How Banks’ Intermediary Institutions Slow Down Payments for African Freelancers

 

Receiving international payments as a freelancer or business owner in Africa can be exciting—but sometimes the funds take longer than expected to reach your account. One of the main reasons for this delay is the role of intermediary banks in processing international transfers. Understanding how these institutions operate and why they can slow down payments is essential for freelancers who want to optimize cash flow and avoid surprises.

In this blog, we’ll explore the function of intermediary banks, common causes of delays, and strategies for minimizing waiting times. And for all book lovers, remember that Tabitha Gachanja’s library of 30+ books is currently available for just $25 on Payhip while the sale lasts: https://payhip.com/b/YGPQU.

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What Are Intermediary Banks?

When you receive an international payment, it often doesn’t travel directly from the sender’s bank to your bank. Instead, the money passes through one or more intermediary banks (also called correspondent banks).

Intermediary banks act as middlemen to facilitate international transfers, particularly when the sending and receiving banks do not have a direct relationship. They help:

• Route payments between banks in different countries

• Convert currencies if needed

• Perform regulatory and compliance checks

While these institutions serve an important purpose, they can also introduce delays.

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How Intermediary Banks Work

Here’s a simplified flow of an international payment:

1. Sender Initiates Transfer

   • Your client instructs their bank to send money.

2. Sender Bank Sends to Intermediary Bank

   • If the sender and your bank don’t have a direct relationship, the sender’s bank uses an intermediary to reach your bank.

3. Intermediary Bank Verifies and Routes Payment

   • Checks compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) rules

   • Verifies the legitimacy of the sender and recipient

4. Recipient Bank Receives Funds

   • Converts currency (if required)

   • Credits your account

At each step, processing time and checks can add days or even weeks to the transfer.

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Common Reasons Intermediary Banks Slow Down Payments

1. Multiple Correspondent Banks

• Some payments must pass through more than one intermediary before reaching the recipient.

• Each bank in the chain may hold the funds temporarily for verification.

• More intermediaries = higher chance of delays.

Example:
A Nigerian freelancer receives $1,000 from a client in the US:

• US bank → US intermediary → European intermediary → Nigerian bank

• Each intermediary may take 1–2 business days to process and verify the payment

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2. Compliance and Regulatory Checks

• Intermediary banks are responsible for ensuring funds are legal.

• Checks may include:

  • Source of funds verification

  • Anti-money laundering (AML) checks

  • Screening against sanctions lists

  • Compliance with local laws in multiple countries

• If the payment triggers a review (due to amount, frequency, or unusual pattern), it can be temporarily held for manual inspection.

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3. Currency Conversion Delays

• Many international payments involve converting the sender’s currency to the recipient’s local currency.

• Intermediary banks may delay transfers to:

  • Ensure the correct exchange rate is applied

  • Wait for sufficient liquidity in the currency market

• Currency conversion can take extra processing time, particularly for smaller or less common currencies.

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4. Incomplete or Incorrect Payment Information

• Errors in payment instructions can result in delays:

  • Wrong SWIFT/BIC code

  • Incorrect IBAN or account number

  • Missing intermediary bank details

• Intermediary banks may hold or return the funds until the error is corrected.

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5. High Transaction Volumes

• Intermediary banks process large volumes of cross-border transactions daily.

• Peak periods, such as month-end or holidays, can cause processing backlogs.

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6. Bank Policies and Cut-Off Times

• Many banks process international transfers only during certain hours or business days.

• Payments received after cut-off times may wait until the next business day to be routed.

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7. Manual Intervention

• Some intermediary banks require manual review for large payments or unusual activity.

• Manual checks can add days, especially if the bank has a limited staff or uses paper-based processes.

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How These Delays Affect Freelancers

1. Cash Flow Challenges

   • Freelancers relying on international payments may struggle to pay bills or reinvest in their business while waiting for funds.

2. Uncertainty

   • Delays make it difficult to predict when money will arrive.

3. Higher Costs

   • If payments are delayed, freelancers may need to use credit or borrow to manage expenses, incurring additional costs.

4. Client Relationship Risks

   • Misunderstandings about payment timing can strain client relationships, even if the delay is due to banks.

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Strategies to Minimize Delays

1. Choose Banks With Strong International Networks

• Banks with many correspondent relationships can route payments faster.

• Some African banks have partnerships with major US or European banks, reducing the need for multiple intermediaries.

2. Use Modern Payment Platforms

• Platforms like Wise, Payoneer, Revolut, or Stripe often bypass traditional intermediary banks, speeding up transfers.

• These platforms handle currency conversion efficiently and provide transparent tracking.

3. Double-Check Payment Details

• Ensure clients provide accurate:

  • SWIFT/BIC codes

  • IBAN/account numbers

  • Bank names and addresses

  • Any required intermediary bank details

• Correct details reduce the chance of funds being held for verification.

4. Communicate With Clients

• Let clients know about possible delays caused by intermediary banks.

• Encourage payment earlier in the month or avoid sending just before weekends or public holidays.

5. Request Faster Payment Options

• Some banks offer priority or express international transfers for a fee.

• Express services reduce the number of intermediaries or shorten processing times.

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Real-Life Example

A Ghanaian freelancer receives $2,000 from a US client through a traditional bank transfer:

1. US bank sends funds via a US intermediary bank

2. Payment moves to a European correspondent bank for routing

3. Ghanaian bank receives and holds the funds for compliance checks

4. Currency conversion to Ghanaian cedis occurs

5. Funds are finally credited to the freelancer’s account

Total processing time: 6 business days, which can feel like weeks when you need the money for operational expenses.

Switching to a platform like Wise or Payoneer can reduce the same transfer to 1–2 business days.

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Benefits of Understanding Intermediary Bank Delays

• Better Cash Flow Management – Plan business expenses around expected payment times.

• Reduced Stress – Knowing the reasons for delays prevents panic and frustration.

• Improved Client Communication – Explaining intermediary delays helps manage client expectations.

• Optimized Payment Strategy – Helps freelancers choose faster payment methods and banks with better international networks.

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Conclusion

Intermediary banks are essential to the international banking system, ensuring funds are routed safely, legally, and accurately. However, they can slow down payments due to:

• Multiple correspondent banks

• Compliance and regulatory checks

• Currency conversion

• Errors in payment details

• High transaction volumes

• Bank processing policies and manual intervention

Freelancers can minimize delays by:

1. Choosing banks with strong international networks

2. Using modern payment platforms like Wise, Payoneer, or Revolut

3. Double-checking payment information

4. Communicating with clients about potential delays

5. Considering faster transfer options

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