A guide to bank transfers in Australia for businesses

Bank transfers are an essential part of doing business anywhere, yet entrepreneurs may not fully understand its impact on operations or profit margins. Factors like transfer times, fees, and exchange rates matter when you make frequent or high-volume payments. 

Choosing the right bank transfer method can help you send money securely and quickly while minimising fees. Keep reading to learn more about bank-to-bank transfers in Australia and how to decide which one to use for paying suppliers or employees.  

What is a bank transfer? 

A bank transfer is the electronic transfer of money from one bank account to another. It’s a broad term that covers domestic transfers, cross-border payments, and interbank transfers.  

Bank transfers provide a secure and efficient way to pay suppliers, employees, or partners. However, payments don’t always have to go through a bank. Fintechs like Airwallex are licensed to offer money transfer services, too.

Types of bank transfers in Australia: a breakdown

Australian businesses have several types of bank transfers options to choose from. Most domestic transfers can be done through NPP or OSKO. Meanwhile, international payments are sent through the SWIFT network, wire transfers, and telegraphic transfers.

Domestic vs international bank transfers: How do they work? 

Domestic and international bank transfers differ in terms of where the money is sent, and what systems are used to move it. Domestic transfers stay within the same country, while international transfers cross borders and often involve higher fees and more processing steps.

Businesses in Australia have several domestic transfer networks to choose from. These transfer methods cater to different needs for speed and transaction size, ensuring flexibility for businesses.

• NPP (New Payments Platform) launched in 2018 to enable Australians to receive real time data and faster transactions. It was designed to be Australia’s fast payments infrastructure and is operational around the clock to individuals, businesses, and government agencies. 

• OSKO offers a fast and simple way for individuals and businesses to pay each other through online banking. Typically through PAYID or BSB and account number, OSKO is used to facilitate these payments. 

Meanwhile, international bank transfers between Australia and other countries often take place on the SWIFT network. This messaging network facilitates transfers between 11,000 banks and financial institutions in 200+ countries.³ 

SWIFT doesn’t actually transfer or hold money - it works as a secure messaging system that banks use to communicate during international transfers. It ensures payment instructions are sent accurately between financial institutions to process the transaction.

Another way to send money internationally is through local payment rails like BECS in Australia, ACH in the USA, and SEPA in the European Union. These are systems that allow money to move between banks and financial institutions within a country. Using these payment rails means faster transfers and lower fees, as transfers are treated like a local transfer. Fintechs like Airwallex give businesses the option to use local payment rails instead of SWIFT.

 Why are bank transfers important?

 Bank transfers involve more than just sending money from account A to account B. They can also help protect and bolster your revenue.

• Reduced chargeback risk. In the case of a customer payment, bank transfers can’t be reversed once a customer completes them, unlike credit card payments, which come with the risk of chargebacks and high fees. If a customer is unhappy with their purchase, they need to request a refund directly from you, which lets you address the issue and‌ possibly avoid a refund. 

• Builds trust with local customers. In Australia, offering transfer types like NPP and OSKO can align with customer expectations and boosts trust. 

• Lower transaction costs. Local bank transfers often have lower processing fees compared to card payments, helping businesses save money on their payment gateway’s transaction fees. 

• Security. NPP and OSKO are regulated by the Reserve Bank of Australia (RBA) which sets strict safety and reliability standards. The RBA ensures these payment systems follow strict standards to protect against fraud and misuse. With these safety nets in place, businesses and consumers can confidently send and receive electronic payments.

Manage local and global transfers with the Airwallex Business Account

Timely and cost-effective bank transfers are critical to seamless business operations. Australia has made several advancements in creating domestic payment networks like OSKO and NPP. However, many businesses still rely on the SWIFT network for cross-border payments. 

SWIFT has long been a trusted network for international payments, but it does have some drawbacks. As we’ve covered above, transactions can get delayed due to time zone differences and the number of intermediaries involved in the process. Transfer fees can also add up and eat into your margins. 

Fortunately for Australian businesses, fintechs like Airwallex offer a cost-effective alternative to SWIFT transfers. We offer an end-to-end payment platform that enables international transfers and multi-currency payouts. Through our local transfer network, you pay zero or close to zero fees for international transfers to 120+ countries. 90% of transfers arrive on the same day.  

Traditional bank accounts like Macquarie Bank Accounts tend to apply a small charge to domestic payment methods.⁴ When you have hundreds of local employees or bills to pay, even a small fee can become a significant cost. Airwallex helps you save on domestic transfers too, with free unlimited transfers using NPP⁸. 

Frequently asked questions

1. Is telegraphic transfer the same as wire transfer?

Yes, a telegraphic transfer and a wire transfer are essentially the same thing. Both refer to the direct electronic transfer of funds between bank accounts, via a secure network managed by global financial institutions. The term “telegraphic transfer” is commonly used for international transactions, while “wire transfers” are used for both domestic and international transfers.

2. Can a wrong bank transfer be reversed?

Yes, in some cases, a bank can amend or reverse a wrong transfer for a fee.  Each financial institution has different rules for handling incorrect transfers. The sooner you report the mistake, the better your chances of cancelling or reversing the transaction.  

3. What is a Bank Identification Code (BIC)?

A Bank Identification Code (BIC) is a unique ID that identifies a specific bank during international transactions. Think of it as an address for banks to communicate securely and efficiently. BIC codes are often used interchangeably with SWIFT codes, but there’s a subtle difference.  BICs are mainly used for European banks, while SWIFT codes are used globally. Their codes are also structured differently.⁵ To avoid delays, it’s always important to double-check your recipient’s BIC code before making a transfer.

4. Is it safe to pay by bank transfer?

Paying by bank transfer is generally safe, because financial institutions in Australia use secure systems to process transactions and are regulated by the Reserve Bank of Australia (RBA). Airwallex is licensed by the Australian Securities and Investments Commission (ASIC). We keep customer funds in trusted global financial institutions and protect them according to the local regulations in each country where Airwallex operates. However, you should only transfer money to individuals or businesses you know, because it can be difficult to reverse payments. 

5. Are there bank transfer limits?

Yes, bank transfers have limits, which can vary depending on the currency and the country you’re sending to. Business accounts usually have higher limits than personal accounts, though the limits vary from fintech firm to fintech firm. For example, Wise has a US$1,000,000 limit for ACH transfers in the USA⁷, but Airwallex’s transfer limit is US$15,000,000⁸. It’s a good idea to check with your bank to know the specific limits for your transfers.

Sources

1.  https://www.swift.com/join-swift

2. https://www.tmbank.com.au/faq/banking/what-is-the-new-payments-platform 

3. https://www.auspayplus.com.au/brands/osko 

4. https://www.westpac.com.au/business-banking/online-banking/payid/ \

5. https://help.airwallex.com/hc/en-gb/articles/900001759623-Which-currencies-can-I-get-a-Global-Account-in-and-what-payments-can-I-receive

6. https://www.swift.com/standards/data-standards/bic-business-identifier-code

7. https://wise.com/help/articles/2932150/guide-to-usd-transfers

8. https://www.airwallex.com/docs/payouts__payout-network__united-states

Disclaimer: This information doesn’t take into account your objectives, financial situation, or needs. If you are a customer of Airwallex Pty Ltd (AFSL No. 487221) read the Product Disclosure Statement (PDS) for the Direct Services available here.