International Money Transfer Terms Explained

International money transfer terms at a glance

You do not need to become a banking expert before making or receiving an international payment. A handful of terms cover most of what you are likely to encounter.

The terminology can become more specific depending on the country, currency and type of payment involved. The sections below explain what these terms mean and how they relate to one another.

Understanding terms such as exchange rate and FX markup helps you see how an international payment is priced. Use the comparison below to see how different exchange rates can change the Canadian dollar cost of sending the same amount abroad.

People, banks and payment parties

What does beneficiary mean in an international money transfer?

A beneficiary is the person, business or institution intended to receive the money. This could be a family member, supplier, university, property seller, lawyer or even your own foreign bank account.

Beneficiary name

The beneficiary name is the legal name attached to the receiving bank account, such as Sarah Thompson for an individual or ABC Manufacturing Ltd. for a business.

The name should match the account details provided by the recipient. For example, if an invoice uses the trading name ABC Components but the bank account is held under ABC Manufacturing Ltd., the beneficiary name should normally reflect the legal account name supplied for the transfer.

Beneficiary account

The beneficiary account is the account where the funds are intended to arrive. Depending on the destination, this may be identified by an account number, IBAN, routing information or another country-specific banking identifier.

Beneficiary bank

The beneficiary bank is the financial institution that holds the beneficiary’s account and receives the payment on their behalf.

Sender → sending bank or payment provider → beneficiary bank → beneficiary

If another financial institution is involved between the sending and beneficiary banks, it may act as an intermediary bank.

What does intermediary bank mean?

An intermediary bank is a financial institution that helps route an international payment between the sending institution and the beneficiary bank when the payment cannot move directly between them.

This may happen when the banks do not have a direct relationship or when the transfer needs to move through a particular currency or banking network.

Canadian sender → Sending bank or payment provider → Intermediary bank → Beneficiary bank → Recipient

The sender and recipient may not deal directly with the intermediary bank. It simply forms part of the payment route.

Why are intermediary banks used?

Intermediary banks are commonly used in correspondent banking to:

• move funds between financial institutions;
• process certain currencies;
• provide access to another banking market; or
• connect banks without a direct relationship.

SWIFT's explanation of correspondent banking provides more context on how these relationships support international payments.

Can intermediary banks charge fees?

Yes. An intermediary bank may deduct a fee while processing a payment, depending on the route and fee instructions.

For example, if USD 10,000 is sent and an intermediary deducts USD 20, USD 9,980 may continue through the payment chain.

Actual charges and who pays them depend on the transfer instructions. OUR, SHA and BEN are commonly used to determine whether the sender, beneficiary or both parties bear certain intermediary bank fees.

What is the difference between an intermediary bank and a correspondent bank?

The terms intermediary bank and correspondent bank are sometimes used loosely or interchangeably, but they describe slightly different ideas.

A correspondent relationship is generally an ongoing banking arrangement. An intermediary role describes what a bank is doing within a particular payment chain. The simplest way to remember the difference is:

• Correspondent bank = relationship between banks
• Intermediary bank = role within the payment route

What does remittance mean?

A remittance is money sent from one person or organization to another, often across borders. It is commonly used for family support or wages sent home, but it can also refer more broadly to personal and certain business payments.

Remittance refers to the payment itself, while remittance advice is the information that explains what the payment is for.

What does remittance advice mean?

Remittance advice is information sent with or alongside a payment to explain what the payment is for. It is commonly used in business payments to help the recipient match incoming funds with the correct customer, invoice or account.

It may include the payer and beneficiary names, payment amount and date, invoice or customer number, payment reference, invoices being settled, and any deductions or adjustments. For example:

• Payer: Maple Components Inc.
• Beneficiary: Global Parts Ltd.
• Amount: USD 12,500
• Invoice: INV-45821
• Payment reference: INV-45821
• Payment date: September 29

The payment settles the supplier amount, while the remittance advice shows which invoice the USD 12,500 relates to.

This is particularly useful when businesses pay international invoices and need suppliers to reconcile incoming funds accurately.

Is remittance advice the same as proof of payment?

No. They are related but serve different purposes.

Imagine a company pays three invoices in one USD 50,000 transfer.

The payment confirmation shows that USD 50,000 was sent.

The remittance advice might say:

• INV-1001: USD 10,000
• INV-1002: USD 15,000
• INV-1003: USD 25,000

That makes reconciliation much easier for the recipient.

Bank account and payment identifiers

What is a SWIFT or BIC code?

