More reliable bank transfers from Europe

Making Monzo
8

Hi all,

Since we last updated you in July, we’ve been working to increase the reliability of payments from other countries into your Monzo account. This post is a status report on what we’ve been up to, and what we’re still working on.

NatWest is currently our correspondent bank

This means that payments to Monzo from other European banks in Euro get to us via NatWest. They have to take an extra “hop” before reaching Monzo, but this lets us take advantage of NatWest’s international presence and membership in Euro payment schemes like STEP2, which is the infrastructure underlying most SEPA payments.

In technical terms, we’ve told other banks about this arrangement via a Standard Settlement Instruction in SWIFTref. SWIFTref is a directory used by banks to look up information about how to route payments. Against Monzo’s Bank Identifier Code in the directory, there’s an instruction to send Euro payments via NatWest.

IBANs and international payments

One thing that we haven’t been great at in the past is using the right terminology around international payments when communicating with customers. “Having an IBAN” isn’t a feature: an IBAN is just an identifier for your account which can be calculated using a BIC and your account details.

At the moment, five things can happen to a payment sent to a Monzo IBAN (that’s not in Pounds):

  1. The foreign bank has a UK presence and is connected directly to UK payment schemes (e.g. CHAPS). They do the FX (foreign exchange) themselves and send the money to us in Pounds as a domestic payment, which we credit to the customer’s Monzo account.
  2. The foreign bank has a Pound correspondent, through which they can send the money to us. Again, they do the FX and it arrives to us as a domestic payment.
  3. The foreign bank has an EU presence and can send Euro payments. They send the money to us as a Euro payment (via NatWest). We then do the FX and credit the customer’s Monzo account.
  4. The foreign bank has a Euro correspondent, through which they can send the money to us (via NatWest). Again, we then do the FX and credit the customer’s Monzo account.
  5. The foreign bank has no UK connectivity themselves and no Pound or Euro correspondent. The payment cannot get to us, and will likely be returned to the sender.

SEPA

Our initial plan was to utilise the existing agency banking relationship, we have with NatWest (and their SEPA scheme connections), to let customers receive inbound SEPA Credit Transfers (SCTs) — the Euro equivalent of next-day bank transfers.

Unfortunately, this turned out to be a dead end and so we’re now looking to provide SEPA Credit Transfers ourselves. Brexit is making this a little trickier than we’d hoped, but we’re hoping to have something in place next year.

In the meantime, use TransferWise

Whilst we work to add the ability to send and receive international payments “natively”, through the app, we’d recommend using TransferWise for your international payments.

For outbound payments - use the TransferWise integration in your Monzo app
For inbound payments - use the IBAN within your TransferWise account (and you can then convert the funds and send it to your Monzo account. Simple!)

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