Transfer cost

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Transfer costs, otherwise known as "cross-border charges", are the costs of transferring money between banks. The valuation rules for principal amounts are the same for bank transfer fees and commissions [1].

The method of accounting for transfer cost

As at the date of conducting business transactions denominated in foreign currencies, such transactions are disclosed in the accounting books at the exchange rate [2]:

  • purchase or sale of currencies applied by the bank whose services are used by the entity - in case of currency sale or purchase operations and payment of receivables or liabilities,
  • the average exchange rate for a given currency determined by the National Bank of Poland on that day, unless another exchange rate was determined in the customs declaration or another document binding on the entity - in the case of other operations.

If assets and liabilities are expressed in currencies for which the bank used by the entity or the recipient bank does not set a rate, the rate of such currencies shall be determined with the reference currency indicated by the entity, for which the rate is set by the National Bank. The above rules apply both to the principal amounts and the fees and commissions charged by the bank in connection with the transfer of funds [3].

It should also be noted what kind of bank charges may be incurred by the persons making the money transfer. Cross-border fees are nothing more than the costs of transferring money between banks. First of all, the cost of a cross-border transfer (e.g. payment for an invoice expressed in euro from France to England) depends on how the contract between the counterparties is structured. These costs can be settled in several ways:

  • the costs of the transfer are borne by the transferor,
  • the costs are shared and partly borne by the exporter (costs incurred by his bank) and partly by the importer (costs incurred by the importer's bank),
  • all costs shall be borne by the entity receiving the transfer.

These costs may be expressed in nominal terms, but usually, the total fee is a percentage (fraction) of the value of the transfer being sent or received [4].

Transfer conditions

For a cross-border transfer between two banks to be possible, banks must cooperate with each other. In this case, the bank of the importer and the bank of the exporter are involved in the transaction. However, it often happens that banks do not cooperate directly with each other and it is necessary to mediate another bank. Of course, each bank charges a specific fee for the transfer and therefore the greater the number of financial institutions involved in the transaction, the more expensive is the money transfer operation [5]. For this reason, when establishing cooperation with a particular foreign counterparty, one should ask him/her which bank he/she uses. This will allow for a preliminary estimation of the costs of future banking operations. Besides, when signing a contract, it is necessary to determine who and to what extent will bear the costs of foreign transfers [6].


  1. A. Chwolka, J. T. Martini, D. Simon 2008, pp. 22
  2. A. Chwolka, J. T. Martini, D. Simon 2008, pp. 22-25
  3. M. Wolff 2007, pp. 178-180
  4. M. Wolff 2007, pp. 178-180
  5. L. Eden 2004, pp. 10-11
  6. L. Eden 2004, pp. 14

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Author: Hubert Olech