Nigerian banks / SWIFT / TELEX / Costs
Very often we get the question if we can provide a telex copy or a SWIFT telex and 99.9% of the time that question comes from a Nigerian bank.
The problem is, there is no such thing as a SWIFT Telex. Telex does exist, at least it did until 1973.
The only thing we will ever be able to provide you with is a payment transcript.
Here is some information / explanation about the how and why:
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication and is was founded in 1973 to replace the telex system.
Telex was both slow and unsafe. SWIFT provides a secure network that allows more than 10,000 financial institutions in 212 different countries to send and receive information about financial transactions to each other. Not only banks, but also by money brokers, security broker dealers, non-bank financial institutions and so on.
The SWIFT network doesn’t actually transfer funds, but instead it sends payment orders between institutions’ accounts, using SWIFT codes. It was SWIFT that standardised IBAN (International Bank Account Numbers) and BIC (Bank Identifier Codes) formats. SWIFT owns and administers the BIC system, meaning that it can quickly identify a bank and send a payment there securely.
On the consumer end, you can think of the SWIFT network a bit like travelling from one airport to another. It’s not always possible to take a direct flight. Which means you may need to travel from one city to another via several connecting flights. SWIFT works essentially the same way. Your money will travel from one country to another, but to do that there are often intermediary/correspondent banks involved.
As long as your bank is affiliated with SWIFT, then the network can be used to securely communicate a payment order and get your money from one place to another.
So let's put this all together:
1. No one in the modern financial world uses Telex anymore, that system was replaced almost 50 years ago.
2. Both Telex and SWIFT are systems used to exchange information between financial institutions and not by the account holders.
3. A SWIFT Telex does not exist, they are 2 different financial systems
So why do Nigerian banks ask for a Telex?
Most likely because they did not invest in upgrading their financial systems. They must be connected to the financial world around them, so they do have a BIC and a license to receive the funds, but their internal systems are still partly Telex based.
Also they still seem to live in the past for another thing: thinking that an account holder can just walk into his bank and request a Telex copy.
Well back in the past, so before 1973 in the 50's and 60's, compared to today, there were very little international financial transactions. Nothing was digital and there were bank branches everywhere. Telex was extremely slow so it could take ages and it was unsafe, things would go wrong and the money could easily disappear (or be intercepted by someone else). So back in those days, yes, you could walk into the bank and a very nice bank official would be happy to give you the details.
The situation today in Europe: everything is digital, first there were ATM machines everywhere were you could get your money. Lot of bank branches were closed. Now even those ATM's disappear more and more. You load money onto your smartphone and pay for your groceries or your train ticket by holding your phone next to a scanner. They use IBAN for transfering money within almost every country in Europe, completely free of charge. If you transfer money to someone in your own country online, even if it is not the same bank, it is not only free, but real time, split second.
Bank branches are being closed down more and more, those nice personal officials for something simple as a transfer, they don't even exist anymore, everything is done online and digital.
So not only the system changed from Telex to SWIFT, but also it is 100% based on exchanging information between banks and not you and me as account holders. All an account holder can do is download a copy of the transaction from their onw bank account: a payment transcript.
So what about the costs?
As a consumer, you should be aware of a few things.
Fees are often levied by correspondent and recipient banks If your SWIFT transfer involves 2 currencies, banks often apply poor exchange rates and pocket the difference SWIFT transfers can take up to 5 working days in some instances
If you’re sending money through SWIFT, it can be quite pricey, especially for smaller amounts of money. And, as noted, if your SWIFT transaction will need to go through intermediary banks, each of them normally will levy their own fee. Though most banks will give you the ability to choose whether you, the recipient, or a combination of both foot the bill for these additional fees, the costs can still add up.
On top of that, if your money will need to be exchanged for another currency, banks can add their own spread (profit) to the rate they offer you.
The sender of the money has nothing to do with any of this. The sender will just fill in the details of the beneficiary in his bank application, fill in the amount and press the send button. Recipient and amount will be registered in the bank account and that is it. The whole SWIFT process which then will start is not visible to the sender, that is between all involved financial parties.
Of course out of all the financial transactions done worldwide daily, smaller amounts are just a small percentage of the total. The SWIFT system is designed to make it faster and safe, but because of that, different parties are involved and they don't work for free. And of course that requires a certain kind of minimum fee. And there lays the problem.
