS compliance, encryption, tokenisation, and advanced fraud detection
• Scale confidently with flexible solutions that adapt to new markets, evolving regulations, and changing customer needs.

Get in touch with Unlimit’s team to explore how we can simplify bank transfers and help you accept payments confidently across markets.

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