A local bank transfer refers to transferring funds electronically from one bank account to another within the same country or region. It is also a cross-border payment method where a deposit is made into a foreign bank account. A local bank transfer is also known as an international ACH or Global ACH.

​Local bank transfers are becoming a popular peer-to-peer payment method globally, offering several advantages for both individuals and companies:

Local bank transfers work similarly to other money transfer systems, except instead of using banks to send the money, they use a peer-to-peer network.

To understand how peer-to-peer financial services work, we first need to know how traditional international bank transfers work. Suppose you want to pay someone in another country using an international bank transfer, also known as an international wire transfer. In that case, you must initiate the payment by visiting your bank, making a phone call, or using an online banking platform. The bank takes your request and begins the process of transferring your money.

A bank can only transfer money by passing it to other banks until it eventually reaches its destination. Note here that the banks don’t physically pass the money. Instead, the banks pass on information about your payment request until it eventually credits the receiving bank account and debits the payer (the originator). The banks use the SWIFT network, a secure messaging system, to pass on this information.

The downfall of this method is that all banks are different and don’t have direct relationships with one another, so the information is never passed on directly. Some banks are well connected; others are not. It’s like taking a series of connecting flights to arrive at your destination, except you aren’t quite sure which route your connecting flight will take or how much it will cost to get there.

Suppose a corresponding bank is unable to contact the recipient’s bank directly. In that case, it will hire another intermediary bank or financial institution to transfer the request. This process continues until the information reaches its destination and the account balance is credited with the funds.

The more corresponding banks involved in the chain, the longer it takes and the more expensive it becomes to carry out an international transfer since every bank charges separate handling fees.

How the Local Transfer facilitates this exchange:

Outcome:

Both parties get their desired currencies and pay only a small fixed fee to the transfer service, saving significantly compared to traditional SWIFT transfers.
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