Correspondent and intermediary bank fees
Why intermediary banks deduct fees, how routing decides who is in the chain, why the deductions are hard to predict, and practical ways to reduce the uncertainty.
Correspondent banks in the middle of a SWIFT wire can each deduct a handling fee before the money reaches the beneficiary, and because the sender’s bank does not control the route, the exact deductions are hard to predict.
Key points
- A payment may pass through one or more correspondent banks, each of which can charge a handling fee.
- The sender’s bank does not fully control which correspondents are used, so the deduction is often an estimate.
- Japan Post Bank discloses fixed correspondent deductions on qualifying USD ($10) and EUR (€5) receipts and warns more may apply.
- You can reduce uncertainty with a sender-pays instruction, a local-payout platform, or confirming the recipient bank’s incoming fees.
Why the fee is deducted
When your bank and the beneficiary’s bank have no direct relationship, the payment is settled through correspondent banks that hold accounts for one another. Each correspondent performs work — screening, reconciliation, onward messaging — and can charge for it, deducting the fee from the transfer before passing it on.
Because the route depends on the currency, the banks involved, and their existing relationships, the sender’s bank often cannot tell you in advance exactly how many correspondents will touch the payment or what each will take. That is why a wire can arrive a little short even when everything is correct.
Reducing the uncertainty
Some banks disclose fixed correspondent deductions. Japan Post Bank, for example, states $10 on qualifying USD receipts and €5 on qualifying EUR receipts, while warning that additional intermediary charges may still be deducted.
Practical steps: choose a sender-pays fee instruction where the invoice must arrive in full (understanding it is not an absolute guarantee); use a local-payout remittance platform that avoids the retail SWIFT chain when the corridor allows; ask the recipient’s bank about its incoming-wire fee; and, for an important payment, send a small test first and confirm the exact amount credited before sending the balance.
Who this is for
- Anyone whose wire arrived short
- People paying an invoice that must arrive in full
What this is not
- Local-payout transfers that never enter the correspondent chain
- No fee instruction fully eliminates the risk of a downstream deduction on a SWIFT wire.