International Monetary Transfers As Payments
By M. Ettisch-Enchelmaier

 

 In May 2001 there was an ongoing thread or topic on one of the email lists the writer of this essay belongs the name of which is not cited for confidential reasons. An investigator asked how to accept payment from a client in a foreign country?

The writer of this essay answered as follows:

It very much depends on WHERE his client is located and the sum involved. Cheapest manner is to get a money order in US dollar or a bank cheque in US dollar drawn on an American bank. The payers do not like this way too much since they have to pay all the fees incurring to have this order or cheque issued, but it is the cheapest way for the payée to receive the money. The money order or cheque should be sent by registered airmail.

However according to Mr. Andy Grudko [1] this is not the case in South
Africa. If one sends a cheque to South Africa there is a 70% chance it
will be intercepted and a fraud be perpetrated by the many syndicates that operate within the SA Post Office. They will take the payer's cheque reading US $70.00 and forge it to read $ 7,000.00 in their favour. Then payer will have to prove it was not his original cheque or he might lose the $ 7,000.00, which is not the easiest thing to do if at all finally successful in convincing the banks involved of the original cheque having been forged.

Mr. Grudko warns that one should never send a cheque to South Africa, but use a credit card or wire-transfer the money. Others are of the same opinion [2].

If the payer is located in Germany and the recipient in the USA, it is advisable for the latter to work out with the help of his bank how much the sum X in DM is in US dollar. However, one should take into conside-ration that there are two rates of exchange of the banks, one for cash
money and one (in German "Brief") which is used for transfer. This rate
of exchange is called he official rate of exchange fixed at the apper-
taining stock exchange. In Germany it is Frankfurt/Main.

To calculate the sum involved to be paid, the following steps should be
undertaken:

For example the sum in question is 5000 DM. At present the rate of exchange US $1.00 = 2.36 DM. By dividing 5000 DM with 2.36 =
US $2118.644067797 or a full amount of US $2119, or to round up: US $2120
as a sign of courtesy towards the recipient.

This method is good when the payment is imminent which is rare (but even
here the rate of exchange may fluctuate strongly in days).

In most instances an offer is first requested for an envisaged service or
the delivery of goods. Here the time elapsing between an offer and the final invoicing may amount from several days, more likely several weeks an months, and in quite a number of fields of activities, such as in productions of big and complex machinery, airplanes (especially options), even years may pass until the (final) invoice is compiled. In the investigative business, especially information brokers and guard services, one must issue a price list for the coming (calendar) year. In the travel industry (journeys, hostelry) or the clothing industry for instance the prices are fixed for the coming season, but in reality this means planning 1.5 years ahead in most instances.

When the time elapsing between the offer and the compilation of the service or the delivery of goods is but a few weeks or months, one may take the average rate of exchange of perhaps the past 4 months. If the time between the offer and the payment will be one year, it is advisable to consider the development of the rate of exchange in the past and what experts believe it to be in the coming months. But unluckily they are
quite often are wrong in their prognoses. The German leading airliner Lufthansa lost much money as did Volkswagen through such "options to the future".

The writer of this essay usually employs the rate of exchange of US $2.20,
especially when submitting an offer to American clients, since the US dollar fluctuates between 2.1... and 2.3... DM.

When the payment is done through a transfer the bank calculates the final rate of exchange, mostly using the last officially published rate of exchange at the stock exchange in Frankfurt. The Zurich stock exchange
or the New York counterpart may quote a different rate of exchange of the
DM to the US Dollar than to that in Frankfurt. This is due to various
factors such as the time of trading (Frankfurt as compared to New York),
the demand and the volume traded at the different stock exchanges.

The "official" rate of exchange of the past trading day is published in certain newspapers permitted to do so. Not every newspaper is granted
that privilege. The rate of exchange for the past month one may get
from the "international" department of one's bank, the same applies
to the past year's rates of exchange. However, the average rate of
exchange, most important in some instances, e.g. for the IRA (tax
authorities) the banks obtain from the "central banks" e.g. in the
USA it is the Federal Bank, in Germany the Bundesbank (soon from the European Central Bank).

A further step to be considered also in offers are the bankers' fees.
Every monetary transfer generates fees on top of the basic bank charges.

International financial transfer fees vary considerably, not only from
country to country, from bank to bank. One mode of transfer may be
cheaper than the other be it the use of a credit card, a personal or
a banker's cheque, a monetary order or normal transfer in contrast
to the S.W.I.F.T. or flash mode. For up-to-date information the payer
should to ask his bank or shop around.

The fees also depend on the amount of money to be transferred. The fees
may vary from 0 to several hundred US dollar, but mostly financial institutions ask for a minimum (flat) rate, then charge a percentage
(between 1%-3%) but may be also higher, again depending on the mode of payment and the sum involved.

To keep the transfer fees as low as possible there are several possibi-lities. If one is very active in a country, there may be the option
to open an account in that country, but here too one should shop around concerning the account running fees.

