Payment and Transfer Services - Singapore

I. Introduction

Over the years, Singapore has established itself as a premier financial hub for Asia, with one of the highest standards of living and quality of life in the world. With the highest GDP per capita of SGD 70,000 in the world, the demand for reliable, efficient, and innovative banking services is inevitable. The following sections provide an insight into Singapore's world-class banking products and procedures, catering to the demanding needs of people from all demographics.

II. Local Funds Transfer

Other than simply walking into one of the bank's branches and requesting the clerk to carry out a transfer, there are several other ways, often more efficient, to make a local fund transfer:

1. Interbank GIRO (IBG)

The Interbank GIRO is an offline local interbank fund transfer system that caters to low value bulk payments. Funds can be transferred to different banks within the region, through either debit or credit transactions. Customers use GIRO as a convenient and cashless mode of payment, without bothering with the hassle or remembering when a bill is due. Common examples of this are payroll payments, and college fee payments.

a) Direct Debit Transfers

Through this method of IBG, the payee instructs its bank to collect payment from the payer (after giving prior notice). This is usually for payments to be collected on a recurring basis. To enable this, the customer (Payer) must sign a Direct Debt Authorization form and submit it to the Billing Organization (Payee). The payee then forwards the DDA form to the payer's bank for approval. This usually takes 14 days. The upper limit for such transactions is SGD$25 million.

b) Credit Transfers

Through this mode, the payer instructs its bank to make recurring payments to the payee by debiting the payer's account. The bank then carries this transaction out on a specific date on a recurring basis. There is no upper limit for such transactions.

The GIRO service provided by banks is generally free of cost. However, they usually charge customers for incomplete transactions when there are not enough funds in the payer's bank account. The fee usually varies with different banks and should be noted.

2. Cheques

Cheques are commonly used offline instruments by consumers to pay bills and by businesses for regular payments such as goods and services. There are 2 basic types of cheques classified by banks in Singapore:

a) Local SGD Cheques

These types of cheques are issued in the local currency, i.e. the Singapore Dollar. The Cheque Truncation System, an online image based clearing system, clears these cheques. This system allows such cheques to be cleared within a day. Funds can usually be withdrawn at 2pm the next working day. Local cheque services are free of cost, however some banks may charge for extra cheque-books.

b) Local USD Cheques & Foreign Cheques

Local USD cheques are cleared using the U.S. Dollar Cheque Clearing System (USDCCS), which takes banks 3 working days to process and clear. With Citibank as the settlement bank, all banks must maintain a USD balance of at least $10,000 with them to use the USDCCS system. This service is not chargeable by banks; however, the FX fluctuation over the 3-day clearing period might cause losses.

Cheques issued in other foreign currencies usually take 1 - 3 weeks to clear, depending on the currency type and the banks involved. These services are chargeable and most banks charge 0.125% - 0.25% of the transaction amount as fees. Foreign currency fluctuation is another possible cost in such a transaction.

3. ATM Transfers

Automated Teller Machines (ATM's) are another mode through which one can make a local fund transfer. Funds can be transferred instantaneously to any bank account within the same bank. However, inter-bank fund transfers are not supported through this mode transfer.

III. Remittances and Overseas Transfers

Funds are transferred overseas primarily through bank telegraphic transfers, cheques, demand drafts, traveller's cheques, and also through non-bank transfer agencies.

1. Bank Telegraphic Transfers

A telegraphic transfer is a method of transferring funds electronically from one country to another. Telegraphic transfers are used by a variety of customers such as employees working abroad who want to send money home to their families in different countries, and parents whose children study abroad, to name a few. This method of transferring funds is fast, but there are a number of charges associated with it.

a) Inward Telegraphic Transfers (receiving funds from an overseas party)

The receiver (beneficiary) must provide the sender or the remitting bank with the SWIFT code of the bank where the receiver holds an account, as well as the name and account number as stated in the bank's records. Most banks charge a handling commission ($10 is the average charged by OCBC, UOB, and DBS) per inward transaction, and allow various currencies to be transferred into Singapore.

b) Outward Telegraphic Transfers (sending funds to an overseas party)

The sender may either apply for this using an application form, or via the Internet. An outward TT is quite expensive for the sender, so the amounts that are sent are typically quite large. The charges associated with this transaction are: handling commission (generally 0.125% of the amount to be transferred, which is halved if the transaction is done via the internet), cable/telex charges (between $10 and $30, sometimes depending on which currency is to be transferred), agent charges if applicable, charges to amend or cancel the transfer, charges if the previous transaction was more than 3 months prior to the current one, and charges to trace the transaction. This type of transaction takes between one and four business days.

2. Cheques

Cheques that are drawn on overseas bank accounts may be deposited into one's bank account in Singapore, regardless of the currency, as mentioned in the preceding sections.

3. Demand Drafts

A demand draft is a bill of exchange issued by banks as an overseas medium of exchange, which is drawn on the banks' foreign corresponding banks. Demand drafts are commonly used when travelling from Singapore to other countries. It is a relatively