A bank transfer is a way to pass money from one bank account to another. In simple terms this is when you ask your bank to send a stipulated amount from one account to another account. It is also a faster form of transaction than using a bank draft.
What is a bank transfer?
The person who requests the transfer is the payer whilst the one receiving it is the payee and the bank doing the transfer is the payment services provider. The latter can be a credit institution, payment institution or an electronic money institution.
How does it work?
A transfer can be done over the counter of an institution, by telephone, via home-banking (internet banking) or any other platform made available by your bank or financial institution.
The access via home-banking (internet banking) would only be made available if you previously requested it to the bank and if the bank had agreed to provide you the same.
Are there any charges?
Charges vary with different forms of transactions and may also vary amongst institutions depending on the way the transfer has been requested. The receiving bank may also charge a fee for incoming payments. You are likely to pay lower charges if you order a transfer through the bank’s internet banking service. Higher charges may be applicable if you order a transfer through a bank branch. You may find more information on the charges of the institutions in their respective websites or public facilities.
Do you know?
Your bank must charge you the same fee for payments in euro across the European Union as it does for equivalent transactions carried out in Malta. This includes:
- Transfers between bank accounts in different EU countries
- Withdrawals from ATMs in EU countries
- Payments by debit or debit card across the EU
- Direct debit transactions
Bank Draft
A bank draft, also called a bank cheque, is a payment instrument that involves a document issued by a bank guaranteeing that the amount stated on the draft will be paid to the recipient of that draft.
It is used as a type of cheque which is more reliable and secure than a personal cheque as it is endorsed by the bank itself on behalf of the payer, ensuring that the person receiving it will receive the money.
How does it work?
To obtain a bank draft you should go to your bank, and after processing your request and carrying out some necessary checks will issue it.
First, the bank will check your account to make sure the funds are available for transfer. Having verified this, the bank will transfer the money from your account to the bank. This is what makes this payment instrument more reliable than other forms of payment as the bank already has the money that will be paid out and the document is backed by a financial institution.
The draft is then issued and handed to you. Afterwards you can deliver it to the seller or recipient.
When is a bank draft used?
The bank draft can be used in foreign countries to make a payment or close a transaction. You can have one prepared in the currency of your choice.
On the other hand, the person who’s being paid by bank draft can deposit it at any financial institution, exactly as if it were cash. Since the funds have been guaranteed by the issuing bank, the payee (person or entity receiving the draft) is sure to receive the money indicated in the draft.
Can I stop a bank transfer?
If you change your mind and decide not to buy the item in question, or the seller decides to call off the transaction, you can have the bank draft refunded to you. To do this you should simply visit your bank with the unused bank draft.
What currency is used to transfer funds in the EU?
All banks throughout the EU (including Malta), are obliged to process transfers in Euro and EEA* currencies at the latest by the end of the next business day at no additional costs. This also applies if you are sending/receiving payments from or to an account held with a bank in the EEA*. If your request is made through a bank branch (rather than electronically through internet banking), the bank may delay the process by a further one (1) day.
*The European Economic Area (EEA) includes EU countries, and also Iceland, Liechtenstein and Norway. It allows them to be part of the EU’s single market.
Safe Transfer of Funds
What do I need to look out for to ensure a safe transfer of funds?
When requesting a transfer, you would need to indicate the following:
- the amount in the currency of the transfer;
- the name and the IBAN (International Bank Account Number) of the beneficiary;
- the bank account details of any correspondent bank, if applicable;
- the purpose for which payment is being made;
- the subject for the payment is stated.
Are there any charges involved in case of an error?
Your institution may charge you additional fees if you do not provide a correct or full IBAN. Compensation may be payable if the institution of your choice does not keep to its stipulated time limits or does not comply with the instructions it receives.
Always ask the institution for more information.
What do I need to watch out for when transferring funds?
The institution is only obliged to process a payment on the basis of your instructions. It will NOT verify if the beneficiary is genuine. Once the transfer is processed, your bank will not be able to amend your instructions or cancel/reverse the transfer.
Receiving money from abroad
Depending on the bank of your choice, you may be charged a flat fee (depending on the amount you receive) or a percentage of the amount received, subject to a minimum or a maximum threshold. Some banks may not charge you if the amount is below a certain amount.
What do I need to know and check for when receiving money from abroad?
- Keep in mind that if funds are credited in an account of a different currency, the bank will apply an exchange rate to convert the amount.
- If you are expecting a payment from abroad, you should provide the sender of the funds with:
- Your details (name and address);
- Complete and correct name of your bank (and branch, where applicable);
- Your IBAN (International Banking Account Number). It is likely that these details are already printed on your bank account statements but if in doubt, check with your bank;
- Amount in the currency of the transfer.
Understanding your bank’s list of charges
When sending money by bank transfer, you will be charged either a flat fee or a percentage of the amount, subject to a minimum or a maximum.
