International payments
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Why the same payment takes one day to Germany and three weeks to Dakar
Why a cross-border payment takes one day to one market and three weeks to another — correspondent chains, risk appetite and exchange controls, and the five questions to ask before entering a market.
Antoine Potier
A finance team sends two transfers on the same morning, from the same account, for a similar amount. The one to Germany settles the next day, at no visible cost. The one to Senegal takes three weeks and, once every deduction is counted, costs more than four per cent. Same company, same bank, same instruction.
This comes up in almost every conversation we have with finance directors of internationally active companies. It is usually presented as a pricing problem. It is not. It is a routing problem, and the price is only what the routing leaves behind.
The chain nobody shows you
A domestic euro transfer inside SEPA is a single hop. Your bank and the beneficiary’s bank are both in the same scheme, settlement is standardised, and the amount that arrives is the amount that left.
A transfer to a market your bank does not serve directly is something else entirely. It travels through correspondent banks: an intermediary that holds an account with your bank, another that holds an account with the beneficiary’s bank, sometimes a third in between. Each link in that chain applies its own charges, deducts them from the principal, and passes the remainder on. Add a lifting fee, add a conversion at a rate nobody quoted you in advance, and the beneficiary receives an amount that can only be established after the fact.
For a one-off payment, that is an irritation. For a subsidiary with fixed monthly obligations — payroll, local suppliers, rent — funds landing somewhere between day eight and day twelve, for an amount known only on arrival, is not a treasury process. It is a monthly improvisation.
Risk appetite is applied before your file is read
The second reason is less mechanical and harder to argue with. Correspondent banks have spent fifteen years reducing their exposure to markets they consider difficult to supervise. Whole regions have seen their correspondent relationships thin out. What remains is fewer institutions, applying stricter filters, for less commercial upside.
The practical consequence for a company is that a payment can be delayed, returned or declined on a jurisdiction filter alone, before anyone has looked at what the payment is for. And because the reason is rarely stated, the finance team is left resubmitting the same instruction with slightly different wording, hoping something changes.
The question is never whether your payment is legitimate. It is whether anyone in the chain has an interest in taking the time to establish that it is.
Exchange control turns every transfer into a file
Then there are markets where the currency is not freely convertible and inbound or outbound flows require documentation approved locally: the underlying contract, the invoice, the purpose of payment, sometimes a prior authorisation. None of it is unreasonable. But if nobody in the chain has done it before, every monthly transfer is treated as a bespoke case, assembled from scratch, and the delay is the assembly, not the settlement.
Five questions worth asking before you commit to a market
Most of the difficulty we see could have been anticipated before the first invoice was issued. Before a company opens a subsidiary, signs a distributor or takes on a client in an unfamiliar market, five questions are usually enough to know what it is walking into.
Is the currency freely convertible? If not, assume documentation requirements and a settlement window measured in days, not hours.
Who produces the exchange-control file, and how long does it take? The answer determines whether you have a process or a monthly negotiation.
Does my bank hold a direct relationship in that market, or is it routing through two or three correspondents? Ask explicitly. The answer is rarely volunteered.
Can I know the landed amount before execution? If the answer is no, you are not paying a fee, you are accepting an unknown.
Has anyone at my provider actually executed this corridor? Not the country — the corridor, in this direction, in this currency, for a company of this profile.
None of these questions require specialist knowledge to ask. They do require asking them of someone who has an answer, which is often not the relationship manager at the incumbent bank — not through any failing of theirs, but because the bank’s model was never built for these flows in the first place.
