Intermediary Bank: What It Is and Why It Can Cut Your Payment

An intermediary bank is a third-party financial institution that passes an international payment from the sender's bank to the receiving bank when the two have no direct relationship. It bridges the sending and receiving banks, and it can take a fee from the amount before passing the rest along.

If you bill clients abroad from India, that fee is often why a payment lands below the invoice. Your client's bank usually picks the route, so you rarely choose the intermediary, and your own bank's details are normally enough for the money to reach you.

Some clients and their banks still ask for intermediary bank details. Once you know where this bank sits, you can read its name off your payment and work out who paid its fee.

An intermediary sits in the middle of a SWIFT payment, between your client's bank abroad and your bank in India. SWIFT is the network banks use to send each other international payment instructions. Here is the chain a typical payment follows:

1. Your client: tells their bank to pay your invoice in their currency, using the bank details you gave them.
2. Your client's bank: checks whether it has a direct link with your Indian bank, then picks the route the payment will take.
3. One or more intermediary banks: each one receives the payment, passes it to the next bank in the chain and may deduct a flat fee on the way.
4. Your Indian bank: receives what is left, converts it to rupees if needed and credits your account, sometimes after its own inward charge.
5. You: see the credit in your account, which can be lower than the invoice if fees were taken along the route.

Whether step 3 happens depends on that direct link. If your client's bank and your Indian bank hold accounts with each other, the payment goes straight across. A nostro account is a bank's own account held with a bank abroad, in that country's currency, and a vostro account is the same account seen from the other side.

When no such link exists, your client's bank routes the money through a bank that both sides do hold accounts with. As an intermediary bank example, large banks such as Deutsche Bank, Bank of America and Standard Chartered appear in this role on the inward-remittance lists of Indian banks. Many payments pass through one intermediary, and some pass through two or more.

Do you need to name an intermediary for your client? Usually not. Their bank chooses the route from its own arrangements. Your bank's name, your account number and your bank's SWIFT code normally get the money to you.

You can find your intermediary bank details in two places: the payment message (the MT103) for a transfer you've already received, and your Indian bank's published list for future ones. If a client is asking before they pay, start with the list. If money has already landed short, start with the message.

Before either, check that your client has your bank's correct SWIFT code. This code is also called a BIC (Business Identifier Code), and it names your bank as the place the payment ends. It doesn't name the intermediary, which is why a client can have it and still ask for more.

Reading fields 56 and 57 on an MT103

The MT103 is the SWIFT message your client's bank sends for a single customer payment, and newer systems carry the same data in its ISO 20022 equivalent, called pacs.008. Ask your Indian bank for a copy of the incoming MT103 or the credit advice, or ask your client to get one from their bank. These fields matter most:

Field 56 carries the label "intermediary institution", and it's where the intermediary bank name appears when the sending bank fills it in, usually with the intermediary bank SWIFT code beside it.

Your copy may not show every field. If field 56 is blank or missing, ask your bank's forex desk which bank the payment came through. The other fields of the SWIFT MT103 matter less for this job.

Your Indian bank's own list of intermediary banks for each currency

Some Indian banks publish the banks they hold nostro accounts with, currency by currency. These are the banks a sender is pointed to, though the route on any one payment still depends on the sender's bank. As an example, this is an extract from HDFC Bank's published list, read on 11 November 2026 (not every bank or currency on it is shown):

HDFC Bank says one SWIFT code, HDFCINBB, can be used for payments to any of its branches in India. Where a currency has more than one bank, HDFC says the choice of correspondent is at its own discretion. Other Indian banks publish their own lists, and every bank changes them from time to time. Check your bank's current page before you pass anything to a client.

The charge code your client picks in field 71A decides who pays each bank in the chain, including any intermediary banks. Each bank sets its own correspondent bank charges, and here is how the three codes split them:

Intermediary bank fees are commonly quoted at roughly USD 15 to 50 per bank. No regulator publishes a tariff, and the real figure depends on the banks and the currency involved.

Your Indian bank may also charge its own inward fee, which varies by bank and account type. It sits alongside the other bank charges for foreign remittance you may see on an international transfer.

Example of how flat fees hit USD 500, 5,000 and 50,000 invoices

In this example, the fee comes out of the invoice under SHA or BEN, and both currency conversion and your Indian bank's own charge are left out. The figures are illustrative arithmetic, not measured fees:

The same flat fee takes a share a hundred times bigger of a USD 500 invoice than of a USD 50,000 one. The shares work the same way in any currency when the fee and the invoice are in that currency. That is arithmetic only, not a fee level for any currency.

Anyone billing small, frequent invoices feels intermediary fees far more than someone sending one large invoice a quarter.

A payment from abroad usually arrives short because of an intermediary fee under SHA or BEN, your Indian bank's own inward charge, or the exchange rate your bank used to convert it to rupees. Even a payment sent with OUR can arrive a little short, because the receiving bank may still charge. Work through it in this order:

1. Ask your bank for the MT103 or credit advice: the MT103 shows the amount received, the charge code in field 71A, any fees listed in 71F and the intermediary in field 56 if it was filled in. If the payment is slow, also ask for its SWIFT gpi tracking reference, which lets banks follow it hop by hop.
2. Compare the invoice with the credit: the gap is the bank fees, plus the exchange rate effect if your bank converted the money to rupees before it reached your account.
3. Ask your client which code their bank used: their bank can confirm OUR, SHA or BEN, say whether an intermediary took a fee and send its own copy of the MT103.
4. Agree the fix for the next invoice: ask for OUR, or add a fee allowance to the invoice, so more of what you're owed reaches you.

Whether you can get back a fee that's already been taken depends on the banks involved. Either way, keep the MT103 and the FIRA or eFIRA, the record of money received from abroad, with each invoice so any gap can be explained.

The intermediary, correspondent and beneficiary banks are three roles in the same payment, and you'll often see the first two used for one bank. Here's how each one shows up when a client pays you from abroad:

So if your bank says a payment came in "through our correspondent", it usually means the bank you'd call the intermediary, because correspondent banks are the ones holding standing accounts with other banks. The beneficiary bank is different: it's your own bank, and its name goes in the payment details you give your client.

You can cut what intermediary fees cost you by changing who pays them, or by changing the route the money takes. None of these removes every fee on a SWIFT payment, but together they cut what you lose on each invoice:

• Ask for OUR on every invoice: write "please send with charge code OUR" in your payment instructions, which moves intermediary fees to your client, though your own bank can still charge.
• Send fewer, larger invoices: a flat fee takes a smaller share of a bigger amount, so combining several small milestone invoices into one keeps more of what you are owed.

Collecting the payment inside your client's own country, through a local account there, skips the chain on their side. On a SWIFT payment, the usual chain still applies.

With Xflow receiving accounts, your client gets local account details and pays a USD, EUR, GBP or CAD invoice as a local bank transfer rather than a SWIFT wire, so no intermediary sits on the payer's side. AUD, SGD and AED invoices still travel by SWIFT. Withdrawals reach your Indian bank within one business day, using FX rates linked to the mid-market rate, with a free FIRA for each withdrawal.

The intermediary bank meaning comes down to this: it's the bank in the middle of a SWIFT wire transfer, and it may take a flat fee on the way. You can find it in field 56 of the MT103 or on your bank's own list for each currency. The charge code decides who pays that fee, and small invoices feel it most. Asking for OUR, sending fewer, larger invoices or getting paid by local transfer all reduce what you lose.