Charges and foreign exchange
Who pays the fees, and whose exchange rate applies? Why the amount received on a cross-border payment is not always the amount sent.
L0 Explain simply
Send the equivalent of 100 abroad, and the beneficiary — the person being paid — may receive 91. Two forces eat the difference: fees and currency conversion. Analogy: a parcel through several couriers. Each courier in the chain can charge for its leg. Either you prepay the whole journey, or you split costs with the recipient, or the recipient pays on delivery — three arrangements, three different amounts arriving. Currency conversion is the second force: somewhere along the way your money is exchanged, like at a bureau de change, and the rate used includes a margin for whoever converts. Neither force is hidden magic — both are recorded in the payment's details — but unless you know who charged what and where the conversion happened, the missing 9 looks like a mystery.
L1 Core concepts
The payer is the ordering customer in classic terminology; the receiver is the beneficiary. Between them, each institution in the chain may levy charges, and who bears them is set by the payment's charge option. Three arrangements exist: the sender pays all charges, charges are shared — each side pays its own institution — or the beneficiary bears everything, in which case banks along the way may deduct fees from the amount itself. The party responsible is called the charge bearer. Foreign exchange is a separate decision: conversion can happen at the sending bank, an intermediary, or the receiving bank, and whichever institution converts applies its own rate, typically a market rate plus a margin. Amount sent, amount converted, and amount delivered are three different numbers.
L2 Practitioner view
For operations, charges and conversion generate a steady stream of claims. Beneficiaries complain about short payments; tracing the deductions means reading the charge details each bank recorded on its leg. Corporates negotiate charging terms and escalate when a deducted fee breaks an exact-amount invoice. Regulation constrains the menu in some corridors — within the European Economic Area, for example, shared charging is the standard arrangement for most payments — so not every option is always available. Conversion disputes are thornier: the applied rate sits buried in the payment record, and 'your rate was worse than the internet rate' is a conversation every service team knows. Institutions differ on where they convert and how they disclose margins, so learn your own bank's model first.
L3 Technical details
In an MT103 the mechanics are explicit fields. Field 71A carries the charge option code: OUR (ordering customer bears all charges), SHA (shared), or BEN (beneficiary bears all). When banks in the chain deduct, each deduction appears in a repeatable field 71F occurrence so the receiver can reconstruct the original amount; field 71G carries the receiver's charges when they are prepaid by the sender. The amount story is told by field 33B — the original instructed amount and currency — against field 32A, the interbank settled amount, with field 36 giving the exchange rate whenever the two currencies differ. ISO 20022 carries the same ideas as charge-bearer codes and structured charges records. Reading these fields in sequence is the standard way to answer 'where did the money go?'
Sources for this topic2
- Official requirement
Swift Standards MT (annual standards releases) ↗ — Swift · MT 103 fields 71A, 71F, 71G, 33B, 32A, 36
Full field-level specifications live in the Swift Knowledge Centre User Handbook behind a swift.com login; content here relies on public summaries. Swift ended MT-to-ISO 20022 coexistence for in-scope cross-border payment instructions (for example MT103 and MT202) in November 2025; MT statement messages are being phased out on a separate timeline.
- Simplified educational illustration
Payments Signal editorial teaching models — Payments Signal
What this simplifies: The 100-sent, 91-received example uses invented round numbers; actual deductions and margins depend on each institution's tariff and the corridor, and some corridors restrict which charge options are permitted.
Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.
Deepest material on this page: L3 — Technical details. Where a topic stops short of implementation depth, that is a deliberate coverage decision, not an oversight — see coverage.