Bank transfers in US dollars (USD) are the basis for countless transactions across the globe—and an important part of modern finance. The ability to transfer money swiftly and securely in a widely accepted and stable currency such as USD helps support international commerce by connecting far-flung economies and regions. USD bank transfers support both domestic transactions within the United States and international remittances, where USD often serves as the preferred currency for cross-border transactions between family members. The reliability of USD bank transfers have made them a fixture of global financial exchanges, facilitating trade, investment, and personal financial management.

For businesses, the stakes around USD bank transfers are high. This guide will cover what businesses need to know about USD bank transfers: how they work, who uses them and why, and what the requirements are to accept USD bank transfers as a payment method.

What’s in this article?

• How do USD bank transfers work?
  
• Where are USD bank transfers used?
  
• Who uses USD bank transfers?
  
• How are USD bank transfers used?
  
• Benefits of accepting USD bank transfers
  
• USD bank transfer security measures
  
• Business requirements for accepting USD bank transfers
  

How do USD bank transfers work?

There are four main types of USD bank transfers: Automated Clearing House (ACH) transfers, wire transfers, bank-to-bank transfers, and international transfers. While all four involve moving USD from one bank account to another, each suits a specific need. Low-cost ACH transfers are frequently used for routine payments, while more expensive, faster wire transfers are typically used for urgent or large transactions. Bank-to-bank transfers offer convenience and security for both intra and interbank transactions, while international transfers facilitate global financial interactions. The four main types of USD bank transfers are outlined below.

• Automated Clearing House (ACH) transfers: ACH transfers move funds electronically between bank accounts in the US through the Automated Clearing House network. These transfers are a popular method for domestic money transfers in the US and are typically used for regular, recurring payments such as payroll, direct deposits, and bill payments. ACH transfers usually take two to three business days and have the lowest fees, making them the most cost-effective method. To initiate an ACH transfer, the initiating bank sends a request to the ACH network, which verifies the account information and routing numbers, deducts the funds from the sender’s account, and deposits the funds into the recipient’s account.

• Wire transfers: Wire transfers are a faster method of transferring funds, and they are often used for larger or more urgent transactions such as real estate purchases, car loans, or immediate financial needs. Typically, funds arrive in the recipient’s account the same day—and sometimes within hours. This type of electronic funds transfer usually comes with higher fees compared to ACH transfers, and charges can vary based on the transfer amount and level of urgency. To initiate a wire transfer, the sender provides their bank with recipient details and the transaction amount. The bank verifies this information and sends a message to the recipient’s bank through a network such as SWIFT (Society for Worldwide Interbank Financial Telecommunication), at which point the recipient’s bank moves the funds into their account.

• Bank-to-bank transfers: Bank-to-bank transfers are transfers between accounts within the same banking institution or at different banks. They are a convenient way to move money between personal accounts or accounts held with different institutions, and they can be conducted online or in person. These transfers are usually processed within the same day or by the next business day. Fees can vary depending on the banks involved and the transfer amount, though typically they are more affordable than wire transfers. These transfers are started when the initiating bank processes the transfer request through internal systems or a network such as Fedwire, after which the receiving bank deposits the funds into the designated account.

• International transfers: An international transfer is when USD is sent from a US bank account to an account in another country. These transfers—which often involve currency exchange—are a common way for individuals to send money to family or friends abroad, make overseas investments, or settle international business transactions. Usually, international transfers are more expensive than domestic transfers due to currency exchange fees and intermediary bank charges. International transfers are started when the initiating bank verifies the recipient information and currency exchange rates, converts the funds to the receiving currency, and sends the funds to the recipient’s bank via a network such as SWIFT. The recipient’s bank then credits the funds to their account.

Where are USD bank transfers used?

USD bank transfers are a popular payment method globally. The emergence of digital technologies such as digital wallets and online banking platforms has led to a reduction in USD transfer fees and has made these transfers more accessible. Stricter regulations aimed at combating money laundering and financial crime have also impacted USD bank transfer’s usage by increasing compliance costs for banks involved in USD transfers. The prevalence of USD transfers in developed and emerging markets is outlined below.

Developed markets

As of 2021, the US dollar accounted for about 40% of cross-border SWIFT flows, according to the International Monetary Fund. This dominance comes from the currency’s status as the world’s primary reserve currency and its integral role in global finance. In the UK and EU, international transactions are often carried out in USD: a 2022 Bank of England report found that the US dollar was the most traded currency in the UK market that year, with nearly 91% of all trades using USD on at least one side of the trade.

Emerging markets

The need for a stable and reliable currency drives the use of USD bank transfers in emerging markets. Remittances sent in USD play a major role, too. In 2023, India received $125 billion in remittances, and Mexico received $67 billion in remittances, according to the Migration Data Portal, reflecting the enduring appeal of USD in these markets.

Who uses USD bank transfers?

USD bank transfers are a major pillar of international finance, facilitating trade, investment, and personal transactions across the globe. This payment method’s primary users and use cases are outlined below.