Financial institutions prefer the S.W.I.F.T. mode of transfer. S.W.I.F.T. is the abbreviation meaning "Societe for Worldwide Interbank Financial Telecommunication", working like a bank code therefore. According to the
writer's of this essay past experience proved that this mode is dearer
than that of a normal "lettre", but on June 26, 2001 an official at the
Deutsche Bank/Mannheim, International Department, maintained that this
is no longer so. It is advisable to re-check with one's own bank or
shop around.

One investigator expressed the bank charges very clearly [4]:

Beside being of the opinion that wire transfer is "the best way to
transact business", it is same day funds, i.e. cash. (NOTE: this is not
so worldwide). He relies on his fellow professionals to provide him with
the correct rate of exchange and wire US funds always. The only derogative feature is that there is usually a charge initiated by the bank transferring the funds, which reduces the amount. He states an example
of having received a wire transfer from Norway in the first half of 2001. The invoice was $400.00. He received $365.00. [Sending bank charge of $20.00 deducted a fee, and his bank deducted their fee]. In another
instance a $150.00 invoice resulted in his receiving $95.00. On large invoices one does not really care about the wire transfer fees. However,
on the "smaller jobs it hurts" he stated.

He continued in stating that a few years ago, the Citibank allowed their
customers to send and receive wires free of charge. Now, it's $20.00 out, $15.00 in. So, again, on small invoices, the creditor has to build in the
wire charges. On a large invoice he can absorb the fees. Once, on a small job from England, he told the British PI just to send him a cheque in US
funds, (NOTE: but not stating that the cheque should be drawn on a US bank
perhaps out of ignorance or that he forgot to mention it). The cheque was
to be sent to the USA via regular mail. When the US investigator deposited the cheque, there was a charge for collection of a foreign instrument. In the USA, or better said, in New York, most banks offer free checking.
They do away with the monthly charges, but charge fees for every thing,
i.e. the number of deposit slips used, the number of cheques deposited, the number of cheques written, ATM fees, copies of statements, etc. (as
do most other banks in many cases too. The banks have this formula by
which they assign dollar values to each cheque deposited, each deposit slip used, each cheque processed, etc., and then take the average monthly balance, divide it by some secret formula to arrive at a dollar amount.
If the fees are more than the dollar amount, the bank charges the difference. If, the dollar amount is in excess of the fee calculations, there is no charge. However, there is no carryover. So if the balance is $50.00 v. $25.00 in fees, they don't carry over the $25.00 to the next month. Wire charges, certified cheques and other "special services" are not included in this calculation. [4]

The American bank of the writer of this article asks for a minimum sum
of US $1,000, then there is no charges amounts of cheques handled, the
monthly balance and etc. Further details can be asked when interested.

The American investigator [4] further states that if he gets an
assignment with a nominal fee, he handles it generally as a professional
courtesy on the assumption that a favour is owed to him. The writer the
writer of this article often also acts likewise although the experience
of 30 years has taught the latter not to be too optimistic on the one
hand but on the other free of charge help has come from unexpected
sources or corners of the world.

However in May 2001 the American investigator [4] had a small assignment
for an Italian PI for whom he did 2 favours in 2000. The Italian colleague
invoiced his American counterpart with $30.00 on a simple matter, namely
for faxing a page from a telephone book. So, this assignment cost the
American investigator $50.00 with the wire fee (plus the handling: time
and expenses of the two favours a year before.

The payer may ask for a transfer using the following methods:

The most frequently used method in the business world is that everyone pays his own banker's fees. Less often it occurs that the payer pays also those of the recipient. This method is often used by private persons, e.g.
parents sending money to their offspring away in college.

Mr. Paul Albert Oostmeyer [5], another American PI stated he did several
purchases with private parties and businesses in Germany. Some were much easier than others. A book dealer in Frankfurt/Main accepted US cheques, personal or cashier's cheques with no problem. A porcelain manufacturer on the other hand insisted on funds transfer from bank to bank. However, in the latter case, a Thomas Cook cheque in DM sent directly to the manufacturer did the trick for which the payor assumed the transaction
costs.

There is a third method, very rarely used, namely that the recipient pays
all charges incurring.

Getting the money cash is an option but not a very desirable for obvious reasons: it may get in reality or "lost" to "wrong" recipients. The same
can happen to cheques. A friend or acquaintance may act as the cash
messenger or cash may be put in an envelop, a very insecure method, often
even illegal (e.g. this was the case in East Germany)

The option of a friend acting as a courier was used in times when a
payment had to be done from a country whence money to be taken out was
illegal.

Others believe that wire transferring the money is the best mode [2], [6].
When a client has access to Visa Card, Western Union etc., one may use
them, since these entities being well versed in international transfer especially within their system. The writer of this article cannot utter
an advice here since not using them.

However, Mr. Steve Rambam [3] believes that the use of a credit card seems the best route. The charge can be in the investigator's "home" currency, and the credit card also serves as proof of identity, incl. address (if verified).

The mode of payment: letting the creditor withdraw the money from the
debtor's account is of no value really in international payments.

Credit cards are in great use in the USA. Many people may have 10 or
more such tools of payment. In Europe this mode of payment is not so
frequently used, still in the age of e-commerce which dawns, the use
of VISA Card, American Express and the like will become also more
frequently used in international monetary transfer. WHY?

