An intermediary bank acts as a mediator between originating and receiving banks during international financial transactions when direct transfers aren’t possible. Often, these banks have established relationships or agreements with banks around the world, which they use to facilitate the movement of funds across borders. This is particularly useful when the sending and receiving banks do not have a direct relationship or when the transaction involves different currencies.
The global cross-border payments market was valued at $194 trillion in 2024 and is expected to reach $290 trillion by 2030, highlighting the growing demand for intermediary banks’ services. Below, we’ll explain what intermediary banks do, what types of businesses and financial transactions use intermediary banks, and the types of fees associated with intermediary banks.
What’s in this article?
- What do intermediary banks do?
- What types of businesses use intermediary banks?
- What kinds of financial transactions use an intermediary bank?
- Intermediary vs. correspondent banks
- Intermediary vs. beneficiary banks
- How to find intermediary bank information for a wire transfer
- Types of fees associated with intermediary banks
- Examples of intermediary banks
- How Stripe Payments can help
What do intermediary banks do?
Here’s how intermediary banks participate in financial transactions.
Transfer facilitation: Intermediary banks act as a bridge between the bank that sends the wire transfer and the bank that receives. Typically, this is coordinated through the Society for Worldwide Interbank Financial Telecommunication (SWIFT), a global messaging network that lets banks securely relay payment instructions to one another. This is common for international transactions where banks operate in different countries with different financial regulations and systems.
Currency exchange: If a transfer needs to be converted from one currency to another, intermediary banks can handle this conversion before the funds reach the final destination.
Network access: Intermediary banks provide access to financial networks to which smaller banks might not have direct access, allowing these smaller banks to engage in international transactions.
Fee collection: Intermediary banks typically charge fees for their services, which can be deducted from the transferred amount. These fees vary depending on the bank, the complexity of the transaction, and the countries involved.
Regulatory compliance: Intermediary banks ensure compliance with international banking regulations, including Anti-Money Laundering (AML) laws and other regulatory requirements.
What types of businesses use intermediary banks?
Any business involved in international transactions, such as buying or selling goods, offering services, or receiving donations, will likely use an intermediary bank at some point. While multinational corporations and large importers and exporters are frequent users, smaller businesses and individuals engaging in cross-border payments also rely on intermediary banks. If the transfer involves different countries, currencies, or banks without a direct relationship, an intermediary bank is required to facilitate the transfer.
What kinds of financial transactions use an intermediary bank?
Intermediary banks are used in the following situations:
When the sender’s bank (originating bank) and the recipient’s bank (beneficiary bank) don’t have a direct financial relationship or account with each other
When transactions involve multiple currencies, multiple countries, or complex payment routes
When smaller banks don’t have the resources or infrastructure to handle international transactions directly
When transactions involve countries or entities under sanctions or embargoes, intermediary banks can ensure compliance with legal restrictions
When transactions involve large amounts of funds, intermediary banks can manage risk and securely transfer funds
When it’s a specialized payment type such as documentary collections or letters of credit
Intermediary vs. correspondent banks
The terms “intermediary banks” and “correspondent banks” are often used interchangeably in the context of international banking, but these entities hold slightly different roles depending on the specifics of the transaction.
Both types of banks facilitate international banking transactions, but correspondent banks often have a broader scope of ongoing services, while intermediary banks are specifically involved in the chain of transfers for particular transactions. In practice, a bank might act as both a correspondent and an intermediary, depending on the transaction and the primary banking institutions’ needs.
Here’s how these types of banks compare.
|
|
Correspondent bank |
Intermediary bank |
|
Relationship scope |
Broad, ongoing; established through formal agreements covering a range of services |
Narrow, transaction-specific; involved only in the chain of transfers for a particular payment |
|
Primary role |
Provides services to another bank, usually in a different country, acting on its behalf |
Connects sender and receiver when the primary institutions lack a direct exchange path or relationship |
|
Main functions |
Settling trades for securities and other transactions; exchanging currency and executing foreign transaction settlements; providing smaller banks access to international markets and banking networks |
Moving funds from the sender's bank to the recipient's bank; managing and deducting fees for international transfers; ensuring transfers comply with international banking regulations |
|
Typical use case |
Handling wire transfers, business accounts, and document exchanges under reciprocal agreements |
Facilitating a single international transfer that requires multiple banks to complete |
Intermediary vs. beneficiary banks
The key difference between intermediary and beneficiary banks is that an intermediary bank is an optional middleman that only steps in when needed, while a beneficiary bank is the mandatory final stop where the recipient receives their funds.