• Multinational corporations: These entities rely on USD transfers for transferring funds between subsidiaries in different countries, paying suppliers and receiving payments from customers for international trade, and investing in foreign assets and managing global portfolios.

• Financial institutions: These institutions use USD transfers for initiating and receiving USD transfers on behalf of their clients and buying and selling currencies, both to meet client demand and for speculative purposes.

• Import and export businesses: These businesses use USD transfers for paying international suppliers and receiving payments from overseas customers.

• Ecommerce platforms: These platforms use USD transfers for facilitating transactions between sellers and buyers in different countries, and settling payments with suppliers and vendors located abroad.

• Travel and tourism companies: These companies use USD transfers for paying hotels, airlines, and other travel-related vendors located abroad. They also provide prepaid travel cards and other financial services to international travelers.

• High-net-worth individuals: These individuals use USD transfers to invest in international assets such as stocks, bonds, and real estate, and they buy luxury goods and real estate in other countries.

• Expats and migrant workers: These individuals use USD transfers to support families and dependents in their home countries, and they invest their earnings in USD-denominated accounts.

• International students and families: These individuals use USD transfers for covering the cost of tuition and other educational expenses at international universities.

• Freelancers and remote workers: These individuals use USD transfers for receiving payments from international clients and contributing to USD-denominated accounts for savings and investments.

How are USD bank transfers used?

• Cross-border payments: USD transfers are the dominant method for transferring funds internationally. Total global payments are expected to grow from $190 trillion in 2023 to $290 trillion by 2030.

• International trade settlements: USD is the preferred currency for settling global trade transactions. About half of global trade is invoiced in USD as of 2022.

• Foreign exchange transactions: USD is the most traded currency in the daily foreign exchange market, with nearly 90% of global foreign exchange transactions involving USD as of 2022.

• Investment and asset management: USD is a key currency for foreign direct investment. The US recorded $5.25 trillion in foreign direct investment in 2022.

• Financial aid and remittances: USD transfers are an important tool for supporting individuals and families across borders. Global remittance flows reached $860 billion in 2023.

Benefits of accepting USD bank transfers

USD bank transfers are a catalyst for growth, expansion, and international relationship-building. Here’s a closer look at the benefits businesses may see from working with USD bank transfers.

• Easier cross-border transactions: USD transfers are a standardized and efficient method for exchanging funds across borders because they eliminate the need to navigate different currencies and regulations. Businesses can rely on a single, familiar system for sending and receiving payments, streamlining their international operations.

• Improved cash flow: USD bank transfers have faster transfer speeds compared to traditional methods such as checks or letters of credit, allowing businesses to manage their cash flow more effectively. This improved liquidity enables businesses to capitalize on opportunities and react quickly to market changes.

• Enhanced transparency: Secure tracking features and detailed transaction reports provide businesses with greater transparency and control over their international finances. This enables informed decision-making and minimizes the risk of fraud or errors.

• Expanded market reach: As the world’s most widely used reserve currency, USD is readily accepted by businesses and individuals in virtually every country. Businesses that accept USD bank transfers can expand their market reach and attract customers globally by offering a familiar payment option capable of cross-border transactions.

• Reduced transaction costs: USD bank transfers have competitive fees compared to other international payment methods, particularly for large transactions. This translates to cost savings and improved profitability for businesses.

• Enhanced security and reliability: USD transfers employ strong security features and fraud prevention measures, ensuring the safe and reliable movement of funds.

• International investment capability: USD transfers allow businesses to invest in opportunities around the world, diversifying their portfolios and mitigating risks associated with overexposure to a single market.

• Global asset management: Businesses can leverage USD transfers to efficiently manage their global assets—including real estate holdings, intellectual property, and other investments—which allows for centralized control and coordinated investment strategies.

• Access to international capital markets: USD bank transfers provide businesses with access to international capital markets, where they can raise funds for expansion, acquisitions, or other strategic initiatives. This access to capital fuels growth and can facilitate ambitious business goals.

• International partnership opportunities: The secure and standardized nature of USD transfers builds trust and transparency between businesses located in different countries, facilitating collaboration and enabling businesses to leverage global expertise and resources to achieve their objectives.

• Supply chain support: USD transfers allow goods and services to flow smoothly across international borders, minimizing disruptions and delays in supply chains and contributing to business continuity and profitability.

USD bank transfer security measures

USD bank transfers come with a suite of security measures designed to protect both sender and recipient. These measures are key to preserving the integrity and safety of financial transactions. USD bank transfers include the following technical security features.

Secure key management

• Hardware security modules (HSMs): Tamper-resistant devices store encryption keys, preventing unauthorized access.

• Regular key rotation: Encryption keys are updated regularly to maintain security and prevent breaches.

• Multisignature key management: For added control, multiple authorized individuals must approve key usage.

Data encryption

• Tokenization: Sensitive information, such as account numbers, is replaced with tokens—minimizing exposure risk in the event of data breaches.

• Homomorphic encryption: Computations can be performed on encrypted data without decryption, ensuring data privacy during transactions.

• Quantum-resistant algorithms: Encryption algorithms are evolving to be resistant to future quantum computing threats.