Again the USA are the forerunners and the suppliers of services or
products from other countries easily "copy" or adapt also that mode
of payment on their websites where their products or services are
propagated, although credit cards can be 'disputed" with a US merchant
having absolutely no recourse against a foreign bank [6].

This method is a variation of the mode to have the creditor withdraw
the money from the debtor's banking account much used WITHIN a country, e.g. for payment of utilities, newspaper subscription, health insurance
and other repetitious payments. Of course also for single payments this
method is used, but already here fraudulent deductions are done pretty
often as reported in the media, let alone it is difficult to con-
vince potential customers to supply confidential data to unknown "business
partners" who are located abroad or even overseas, thinking also of the difficulties encountered when one wants to retrieve the money: Nearly
impossible.

In Germany still in June 2001 to pay via the Internet is quite reluctantly adopted. Not only are Germany or other European countries behind the American online developments about 1-3 years [7], but a great issue is the safety of transferring private and confidential data (banking and personal) over the "unprotected" medium Internet, although suppliers maintain that their websites are safe. Reports in the media show the contrary, even the Pentagon is vulnerable to hackers.

To facilitate international transfer from bank to bank be it a savings
bank, a postal bank or a regular bank for instance, codes are of importance. Like the postal or Zip codes banks have their codes in many countries but still many countries do not yet have such, others have the bank code included in the account number. But surely more and more countries will adopt that system in due course.

Furthermore, like automobiles having plates or at least stickers showing in which country they are registered, similarly countries have their "codes", often identical with those of the automobiles. These codes are needed for the transfer. The currencies quoted are those used for international monetary transfer.

Listing per German postal bank in their sample to complete a order for a
monetary transfer:

Country Country Abbreviation Currency Bank Code
Algeria DZ DZD none
Argentina AR USD none
Austria AT EUR or ATS* yes, bank
code, 5 digits
Australia AU AUD none
Bangladesh BD USD none
Belgium BE EUR or BEF* included
Brazil BR USD none
Bulgaria BG USD or EUR none
Canada CA CAD included
Czech Republic CZ USD or EUR none
China (Mainland) CN USD none
C.I.S. RU USD or EUR none
Croatia HR USD or EUR none
Denmark DK DKK included
Egypt EG USD none
Estonia EE USD or EUR none
Finland FI EUR or FIM* included
France FR EUR or FRF* yes, code
banque/
guichet or
10 digits
Germany DE EUR or DM* yes (BLZ), 8
digits
Greece GR GRD incl.
Great Britain (UK) GB GBP yes, sort
code, 6 digits
Hong Kong HK HKD none
Hungary HU USD or EUR none
India IN INR none
Ireland IE EUR or IEP* yes, sort code,
6 digits
Israel IL USD or ILS none
Italy IT EUR or ITL* yes, codice
ABI/CAB, 9
digits
Japan JP JPY none
Latvia LV USD or EUR none
Lithuania LT USD or EUR none
Liechtenstein LI CHF yes, sic code,
5 digits
Luxemburg LU EUR or LUF* included
Malaysia MY USD or MYR none
Morocco MA MAD none
Netherlands NL EUR or NLG* included
New Zealand NZ NZD none
Norway NO NOK included
Pakistan PK USD or GBP none
Philippines PH PHP none
Poland PL USD or EUR none
Portugal PT EUR or PTE* yes, NIB code,
4 digits
Sweden SE SEK included
Switzerland CH CHF yes, sic code,
5 digits
Singapore SG SGD none
Slovakia SK USD or EUR none
Slovenia SL USD or EUR none
Spain ES EUR or ESP* yes, codigo de
banco, 8 digits
South Africa ZA ZAR none
Taiwan TW USD none
Thailand TH USD or THB none
Turkey TR TRL none
Tunisia TN TND none
United States of America US USD yes, fedwire,
chips, chips
UID

The last D in the currency often meaning $, but not always, e.g. Greece, Morocco.

* per 1.1.2002 the local currency disappears fully substituted by the EUR. It is most advisable to check with one's financial institution at the time of transfer, changes are envisaged, e.g. more countries will also
adopt the EUR.

[1] Andy Grudko in an email of June 24, 2001, http://www.grudko.com
[2] Warren Levicoff, in an email of May 23, 2001,
http://www.levicoff.com
[3] Steve Rambam in an email of May 23, 2001, http://www.pallorium.com
[4] An email of May 23, 2001 by an American investigator who wrote: "So
long as there is no reference made to me, my email address, etc., I
have, no objection. I value my anonymity. I am a private
investigator."
[5] Paul Albert Oostmeyer, in an email of May 23, 2001,
pzmeyer2@accessone.com
[6] also this investigator wanted to stay anonymous
[7] Miriam Ettisch-Enchelmaier, European Resources vs. American,
J. Culligan's Newsletter/USA, March 2001

 

7 pages, 3033 words, 14,160 signs without and 20,120 with empty spaces,
363 lines.

 

ETTISCH-ENCHELMAIER GMBH 29 years

Internationale
Wirtschaftsauskunftei
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June 26, 2001

 

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