|
|
Intermediary bank
|
Beneficiary bank
|
|---|---|---|
| Role in the transfer | A middle bank in the chain, connecting the sender's and recipient's banks when no direct relationship exists | The recipient's own bank; where the funds are ultimately deposited |
| Position in the chain | Between the originating bank and the beneficiary bank | The final destination in the transfer chain |
| Fees charged | May deduct handling or lifting charges as funds pass through | May charge an incoming wire transfer fee upon receipt |
| Always involved? | Only when the sender's and recipient's banks don't have a direct relationship | Always; every wire transfer has one |
How to find intermediary bank information for a wire transfer
If you're initiating an international wire transfer, you'll typically need your intermediary bank's name, SWIFT/BIC code, and address before you can complete the transaction. SWIFT/BIC code refers to the standardized code that uniquely identifies a specific bank, with the two terms often used interchangeably. Here's how to track down that information:
Ask your bank directly. Your originating bank usually knows which intermediary banks it works with for transfers to a given country or currency, and can provide the relevant SWIFT/BIC code and address.
Check the recipient's bank. The beneficiary bank can often tell you which intermediary bank(s) it typically receives funds through, since it works with the same correspondent relationships repeatedly.
Use a SWIFT/BIC lookup tool. Many banks and financial services websites offer free lookup tools where you can search by bank name or country to confirm a SWIFT/BIC code.
Review past transaction records. If you've received or sent a similar wire transfer before, the intermediary bank's details are often listed on the transfer confirmation or bank statement.
Confirm before sending. Since intermediary banks can vary by currency, destination country, and transfer amount, it's worth double-checking the details for your specific transaction rather than reusing information from a past transfer.
Types of fees associated with intermediary banks
It’s important to research and consider the fees associated with intermediary banks when preparing to conduct international transactions. These fees are not standardized and vary depending on several factors. Here are the types of fees you can expect.
Handling fees: A flat fee charged by the intermediary bank for processing the transaction.
Currency conversion fees: A fee or percentage charged for currency conversion. This can include hidden markups on the exchange rate.
Lifting charges: Additional fees imposed by other intermediary banks involved in the payment chain. These can be passed on to the sender or receiver.
Incoming wire transfer fees: A fee charged by the recipient’s bank for receiving the international wire transfer.
The following factors can impact the type and amount of fees you face.
Number of banks involved: The more intermediaries involved in the transaction, the higher the total fees.
Currency and amount: Fees can vary based on the currencies involved and the amount being transferred.
Location and relationships: The location of the involved banks and their relationships can influence the fees charged.
Payment method: Different payment methods, such as wire transfers or online platforms, have varying fee structures.
To reduce intermediary bank fees, ask about fee-inclusive transfer options, use banks with direct relationships to limit the number of intermediaries, or consider lower-cost alternatives to traditional wire transfers.
Examples of intermediary banks
Intermediary banks are large, well-established institutions with a global presence and extensive networks. Some examples include:
Bank of America: One of the largest banks in the United States, with a range of international banking and payment services
BNP Paribas: A French international banking group with a large presence in global financial markets
BNY Mellon: A leading global investment company with various financial services
Citibank: A global financial services company with a strong presence in international trade finance and payments
Deutsche Bank: A major European bank involved in various aspects of global financial markets
HSBC: A leading international bank with a vast correspondent banking network
JPMorganChase: A global leader in financial services, facilitating cross-border payments and trade finance for businesses
Standard Chartered: A British multinational bank with a strong focus on emerging markets and international trade
How Stripe Payments can help
Stripe Payments provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.
Stripe Payments can help you:
- Optimize your checkout experience: Create a frictionless customer experience and save engineering time with prebuilt payment UIs, access to 125+ payment methods, and Link, a wallet built by Stripe.
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- Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.
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Learn more about how Stripe Payments can power your online and in-person payments, or get started today.
The content in this article is for general information and education purposes only and should not be construed as legal or tax advice. Stripe does not warrant or guarantee the accurateness, completeness, adequacy, or currency of the information in the article. You should seek the advice of a competent attorney or accountant licensed to practice in your jurisdiction for advice on your particular situation.