A SWIFT or BIC code identifies a bank or financial institution involved in an international payment. For most payment purposes, the terms SWIFT code and BIC refer to the same type of bank identifier.

SWIFT/BIC codes usually contain 8 or 11 characters, with different sections identifying the institution, country, location and, where applicable, a branch. For example:

AAAA BB CC DDD

A SWIFT/BIC does not identify the beneficiary. It identifies the bank handling the payment.

SWIFT/BIC → identifies the bank
IBAN or account number → identifies the beneficiary’s account

Understanding this distinction helps ensure the correct bank and recipient account details are used for an international transfer..

What does IBAN mean?

IBAN stands for International Bank Account Number. It is a standardized format used to identify a specific bank account in countries that use the IBAN system.

Canada does not issue IBANs for Canadian bank accounts, but Canadians often need them when sending money to Europe, the UK, the Middle East and other participating markets. An IBAN typically includes:

• a country code;
• check digits;
• bank or branch information; and
• an account identifier.

For example, a UK IBAN begins with GB, while a UAE IBAN begins with AE. The exact length and structure vary by country. An IBAN identifies the recipient’s account, while a SWIFT/BIC identifies the bank or financial institution handling the payment.

You can read more about what an IBAN is or use an IBAN checker to confirm whether an IBAN follows the expected format.

What is the difference between IBAN and SWIFT?

The easiest distinction is:

A payment may require both. For example, when paying a supplier in Germany:

• IBAN: identifies the supplier's account
• SWIFT/BIC: identifies the bank handling the account

What does a routing number mean?

A routing number is a banking identifier used to direct payments to a particular financial institution or branch within certain domestic banking systems.

The exact terminology varies by country. Common examples include:

• ABA routing number in the US;
• sort code in the UK;
• transit number in Canada;
• BSB in Australia.

These codes are not interchangeable. For example, a Canadian transit number should not be entered where a US bank specifically asks for an ABA routing number.

Which identifier you need depends on the destination and payment instructions, so it helps to understand how routing numbers work for international transfers before entering the beneficiary's banking details.

Payment instructions and references

What is a payment reference?

A payment reference is a piece of information used to identify what a payment relates to or who it belongs to. It can be especially important when one bank account receives payments from many people. Examples include:

• invoice number;
• customer number;
• student ID;
• property reference;
• order number;
• account reference.

Imagine a university receives hundreds of tuition payments every day. Sending CAD converted to GBP to the correct bank account is only one part of the process. Including the correct student number as the payment reference helps the university apply that money to the right student's account.

What does purpose of payment mean?

The purpose of payment explains why money is being transferred. Common purposes include:

• family support;
• property purchase;
• tuition;
• supplier invoice;
• professional services;
• investment;
• mortgage payment;
• payroll;
• travel or living expenses.

Banks and payment providers may request this information for processing, record-keeping or regulatory reasons. The terminology can vary between countries. Some markets use specific payment-purpose categories or codes. For a business, the purpose could be as straightforward as:

Payment for invoice INV-2468 for machinery components

For a personal payment:

University tuition for September semester

Clear information makes the transaction easier to understand for everyone involved.

What do OUR, SHA and BEN mean?

OUR, SHA and BEN describe how certain international payment charges are allocated between the sender and beneficiary.

• OUR: The sender is intended to bear the applicable payment charges covered by the instruction.
• SHA: Charges are shared between the sender and beneficiary according to the payment route and applicable rules.
• BEN: The beneficiary bears the relevant charges, which can reduce the amount ultimately credited.

For example, if a supplier invoice is USD 25,000, a payment arriving short because bank charges were deducted along the route could leave the supplier with less than the invoice amount.

Understanding how OUR, SHA and BEN fees work can help explain why the amount received may occasionally differ from the amount originally sent.

Exchange rate and FX terminology

What is an exchange rate?

An exchange rate tells you how much one currency is worth in another currency.

For example: USD/CAD = 1.3800

means: USD 1 = CAD 1.38

If you need USD 10,000:

USD 10,000 × 1.3800 = CAD 13,800

This does not necessarily represent the final amount you would pay because the actual customer rate and any applicable fees can differ.

A currency converter can help estimate the value of one currency in another, while currency charts show how exchange rates have moved over different time periods.

What do base currency and quote currency mean?

Currency pairs contain two currencies. Take: USD/CAD

USD is the base currency.
CAD is the quote currency.

If USD/CAD is 1.3800, one unit of the base currency, USD 1, equals 1.38 units of the quote currency, CAD.