Network security

• Secure communication protocols (TLS 1.3): Encrypted envelopes are used for data transmission, preventing eavesdropping and tampering.

• Zero trust network access (ZTNA): Access to sensitive data is granted based on need, minimizing the attack surface and restricting unauthorized access.

• Segmentation and firewalls: Bank networks are segmented and assigned varying security levels and firewalls that filter traffic for enhanced protection.

Vulnerability management

• Penetration testing: Regular scans identify and address vulnerabilities in systems before attackers can exploit them.

• Security information and event management (SIEM): Security logs are analyzed to detect suspicious activity and identify potential threats.

• Threat intelligence: Threat intelligence feeds are leveraged to anticipate and adapt to evolving cyber threats.

Blockchain technology

• Distributed ledger technology (DLT): Shared ledgers provide a transparent and secure way to record financial transactions, improving auditability and traceability.

• Smart contracts: Automated contracts execute specific actions based on predefined conditions, eliminating manual intervention and reducing human error.

Business requirements for accepting USD bank transfers

Businesses that want to use USD bank transfers must meet certain requirements. As a baseline requirement, businesses that conduct USD bank transfers must comply with all relevant financial regulations specific to their jurisdiction and industry, including Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations governing customer identification and transaction recordkeeping. Businesses should implement strong cybersecurity measures such as encryption, secure authentication protocols, and firewalls. They should also develop a comprehensive data breach response plan, as well as regularly train staff on cybersecurity best practices and procedures.

Another baseline requirement for businesses that conduct USD bank transfers is establishing a business bank account specifically designated for USD transfers. This ensures a clear separation between personal and professional finances and facilitates smoother tracking and management of business transactions. Different banks will have different requirements for opening an account and may request business registration documents, tax identification numbers (EIN/TIN), and other paperwork.

Once a business establishes a business bank account, it should choose its transfer provider by analyzing the transfer fees, processing times, supported currencies, and international capabilities that different banks and payment service providers (PSPs) offer. Many businesses prefer well-established banks and PSPs for their security measures, processing capabilities, and strong customer support. But businesses should also consider any niche functionalities they may need, such as multicurrency accounts, advanced fraud protection, or application programming interface (API) integrations.

At this point, businesses should alert their chosen bank or PSP about their intent to conduct USD bank transfers. Different banks may have specific documentation requirements or onboarding procedures for USD transfers, and businesses should consult the bank’s website or contact customer support for setup instructions. Some banks offer ACH transfers directly, and some require businesses to use a payment processor that partners with an ACH operator. Setting up wire transfers might require additional documentation or activation procedures. Businesses that want to conduct international transactions with USD bank transfers should also familiarize themselves with the SWIFT network’s requirements and fees.

Some businesses may find it helpful to integrate their bank account with accounting software to automate transaction reconciliation, facilitate real-time cash flow tracking, and maintain accurate financial records. Before committing to a product, businesses should confirm that their chosen accounting software can integrate with their bank’s system.

Businesses will also need to establish the following rules and procedures for how they will handle USD bank transfers:

• Authorization procedure: Establish clear procedures for authorizing USD transfers, including who has the authority to initiate transactions and any required approval processes.

• Transaction limits: Set limits on transfer amounts to control risk and monitor potentially suspicious activity.

• Reconciliation process: Develop efficient reconciliation procedures for accurate tracking and accounting of all USD transfers.

Businesses that want to accept USD bank transfers through Stripe should be aware of provider-specific functionalities and eligibility requirements. First, businesses should check whether their business category is supported for bank transfer payments through Stripe and familiarize themselves with the specific pricing structure for these transactions.

Learn more about eligibility and pricing with Stripe.

Eligible businesses will be able to set up USD bank transfers with Stripe by activating bank transfer payments in their Stripe Dashboard. This activation provides customers with a virtual bank account number to use for transfers, which keeps the business’s account details private. From the Stripe Dashboard, businesses can access the sender details of any incoming bank transfers, including the sender’s name, reference, and the transfer network used. Businesses can also access this information via Stripe’s API. The Stripe Dashboard allows businesses to manage not just bank transfers, but also several additional payment methods such as credit cards—creating a simplified, integrated environment for managing all payments.

Here’s how Stripe handles the following scenarios related to USD bank transfers:

• Overpayment or underpayment: Since businesses cannot dictate the amount they receive for bank transfers, this payment method is vulnerable to overpayments or underpayments. To address this, Stripe holds the customer’s bank transfer payments in a customer balance for up to 90 days, allowing businesses to reconcile any discrepancies in payment amounts within this time period.

• International payments: Businesses in the US can accept international wire transfers through Stripe using the SWIFT network. These international wire transfers incur fees, which might result in a business receiving a lower amount than expected. These fees are listed on the Stripe Dashboard’s balances page.

• Refunds: Stripe allows businesses to refund customer balance payments either directly to the customer’s bank account or to the customer’s cash balance on Stripe. If the customer’s bank account details are not already available with Stripe, the system sends an email to the customer to collect this information.

• Account verification: If a business needs to show bank account details to customers before the first payment, it can use Stripe’s Funding Instructions API.