Beneficiaries (or recipients) of payments made by you, or your customers, may have reported deductions on USD payments sent via the SWIFT network – even when the payment charge type selected is OUR. Find out more about why this happens below.
Selecting charge type OUR usually ensures the following:
- The Payer (or sender) of the payment will bear all costs associated with the payment transaction fees. Usually, you will be billed separately for the payment transaction fees
- The Beneficiary (or recipient) of the payment will not pay any payment transaction fees
- The Beneficiary will receive the full amount of the payment
However, sometimes the beneficiary may not receive the full payment amount. This is due to the way in which payments enter the US clearing system.
What happens when payments enter the US clearing system?
The US high-value payment clearing systems are not fully optimized to receive SWIFT payments. As a result, when MT103 payments enter through the US clearing system, certain parts of the payment data can be removed (including payment charging type information relating to OUR).
The payment is then treated instead as charging option Shared (SHA). This means the US beneficiary bank and, if applicable, the correspondent bank passing the payment through to the beneficiary bank can potentially deduct processing charges from the payment amount itself.
What are the implications for USD payments?
- USD payments sent to the US
USD payments sent via the SWIFT network to a beneficiary bank in the US with the OUR charge type will always have a charge deducted from the principal amount (the amount intended for the beneficiary).
- USD payments sent outside the US
Most USD payments sent via the SWIFT network to a beneficiary bank outside the US with the OUR charge type will land in full with the beneficiary. This is due to agreements in place between our banking partner and its correspondent banking partners around the world.
However, a small proportion of payments may still have charges deducted, and this is controlled fully by the correspondent banks in the payment chain, and not by Currencycloud or our banking partner.