Understanding which currency is the base can make exchange-rate quotes much easier to interpret.

What does mid-market exchange rate mean?

The mid-market rate is broadly the midpoint between the price at which a currency can be bought and the price at which it can be sold in the wholesale foreign exchange market. You may also hear terms such as:

• interbank rate;
• market rate;
• reference rate.

These terms are sometimes used loosely, so they should not automatically be treated as identical in every context. The important point is that the market reference rate you see online may not be the same rate available for your actual transaction.

What does FX spread or exchange rate markup mean?

The spread is the difference between buying and selling prices in a currency market. An exchange rate markup is an amount or margin added to a reference exchange rate when a customer rate is calculated.

Suppose the market reference rate is USD/CAD 1.3800, and a customer is quoted USD/CAD 1.3950

For USD 10,000:

• At 1.3800: CAD 13,800
• At 1.3950: CAD 13,950

The difference in this simplified example is: CAD 150. That is why the exchange rate can matter just as much as a separately listed transfer fee when comparing the total cost of currency conversion.

If the payment is planned rather than immediate, a foreign exchange forecast can provide broader context on how major banks expect key currency pairs to move, although forecasts are estimates rather than guarantees.

What does spot rate mean?

A spot rate is an exchange rate for a currency transaction intended for near-term settlement, normally according to standard market settlement conventions for that currency pair.

You may hear someone say: "The spot rate for USD/CAD is 1.3800."

That refers to the current market for a standard spot transaction. It does not necessarily mean that every customer will receive exactly that rate, nor does "spot" always mean the currencies settle instantly.

What does transfer fee mean?

A transfer fee is a separately stated charge for processing or sending a payment. It may be:

• a flat amount;
• based on transaction size;
• included as part of a pricing arrangement;
• charged by more than one institution in the payment chain.

It is worth distinguishing a transfer fee from:

• exchange rate markup;
• intermediary bank fee;
• beneficiary bank charge;
• receiving fee.

A transfer advertised with a low flat fee can still have a higher overall cost if the exchange rate contains a wider markup.

Payment dates, processing and settlement

What are trade date, value date and settlement date?

In an international payment or foreign exchange transaction, the trade date is when the transaction is agreed, while the value date is the date it is scheduled to take effect for settlement. The settlement date is when the payment and currency exchange are completed according to the agreed instructions.

For example, a Canadian business may agree on Tuesday to buy EUR 100,000 with Canadian dollars for settlement on Thursday:

• Trade date: Tuesday, when the exchange rate and transaction are agreed.
• Value date: Thursday, when the transaction is scheduled to settle.
• Settlement date: Thursday, when the currencies are due to be exchanged and the payment settled.

In many FX transactions, the value date and settlement date are the same, although terminology can vary between financial institutions and payment systems.

These dates matter because they can affect when funds become available, when a recipient can expect the payment to move through the banking system, and how businesses manage supplier payments, payroll, accounting and cash flow.

What does processing mean?

Processing refers to the steps taken by a bank, payment provider or payment system to handle a transaction before it reaches its final state. A payment may show as:

• submitted;
• pending;
• processing;
• sent;
• settled;
• completed;
• returned.

The exact wording differs by provider. This is why a transfer showing as "processed" does not always mean the beneficiary has already received and been credited with the money.

What does cut-off time mean?

A cut-off time is the latest time an instruction can normally be received for processing within a particular business day or settlement cycle. If a payment misses the cut-off, it may not move until the next eligible processing day.

• Bank cut-off: 3:00 PM
• Payment submitted: 3:30 PM

The payment could effectively begin processing the following business day. Time zones, weekends and holidays in both the sending and receiving countries can also matter.

What does settlement mean?

Settlement is the completion of the financial obligation between the parties involved in a transaction. In simple terms, it is when the funds or currencies are actually delivered according to the transaction. For an FX transaction:

Agreement → processing → settlement

For a bank payment:

Payment instruction → routing → settlement or credit

Settlement is different from simply clicking "send" or submitting a transaction instruction.

Tracking and payment status

What is a UETR?

UETR stands for Unique End-to-End Transaction Reference. It is a unique reference associated with eligible SWIFT payments and can be used to identify and track an individual transaction.

Think of it as a tracking identifier for the payment. A UETR can help a sending bank or payment provider investigate:

• where the payment is;
• which institutions handled it;
• its current status;
• whether it was credited, rejected or returned.