From a bank's perspective the fees are not that high. The amounts are too small. Most online work is not highly paid to begin with and most operators are in need of money all the time and want to be paid as fast as possible. If you follow our blog, you will see people asking if we can't lower the pay out, you will never see someone asking if we can't higher it. While in fact every operator would be better of when we would higher it, for instance to 250. Not only that would lower your costs relatively to the paid amount, but also you would get paid less often and therefore have less transactions and less costs to begin with.
There simply is no good solution for paying small amounts business wise yet. Companies like Payoneer / Transferwise are very fraud sensitive. Not in a way their systems are not safe, but in the way they attract fraud. People use it to fraud with it. So they freeze accounts or get limited by governments and close down Euro options, payment methods and so on, because they too are supervised by, and bound to, follow rules of central banks and the international financial laws and rules.
However there are some new initiatives around the world in several countries to pay directly from consumer to consumer, like Tikkie in The Netherlands, without using a bank (you can pay directly from friend to friend or even set up something to buy a birthday present for someone and let your friends join in and 'donate' what they want) those can only be used within the same country still and are smartphone contact based. Maybe, in the future, this will evolve into newer safer systems, where people can sent money directly online around the world, but until that day, this is what it is.
Note: If you've read all of the above, you will now understand why bank costs are what they are and also that your bank should not even need a payment transcript from you (nor a telex or anything else) to begon with. They are supposed to have their own system to read and recognize the incoming funds based on all the tracking information from the SWIFT system. You've also noticed that an international SWIFT payment can easily take up to 5 working days BEFORE it is processed and CAN be read and recognized and processed by your bank. So even if you need the payment transcript, you can not request it until at least 8 days after your payment confirmation date (start counting next day is 1 day, weekend is 2 days + 5 working days, if there are any holidays involved (on either side) you need to add those days as well). Next to that, Nigerian banks in general are not exactly the fastest most organized in the world, so advisable is asking for you payment transcript in case your money is still not in after 2 weeks. Please be aware that some banks / branches simply won't do anything until you tell them money should be in, but if you notify your bank about that, it is really of no use to do that the very next day after your payment confirmation. They will tell you they need a telex copy, simply because that is their standard reply. They don't see incoming funds because you asked them about it before it even CAN be in. Waste of time and energy.
The problem is, there is no such thing as a SWIFT Telex. Telex does exist, at least it did until 1973.
The only thing we will ever be able to provide you with is a payment transcript.
Here is some information / explanation about the how and why:
SWIFT stands for the Society for Worldwide Interbank Financial Telecommunication and is was founded in 1973 to replace the telex system.
Telex was both slow and unsafe. SWIFT provides a secure network that allows more than 10,000 financial institutions in 212 different countries to send and receive information about financial transactions to each other. Not only banks, but also by money brokers, security broker dealers, non-bank financial institutions and so on.
The SWIFT network doesn’t actually transfer funds, but instead it sends payment orders between institutions’ accounts, using SWIFT codes. It was SWIFT that standardised IBAN (International Bank Account Numbers) and BIC (Bank Identifier Codes) formats. SWIFT owns and administers the BIC system, meaning that it can quickly identify a bank and send a payment there securely.
On the consumer end, you can think of the SWIFT network a bit like travelling from one airport to another. It’s not always possible to take a direct flight. Which means you may need to travel from one city to another via several connecting flights. SWIFT works essentially the same way. Your money will travel from one country to another, but to do that there are often intermediary/correspondent banks involved.
As long as your bank is affiliated with SWIFT, then the network can be used to securely communicate a payment order and get your money from one place to another.
So let's put this all together:
1. No one in the modern financial world uses Telex anymore, that system was replaced almost 50 years ago.
2. Both Telex and SWIFT are systems used to exchange information between financial institutions and not by the account holders.
3. A SWIFT Telex does not exist, they are 2 different financial systems
So why do Nigerian banks ask for a Telex?
Most likely because they did not invest in upgrading their financial systems. They must be connected to the financial world around them, so they do have a BIC and a license to receive the funds, but their internal systems are still partly Telex based.
Also they still seem to live in the past for another thing: thinking that an account holder can just walk into his bank and request a Telex copy.
Well back in the past, so before 1973 in the 50's and 60's, compared to today, there were very little international financial transactions. Nothing was digital and there were bank branches everywhere. Telex was extremely slow so it could take ages and it was unsafe, things would go wrong and the money could easily disappear (or be intercepted by someone else). So back in those days, yes, you could walk into the bank and a very nice bank official would be happy to give you the details.
