What an Intermediary Bank Does in Your Wire Transfer

An intermediary bank is a financial institution that processes your wire transfer between your bank and the recipient's bank when they are not directly connected

When you send money to someone at a different bank, your bank and theirs may not have a direct relationship. An intermediary bank (also called a correspondent bank) sits in the middle, receiving the funds from your bank and passing them to the recipient's bank. This happens automatically — you do not choose the intermediary or contact it directly. The intermediary takes a small fee from the transfer amount, which reduces what the recipient receives.

Intermediary banks are most common in international wire transfers, but they also appear in domestic transfers between banks that do not have established correspondent relationships. The number of intermediaries involved depends on the banking networks and the countries involved. A transfer to Europe might pass through one intermediary; a transfer to a smaller country might pass through two or three.

You will see evidence of an intermediary bank in your wire confirmation. The bank will list the intermediary's name and routing number, and the recipient may see a deduction from the amount you sent because the intermediary took its fee. If the recipient's bank is not in the same country as yours, an intermediary is almost certain.

Key Takeaways

An intermediary bank processes your wire when your bank and the recipient's bank do not have a direct connection, and you cannot prevent this or choose which bank acts as intermediary.
Intermediary banks charge fees that come out of the transfer amount, so the recipient receives less than you sent.
International transfers almost always use at least one intermediary bank; domestic transfers use them less often.
Your wire confirmation will show the intermediary bank's name and the fee amount deducted.
The more intermediaries involved, the longer the transfer takes and the more fees are deducted.

Why intermediary banks exist in the wire system

Banks do not all connect directly to each other. Instead, they join networks — SWIFT (the Society for Worldwide Interbank Financial Telecommunication) for international transfers, and the Federal Reserve or CHIPS (Clearing House Interbank Payments System) for domestic transfers in the United States. When your bank needs to send money to a bank it does not have a direct relationship with, it sends the transfer through a bank that does have that connection.

This is especially true across borders. Your U.S. bank may not have a branch or correspondent account in Japan, so it sends your yen transfer to a larger bank that does business in Japan. That larger bank then delivers the money to the Japanese recipient's bank. Without intermediaries, the number of direct connections each bank would need to maintain would be enormous and expensive.

Domestic transfers in the United States use intermediaries less often because most banks are connected through the Federal Reserve or CHIPS. However, smaller banks or credit unions may still route transfers through larger institutions if they do not have direct access to the recipient's bank.

How intermediary fees reduce what the recipient gets

When an intermediary bank processes your transfer, it deducts a fee before passing the remaining amount forward. This fee is separate from your sending bank's fee and the recipient's bank's fee. If you send $1,000 and three banks are involved (yours, an intermediary, and the recipient's), each might take a fee of $10 to $25, meaning the recipient receives $950 to $970 instead of $1,000.

The fee amount varies by bank and by the transfer amount. Larger transfers sometimes have higher fees in absolute dollars but lower fees as a percentage. You will see the intermediary's fee listed on your wire confirmation, but the recipient may not see it until the money arrives in their account — they will straightforward receive less than you told them you were sending.

This is why it matters whether you choose "OUR" or "THEIR" when your bank asks who pays the fees. If you choose "OUR" (you pay all fees), your bank deducts all fees from your account before sending, and the recipient gets the full amount you specified. If you choose "THEIR" (recipient pays all fees), the full amount you send goes to the recipient's bank, but their bank deducts fees before crediting their account. Many international transfers default to "THEIR" unless you specify otherwise.

How many intermediaries are involved depends on the destination

A domestic wire transfer within the United States typically involves zero or one intermediary. If your bank and the recipient's bank are both large and well-connected, the transfer goes directly. If one is smaller, it may route through a larger correspondent bank, but that is usually the only stop.

International transfers almost always involve at least one intermediary. A transfer to Canada or Mexico might use one. A transfer to Europe might use one or two. A transfer to Africa, Southeast Asia, or the Middle East might use two or three. Each intermediary adds time (usually one business day per intermediary) and takes a fee.

You cannot control how many intermediaries are used. The sending bank chooses the route based on its correspondent relationships and the destination country's banking infrastructure. Some countries have well-established banking networks; others have fewer international connections, forcing transfers through multiple intermediaries.

What information you need to provide to avoid intermediaries

You cannot eliminate intermediaries entirely, but you can reduce them by providing complete and accurate wire instructions. The more specific your information, the more directly your bank can route the transfer.

For domestic transfers, provide the recipient's full legal name, account number, and routing number. For international transfers, provide the recipient's full name, account number, and the recipient bank's SWIFT code (an eight- or eleven-character code that identifies the bank internationally). Some banks also ask for an IBAN (International Bank Account Number), which is required in Europe and some other regions.

If you provide incomplete information — a nickname instead of a legal name, or a SWIFT code for the wrong branch — your bank may have to send the transfer through an intermediary that can verify the details, or the transfer may be rejected and returned to you.

How to read the intermediary information on your wire confirmation

Your wire confirmation receipt will show the intermediary bank's name, its routing number or SWIFT code, and the fee it charged. The confirmation also shows the amount you sent, the amount the recipient will receive, and the total fees deducted.

If you see multiple intermediaries listed, each one took a fee. The time it took for the transfer to arrive will roughly match the number of intermediaries — one intermediary usually adds one business day, two intermediaries add two business days, and so on. International transfers typically take three to five business days; domestic transfers take one to two.

If the amount the recipient received is significantly less than what you sent, check the fee breakdown. If the fees seem high, you can ask your bank whether a different routing or a different transfer method (such as a bank draft or international money order) would cost less for a future transfer.

Frequently Asked Questions

Can I choose which intermediary bank processes my transfer?

No. Your sending bank chooses the intermediary based on its correspondent relationships and the destination. You can ask your bank what route it will use and whether alternative routes exist, but you cannot specify a particular intermediary bank.

Why did the recipient get less money than I sent?

Intermediary banks and the recipient's bank deducted fees. If you chose "THEIR" when sending, the recipient's bank deducted all fees from the amount you sent. If you chose "OUR", your bank should have deducted fees before sending, and the recipient should have received the full amount — if they did not, contact your bank to investigate.

How long does a transfer take if there are multiple intermediaries?

Each intermediary typically adds one business day. A transfer with one intermediary usually arrives in two to three business days; a transfer with two or three intermediaries takes three to five business days. Weekends and holidays extend the timeline.

Is there a way to avoid intermediary banks?

Not completely, but you can reduce them by using banks with large international networks and by providing complete wire instructions (SWIFT code and IBAN for international transfers). Some banks offer correspondent accounts in major countries, which can speed transfers and reduce fees.

What if the intermediary bank made an error?

Contact your sending bank when ready with your wire confirmation number. Your bank can trace the transfer through the intermediary and the recipient's bank to locate the error. If money was lost or misdirected, your bank will work with the intermediary to recover it, though this can take weeks.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.