What type of charges are they?
You should always check about such fees prior to committing yourself to the service, either directly with your bank or through its tariff of charges.
Other additional charges may also apply:
- other transmission charges: usually a flat fee which is usually applied when sending payment in particular currencies;
- same day value payments: usually a flat fee if you wish funds to arrive on the same day when the bank remits them;
- Non Straight-Through-Processing (STP): usually a flat fee is added when you do not provide your bank with the IBAN and BIC.
Keep in mind that:
- if you choose to pay all fees yourself (“OUR”), any fees charged by the beneficiary bank will be debited from your account. Your bank might not be able to tell you how much such fees could amount to at the time of the transfer.
- if for any reason funds are returned to you, you might incur exchange charges if funds may need to be converted to the original currency. Make sure you discuss this with your bank.
SEPA
The Single Euro Payments Area (SEPA) is an initiative of the European banking and payments industry in order to allow customers to make payments in Euro throughout Europe as easily as they do within their own countries.
Where is SEPA available?
SEPA eliminates the differences when dealing with national and European payments.
Besides the countries in the Euro area it also allows for non-Euro European countries to apply the Regulation to their national currency. To-date, it applies for Sweden and Romania.
Under SEPA, when you make a cross-border payment in euros, Romanian lei and Swedish krona within the EU, your bank can’t charge you more than it would for an equivalent national transaction. Even banks based in EU countries outside the euro area must apply this rule.
What type of transactions are available?
The transactions included are:
- transfers between bank accounts in different EU countries;
- withdrawals from cash machines/ATMs in EU countries;
- payments by debit or credit card across the EU;
- direct debit transactions.
Example: if your bank charges you 1 EUR each time you withdraw money in your home country from a cash machine outside your bank network, they must charge you the same amount when you make a withdrawal in another EU country.
A SEPA payment would therefore be national or international payment, for which the account of the remitter (the person sending the money, the sender) and of the beneficiary (the person who is receiving the money) are held in one of the 28 EU Countries or in Norway, Iceland, Liechtenstein, Switzerland and Monaco (all SEPA countries) and is denominated in euro, Swedish krona or Romanian lei.
What other requirements are needed?
Other requirements for SEPA transactions are:
- payments must meet the STP (Straight-Through Processing) criteria. This means that the payment instructions must contain the IBAN of the beneficiary bank;
- all transactions shall use the shared (SHA) charging option. This means that the Remitter pays his/her bank charges and the Beneficiary pays his/her bank charges;
- Transfers in euro and EEA currencies shall be processed at the least by the end of the next business day at no additional costs. If the transaction is made through a bank branch (rather than electronically through internet banking, where available), the bank may delay the process by a further one day;
- Banks of beneficiaries of funds shall value date and make available the amount of the payment transaction to the payee’s payment account at least by the following day after they received the funds in good order (i.e. processed using correct IBAN and on SHARE basis).
IBAN
What is an IBAN?
The IBAN (International Bank Account Number) is a code attributed to every bank account to identify it in national or international payments. It is created having as basis the BBAN (Basic Bank Account Number) adopted in each country, preceded by the respective country code and 2 digits of control.
As an example, in Malta it is made up of 31 characters: the first two are always the letters MT, which stand for Malta, followed by 84 and the BBAN. In Germany it is made of 22 characters and the first four are always the letters DE (Deutschland) and the digits 89.
Is the IBAN number the same as the account number?
The IBAN does not replace the account number given to you by your bank. It is a way of representing your bank’s account number in an internationally recognised standard format.
Where can I locate my IBAN?
You can locate your bank’s IBAN (as well as your BIC – see below) on your account statement. Contact your bank if you cannot locate your IBAN. Some banks’ websites offer the facility to generate your IBAN online. You should quote your IBAN in any correspondence and invoices especially when expecting payments from other banks. Providing your bank’s BIC is optional for payments in euro. Providing the BIC for other currencies (such as GBP sterling) remains mandatory.
An IBAN generated by a local bank is made up of 31 alphanumeric characters. It will split as in the following example:
| Country Code | Check No. | Bank and Sort Code | Account Number |
| MT | 84 | MALT01100 | 0012345MTLCAST001S |
Therefore, the number you should look for on your statement should look something like this: MT84MALT011000012345MTLCAST001S.
You can find additional information on the Malta Bankers’ Association website.
What is BIC?
BIC (Bank Identifier Code), or the SWIFT code, is made up of both letters and numbers and helps to identify one bank from another. Providing your bank’s BIC is optional for payments in euro but for other currencies (such as GBP sterling) it remains mandatory. For a comprehensive list of BICs of banks authorised in Malta and abroad you can refer to the BIC Code Search website. The website requires you to choose the country in order to see the list of the entities authorised and then obtain the relevant BIC Code.