The situation today in Europe: everything is digital, first there were ATM machines everywhere were you could get your money. Lot of bank branches were closed. Now even those ATM's disappear more and more. You load money onto your smartphone and pay for your groceries or your train ticket by holding your phone next to a scanner. They use IBAN for transfering money within almost every country in Europe, completely free of charge. If you transfer money to someone in your own country online, even if it is not the same bank, it is not only free, but real time, split second.
Bank branches are being closed down more and more, those nice personal officials for something simple as a transfer, they don't even exist anymore, everything is done online and digital.
So not only the system changed from Telex to SWIFT, but also it is 100% based on exchanging information between banks and not you and me as account holders. All an account holder can do is download a copy of the transaction from their onw bank account: a payment transcript.
So what about the costs?
As a consumer, you should be aware of a few things.
Fees are often levied by correspondent and recipient banks If your SWIFT transfer involves 2 currencies, banks often apply poor exchange rates and pocket the difference SWIFT transfers can take up to 5 working days in some instances
If you’re sending money through SWIFT, it can be quite pricey, especially for smaller amounts of money. And, as noted, if your SWIFT transaction will need to go through intermediary banks, each of them normally will levy their own fee. Though most banks will give you the ability to choose whether you, the recipient, or a combination of both foot the bill for these additional fees, the costs can still add up.
On top of that, if your money will need to be exchanged for another currency, banks can add their own spread (profit) to the rate they offer you.
The sender of the money has nothing to do with any of this. The sender will just fill in the details of the beneficiary in his bank application, fill in the amount and press the send button. Recipient and amount will be registered in the bank account and that is it. The whole SWIFT process which then will start is not visible to the sender, that is between all involved financial parties.
Of course out of all the financial transactions done worldwide daily, smaller amounts are just a small percentage of the total. The SWIFT system is designed to make it faster and safe, but because of that, different parties are involved and they don't work for free. And of course that requires a certain kind of minimum fee. And there lays the problem.
From a bank's perspective the fees are not that high. The amounts are too small. Most online work is not highly paid to begin with and most operators are in need of money all the time and want to be paid as fast as possible. If you follow our blog, you will see people asking if we can't lower the pay out, you will never see someone asking if we can't higher it. While in fact every operator would be better of when we would higher it, for instance to 250. Not only that would lower your costs relatively to the paid amount, but also you would get paid less often and therefore have less transactions and less costs to begin with.
There simply is no good solution for paying small amounts business wise yet. Companies like Payoneer / Transferwise are very fraud sensitive. Not in a way their systems are not safe, but in the way they attract fraud. People use it to fraud with it. So they freeze accounts or get limited by governments and close down Euro options, payment methods and so on, because they too are supervised by, and bound to, follow rules of central banks and the international financial laws and rules.
However there are some new initiatives around the world in several countries to pay directly from consumer to consumer, like Tikkie in The Netherlands, without using a bank (you can pay directly from friend to friend or even set up something to buy a birthday present for someone and let your friends join in and 'donate' what they want) those can only be used within the same country still and are smartphone contact based. Maybe, in the future, this will evolve into newer safer systems, where people can sent money directly online around the world, but until that day, this is what it is.
Note: If you've read all of the above, you will now understand why bank costs are what they are and also that your bank should not even need a payment transcript from you (nor a telex or anything else) to begon with. They are supposed to have their own system to read and recognize the incoming funds based on all the tracking information from the SWIFT system. You've also noticed that an international SWIFT payment can easily take up to 5 working days BEFORE it is processed and CAN be read and recognized and processed by your bank. So even if you need the payment transcript, you can not request it until at least 8 days after your payment confirmation date (start counting next day is 1 day, weekend is 2 days + 5 working days, if there are any holidays involved (on either side) you need to add those days as well). Next to that, Nigerian banks in general are not exactly the fastest most organized in the world, so advisable is asking for you payment transcript in case your money is still not in after 2 weeks. Please be aware that some banks / branches simply won't do anything until you tell them money should be in, but if you notify your bank about that, it is really of no use to do that the very next day after your payment confirmation. They will tell you they need a telex copy, simply because that is their standard reply. They don't see incoming funds because you asked them about it before it even CAN be in. Waste of time and energy.
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