What it means
A business pays a foreign supplier but the supplier says the amount received is short, and the difference may be a transfer fee, intermediary deduction, receiving-bank fee or foreign-exchange conversion. These are remittance charges and related transfer costs, so identify the route and amounts before assuming the supplier made an accounting error.
Wise's SWIFT transfer documentation explains possible intermediary fees and charging arrangements, while the US Consumer Financial Protection Bureau describes disclosure requirements for covered consumer remittance transfers, which is a US consumer regime, not a universal rule for business payments. International transfers can pass through several banks: the sending bank may charge a visible fee, a correspondent bank may deduct an amount before funds reach the recipient, and the receiving bank may also charge for crediting funds, so a quote showing only the sending fee may understate total cost.
Charging codes such as OUR, SHA and BEN often describe how fees are allocated: under a typical SHA instruction the sender pays its bank's charges and the receiver bears other charges, while OUR generally aims to put charges on the sender and BEN places them on the beneficiary. Actual results depend on the network and participating banks, so a code is not an absolute promise of an exact net amount.
The invoice contract should say whether the supplier must receive the full stated amount or whether transfer charges may be deducted. If an invoice is for $10,000 and the supplier receives $9,975, the buyer may still owe $25 under some terms.
Do not resolve the dispute using the bank code alone; read the payment clauses and the evidence of actual receipt. Foreign exchange is a separate cost, because a provider can charge an explicit fee and also apply an exchange rate with a spread.
Compare the amount debited in the sending currency with the amount delivered in the receiving currency, since a "zero fee" advertisement does not by itself mean a low-cost transfer. Some providers estimate the recipient amount before sending while others cannot know every intermediary deduction, so ask whether the displayed figure is guaranteed or indicative, keep the quote, payment instruction and final receipt, and never report an estimate to a supplier as a guaranteed amount.
Timing matters if an invoice has a strict deadline. A same-day transfer may cost more and still be delayed by compliance checks or bank cutoffs, so initiate early enough for the agreed receipt date, not merely the date the sender clicks "send".
The payment reference should include invoice or order identifiers, because a supplier can receive the full funds but fail to match them to the right invoice, and before sending a second payment the sender should request confirmation and reconcile bank records. For illustration, the sender pays $10,000, the sending bank charges $15 separately, and an intermediary deducts $25.
If no other deductions or conversion occur, the recipient receives $9,975 while the sender's total outflow is $10,015, and the $40 difference comprises two different charges; confirm actual statements rather than assuming this pattern. Before sending a large payment, verify beneficiary details through a trusted channel, because a fraudulent "updated bank account" request can cause a far bigger loss than a transfer fee, and fee optimisation should never bypass payment-approval and beneficiary checks.
In practice
Real-world examples.
Example
A sending bank charges a visible $15 transfer fee on a payment to an overseas software vendor. The fee appears on the bank statement as a separate line, so finance can book it to bank charges.
Example
An intermediary bank deducts $25 before a supplier receives the payment. The supplier reports a short payment, and the buyer uses the bank trace to show where the deduction occurred.
Example
A buyer compares the delivered amount and exchange rate across providers before paying a large invoice. It finds that the provider with the lowest visible fee applied the weakest exchange rate, so the total cost was higher.
Formula
Calculation
Net received = amount sent - deductions along the route, before conversion effects. For example, $10,000 - $25 intermediary deduction = $9,975 received, and a separate $15 sender fee makes sender outflow $10,000 + $15 = $10,015. Actual routes vary.
To compare two providers on a $10,000 transfer, add every cost to the sender and subtract every deduction from the recipient. If provider A charges a $15 fee and delivers $9,975, the cost to the business is $10,015 - $9,975 = $40. If provider B charges a $30 fee but guarantees full delivery of $10,000, the sender pays $10,030 and the recipient gets $10,000, so the cost is $30 and provider B is cheaper by $10 despite the higher visible fee.Case study
Seen in the real world.
This illustrative and entirely fictional case follows Palm Imports, an invented buyer paying a supplier overseas. It sends $10,000 under a shared-charge instruction, but the supplier receives $9,975 after an intermediary deduction. Palm reviews the invoice terms and bank trace before deciding whether to top up.
The contract says the supplier must receive the full invoice value, so Palm sends the $25 difference and asks its bank to use a full-guarantee route for future payments. It also adds the invoice number to every payment reference. The case does not presume that a charge code settles the contractual balance.
Watch out
Common mistakes.
- Assuming "OUR" always guarantees the beneficiary receives exactly the invoice amount.
- Comparing providers only on the visible sending fee while ignoring exchange-rate spread and deductions.
- Writing off a short receipt without checking the supplier's contractual payment terms.
Questions
People also ask.
What are remittance charges?
Fees and deductions associated with moving money, particularly across borders.
Who pays them?
The instruction, provider route and contract determine whether sender, recipient or both bear them.
Why do invoices arrive short?
Intermediary or receiving fees and exchange conversion can reduce the net amount.
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