Who Took a Bite off my Money?

Many years ago transferring money from the US to Israel was a real adventure. Foreign exchange was closely supervised, and Israeli citizens faced many restrictions on holding foreign currency.  The best way to transfer money from the US to Israel was through carrying a stash of $100 bills in your pocket. But today, in a world of global economies, interlinked financial markets and the Internet, one would think that transferring money between countries would be straightforward. Well, almost…

When we visited Israel last fall, we decided to financially prepare for the upcoming move back to Israel. I visited our local bank - ‘Israel Discount Bank’ – and asked about ways to transfer money from the US to Israel. “Not a problem,” was the clerk’s answer. “Simply open a foreign currency account and provide the SWIFT routing information to your US bank”.

SWIFT, or the ‘Society for Worldwide Interbank Financial Telecommunication’, operates a worldwide financial messaging network which exchanges messages between banks and other financial institutions. Simply put, it is an electronic network for transferring funds between banks. Sounds cool. Kind of a banks’ Internet.

I opened a foreign currency account and received the SWIFT code for it. With that, I confidently marched into my local Wells Fargo bank branch in Cupertino, California. I was referred to a “client relationship” manager who seemed quite puzzled by the concept of foreign transfer and SWIFT codes. He was rescued by the branch manager who referred him to a set of agreements I needed to fill for a “recurring telephone transfer”.

“Telephone transfer?” I asked. “I was thinking more along the lines of using a web interface to initiate a transfer using my SWIFT code… “. The branch manager smiled and said “Sorry, but we do not have an online tool for foreign transfer. You’ll have to do it by phone. Just fill in the papers and you will be contacted shortly with a secret transfer code.”

Well, it took almost two months and numerous inquiries on my part before the “secret code” arrived in the mail. By the time I received it we were already in Israel, so I decided to put the system immediately to the test.

Both my Israeli and US banks informed me that a “small service fee” would be involved in doing the transfer. Even so, an electronic transfer sounded more compelling than stashing dollar bills in my pocket. I called the telephone number provided by Wells Fargo and punched in my secret code and the amount of money desired. I was then prompted for the “transfer number”, which is not something I was aware of. With the quick help of a rep, I was told what my transfer number is and completed the transaction.

Wells Fargo was quick to deduct the transferred sum from my account and charge me $15 for the transaction. “Not too bad” I thought to myself. All that’s left is to wait and see if the money will show up on the Israeli end. Sure enough, I got a call from Israel Discount Bank the very next day. “We have some money for you that just arrived, what should I do with it?” asked the clerk on the phone. “How about depositing it into my foreign exchange account?” I replied. “By the way, how much money arrived?” I asked. The clerk read the sum to me over the phone. “Wait,” I said, “there’s $26 missing!” After a short pause, the clerk replied, “We must have taken our fair share of it”.

You’ve got to be kidding, I thought. I understand fees, but taking a bite off my money – that’s way too much! I stormed into the local branch office the next day. “I expected to see the exact sum of money deposited into my account! Look at my US bank – they deducted the precise amount I requested and listed the transfer fee separately. Why can’t you do the same? This is unacceptable!”

The clerk was a bit shaken, and immediately called the international transfer center. They instructed her how to print the SWIFT transaction. A few minutes later, I had the full transcript in my hands. “See here,” she said, “we deposited into your Israeli account the exact sum we received from the US, and charged you $35 for the transaction. If you follow the SWIFT record, you’ll notice that Wells Fargo used Standard Chartered Bank in New York to send the money. Standard Chartered as an intermediary deducted $26 from the amount. Must have been their fees”.

My attempt to teach the Israeli banking system a lesson was quickly diffused. It seemed like the culprit who took a bite off my money was comfortably sitting in New York. “Thank you very much” I smiled and apologized to the clerk. “I will call the US tonight and sort it out”.

That night I called Wells Fargo and asked to speak with a transfer rep. I asked her if she could explain the missing $26… “Please hold and let me speak to my supervisor” was the answer. After a few minutes, she came back and said: “I’m sorry for having you wait… I spoke to my supervisor and we could certainly investigate the reason for the missing $26. I do need to inform you that the fee for such investigation is $25”.

With the SWIFT transcript provided by my Israeli bank I really didn’t feel I should pay Wells Fargo another $25 to get an answer I already knew. Having already paid $15+$26+$35 to the banks along the way seemed quite enough… I found the last piece of the puzzle was found on the Wells Fargo ‘Consumer Account Fees Information’. On wire transfer fees, it stated that: ”Third parties and other banks may impose additional charges for wire transfers”.

So there you go. Electronic transfer works quite swiftly. But in exchange for relieving you off carrying $100 bills in your pocket, banks do charge “small fees” - long live the international banking system!