Payment on account abroad and how to cancel it

Foreign SWIFT and SEPA payment

A foreign payment is not so different from a traditional one. The main difference is that you need to provide some extra information and pay a fee. The amount depends on where you send the payment or where you receive it from. The so-called SWIFT payment is used for international payments. But if you need to make a payment in euros within the European Economic Area, you can use SEPA payment. This has a number of advantages over the traditional international SWIFT payment :

• Lower cost: SEPA payments are usually cheaper than traditional international SWIFT payments. Some banks even offer SEPA payments with no fees.
• Speed: SEPA payments are processed faster than traditional international payments. They are usually processed within one working day.
• Security: SEPA payments use advanced security protocols and standards to help protect you against fraud and unauthorised transactions.

Mandatory components of a payment abroad

A payment abroad must contain the classic details as any other payment. But in addition, it must also contain other details specific to foreign payments. For a SWIFT payment, you must not miss the IBAN and the SWIFT/BIC code, whereas for a SEPA payment, the IBAN is sufficient. Let’s take a look at what these abbreviations mean.

IBAN

IBAN, or International Bank Account Number, is a standardized international account number format designed to improve the accuracy of money transfers across borders. IBAN facilitates and automates the processing of international payments by reducing errors in entering account numbers.

IBAN structure:

• Country: The first two letters in the IBAN represent the ISO country code (e.g. CZ for the Czech Republic, DE for Germany).
• Check digits: The next two digits are check digits that help verify the integrity of the entire account number.
• BBAN (Basic Bank Account Number). In addition, it may include other identifiers that help identify a particular account within a given bank.

SWIFT/BIC code

The SWIFT/BIC code is a standardised international code used to identify banks and their branches in international financial transactions. The acronym SWIFT stands for “Society for Worldwide Interbank Financial Telecommunication”, which is the name of the organisation that provides a global network for financial communication between banks and other financial institutions. BIC stands for ‘Bank Identifier Code’ and thus refers to the code itself used to uniquely identify the bank receiving the payment.

SWIFT/BIC code structure:

• Bank code: the first four characters are letters that identify the bank.
• Country code: The following two letters represent the ISO country code (for example, CZ for the Czech Republic).
• Place: The next two letters or numbers identify the city where the bank is located.
• Branch: The last three characters, which may be numbers or letters, are optional and are used to specify the specific branch of the bank (if not specified, “XXX” is used to indicate the bank’s main head office).

PayPal as an alternative to direct bill payment

In addition to direct bill payment, there are other alternatives to make a foreign payment. One of the most common alternatives is to use PayPal. This is an electronic payment service that allows users to make online transactions. The service basically works like a digital wallet where you store your bank or credit card details and then use it to pay for goods and services online or to receive money, including foreign payments. It offers a number of advantages over SWIFT and SEPO payments:

• Speed of transaction: PayPal payments are often processed almost instantly, whereas international SWIFT transfers can take several working days.
• Convenience and simplicity: PayPal allows you to send money using only the recipient’s email address or phone number, eliminating the need to know bank details such as IBAN or SWIFT code.
• Protection: PayPal provides strong security measures, including protection against fraud and unauthorised transactions. In addition, PayPal offers buyer protection, which can help you get a refund if you purchased an item that wasn’t delivered or didn’t match the description.
• Global Reach: PayPal offers a wide reach with transaction support in over 200 countries and multiple currencies, making it easy to buy and sell internationally.

How to cancel a payment

Whichever way you choose to make a foreign payment, you may make a mistake. For example, you send a higher amount than you intended or you mix up one number in the recipient’s bank account. So how do I cancel the payment in this case?

First of all, contact the bank from which you sent the payment as soon as possible. It is usually possible to cancel a payment before the due date of the payment order you entered. In some cases, however, cancellation is also possible after the due date. However, you should take into account that you will probably only have a few minutes, or at most hours, to do this. At the same time, it should be mentioned that cancellation of payment is usually subject to a fee.

If the money has already left, there is still hope. In this case, you need to work with your bank to send a reminder to the payee to return the money. They are obliged to return the money to you. However, it is possible that this will not happen. In this case, you should contact your bank again, which must give you the identification details of the owner of the account.

This will enable you to contact the account holder yourself and, in the event of non-cooperation, send them a pre-action notice and, if necessary, take legal action for unjust enrichment. The good news is that in most cases, the pre-action notice alone will work and if it doesn’t, it will ensure that you will most likely succeed in court.

Unknown payment on account

It’s possible that you may find yourself on the other side of the barricade and an unknown payment lands on your account. At this point, it’s not a time to celebrate, but to immediately return it to the account it was sent from. If you keep the money, you will have been unjustly enriched. Otherwise, you could face legal action and interest.

Summary

Thanks to modern payment methods such as SWIFT and SEPA, cross-border payments are an efficient and secure way to send money across borders. However, it’s important to remember that in the event of a payment error, it’s important to act quickly and work with your bank to take matters into your own hands if necessary. However, you are never without options and with legal help you can handle anything.