You normally do not need to understand the technical structure of the UETR. What matters is knowing that it can be useful when a SWIFT payment needs to be traced.

If an international wire transfer has not been received, details such as the UETR, beneficiary information and transaction reference can help the sending institution investigate the payment route.

What does payment confirmation mean?

A payment confirmation is evidence that a payment instruction has been submitted, processed or sent, depending on how the provider defines the confirmation. It may show:

• transaction reference;
• sender;
• beneficiary;
• amount;
• currency;
• payment date;
• beneficiary bank;
• payment status.

A confirmation is useful for records and reconciliation, but it should not automatically be interpreted as proof that the beneficiary has already received the funds.

What does returned payment mean?

A returned payment is a transfer that could not be completed as instructed and is sent back through the payment chain. Common reasons can include:

• invalid account details;
• closed beneficiary account;
• beneficiary-name mismatch;
• unsupported currency;
• missing information;
• bank rejection;
• compliance decision.

The returned amount may also differ from the original debit if bank charges or currency conversions occurred during the process.

How do the main international payment terms fit together?

A simple example makes the terminology easier to connect.

Imagine a Canadian business needs to pay a supplier EUR 20,000.

Step 1: The payment is arranged

The Canadian company is the sender or remitter. The European supplier is the beneficiary.

Step 2: The bank details are entered

The supplier provides:

• beneficiary name;
• IBAN identifying its bank account;
• SWIFT/BIC identifying its bank;
• invoice number as the payment reference.

Step 3: Currency is exchanged

The business exchanges CAD into EUR at an agreed exchange rate. The date on which the FX transaction is due to settle is the value date.

Step 4: The money travels through the banking system

If the sending institution cannot route the funds directly to the supplier's bank, an intermediary bank may become part of the payment chain.

Step 5: The supplier receives the payment

The supplier's bank is the beneficiary bank. The Canadian business sends remittance advice explaining that the EUR 20,000 payment settles invoice INV-7825.

That one payment can involve more than a dozen banking terms, but each one describes a specific person, identifier, date or stage in the transaction.

From banking jargon to plain English

International payments can look more complicated than they really are because so much information is compressed into specialist terms, codes and dates.

A beneficiary is simply the recipient. A SWIFT code identifies a bank. An IBAN can identify an account. An intermediary bank may help connect institutions. A value date tells you when settlement is due, while remittance advice helps the recipient understand what a payment is for.

Learning the vocabulary does not change how the banking system works, but it does make payment instructions, invoices, FX quotes and transfer confirmations much easier to understand.

Once those terms make sense, preparing to send money internationally becomes much easier because you know what the different account details, references and payment instructions actually mean.

FAQs

1. What is international money transfer terminology?

International money transfer terminology refers to the banking, payment and foreign exchange terms used when money moves between countries. Common examples include beneficiary, SWIFT/BIC, IBAN, intermediary bank, value date, settlement, remittance advice and exchange rate.

2. What does beneficiary mean in a bank transfer?

A beneficiary is the person, business or institution intended to receive the money. The beneficiary's name should generally match the name held on the receiving account.

3. Is a beneficiary the same as a recipient?

In everyday international payment language, beneficiary and recipient usually refer to the party receiving the funds. "Beneficiary" is the more formal banking term.

4. What does beneficiary bank mean?

A beneficiary bank is the financial institution holding the recipient's account. It is the bank to which the payment is ultimately being directed for credit to the beneficiary.

5. What does intermediary bank mean?

An intermediary bank is a financial institution that helps route a payment between the sending institution and beneficiary bank when a direct route is not available.

6. What is the difference between an intermediary bank and a correspondent bank?

A correspondent bank generally has an ongoing banking relationship with another institution, while an intermediary bank describes a bank participating in the route of a particular payment. The terms can overlap in everyday banking language.

7. What does value date mean on an international transfer?

The value date is the date on which a payment or foreign exchange transaction becomes effective for settlement. It may be later than the day the transaction was originally arranged.

8. What does remittance advice mean?

Remittance advice is information accompanying or associated with a payment that tells the recipient what the money relates to. In business payments, it often includes the invoice number, amount and payer information.

9. Is remittance advice the same as proof of payment?

No. Remittance advice explains what a payment is for, while proof or confirmation of payment provides evidence that a transaction was initiated or processed.

10. What is the difference between an IBAN and a SWIFT code?

An IBAN identifies a particular bank account in countries that use the IBAN system, while a SWIFT/BIC code identifies the bank or financial institution involved in the payment.