What is Lifting Fee? Impact on International Transactions

As global trade continues to grow, every business, whether small or large, would want to have a bite of the cake and export its goods and services in international markets. But every good thing comes with a cost. Exporters not only have to pay tariffs and taxes to the governments, but they also need to pay the banks that process their international payments.

The fees levied by banks are often not disclosed by the banks until the time of crediting it in the exporter’s bank accounts, making it difficult to calculate their profits and expenses. The lifting fee is one such hidden charge, and in this article, we learn its meaning, application and ways to reduce it.

In this guide, you'll learn what a lifting fee is, when it applies in international transfers, and how it differs from correspondent bank and forex charges. You'll also discover the OUR/SHA/BEN charge instructions, typical cost structure of SWIFT payments, how lifting fees impact exporters, and practical ways to reduce or avoid them.

Key Takeaways

• Understanding lifting fees helps Indian exporters and importers anticipate hidden bank costs, reconcile international receipts accurately, and protect margins on same-currency cross-border transfers.
• A lifting fee is charged when a cross-border payment involves no currency conversion (e.g., USD to USD account), compensating the bank for its lost FX spread revenue.
• Typical lifting fees range from $5 to $30 per transaction, depending on bank, currency, and transaction type.
• The OUR/SHA/BEN charge indicator on SWIFT messages determines who pays the lifting fee - sender, recipient, or split.
• Platforms like Xflow bypass traditional SWIFT rails for inward INR receipts, eliminating lifting fees entirely through mid-market-linked pricing and proprietary payment infrastructure.

A lifting fee is a specific charge levied by banks when they handle foreign currency without the opportunity to make a profit on the spread. 

Banks typically make money on international transfers through two main avenues:

• Transaction Fees: A flat fee for processing the wire.
• FX Spread: The margin added to the currency exchange rate.

When you send an international payment in the same currency as the destination account (for example, sending USD from a USD account in New York to a USD account in London), the bank loses the chance to earn money on the currency conversion. The lifting fee is essentially their way of recouping that lost revenue for the administrative effort of moving the funds across borders.

Lifting fees are applied when the currency is not exchanged in a cross-border payment. When currency is exchanged, banks charge a 1-3% markup above the market price of the currency pair as their profit. To make a profit in transactions with no currency exchange, banks charge a lifting fee to release the funds into the recipient's account.

International wire transfers are processed via the SWIFT network (Society for Worldwide Interbank Financial Telecommunication). Among the payment details of sender and receiver, a charge indicator is also mentioned in the SWIFT message that determines who will bear the charges from the banks involved in the transaction. There are three types of charge indicators. These are: 

1. BEN: BEN refers to the “Beneficiary”. In a payment with a BEN charge indicator, the recipient will bear the lifting fee.
2. SHA: SHA is short for shared. As the name suggests, the lifting fee is shared between the sender and the receiver of funds. 
3. OUR: In payments with the OUR charge indicator, the sender is the only one who bears the lifting fee.

Wire transfers conducted via the SWIFT network incur multiple hidden charges beyond the lifting fees. These are: 

Upfront fees

When a customer makes a payment to an international merchant, their bank charges them an upfront fee to initiate the payment. These cover the costs for secure message communication through SWIFT and compliance checks.

Correspondent bank fees

If the sending and receiving banks do not have direct contact with each other, then the payment must travel through the corresponding banks of different countries. All corresponding banks deduct a fee for processing the payment. 

Forex spread

Apart from certain cases, international wire transfers often involve currency conversion. But banks charge a price higher than the midmarket exchange rate. This difference is known as the forex spread, which is 1-3% of the actual currency rate.

Lifting charges differ from correspondent bank charges, as they are mostly levied by the receiving bank at the end of the wire transaction, whereas correspondent bank charges are deducted in the middle of the transaction.

The lifting fee is deducted for settling the foreign currency in the receiver’s account, while correspondent bank charges are deducted by SWIFT network banks for processing the payment through them.

People may expect that processing an international transaction with only one currency involved would be simple and therefore have fixed lifting charges. But the lifting fee is affected by different factors. These are:

Currency involved

The value and demand of every currency is different in the international market; for example, US dollars fetch a higher value compared to Vietnamese Dong. This influences the ease with which banks would be willing to release your payments. 

Bank policies

Every bank has different policies for processing cross-border transactions, which also influence the fees charged. Banks usually waive many fees for their premium customers compared to normal account holders.

Transaction type

International payments consist of various transactions, such as trade transactions for the exchange of goods and services, capital transactions for investment purposes, or remittances sent by family members. Each influences the amount of lifting fees.

As different stages of cross-border payments have some sort of fee involved in them, a typical cost structure with a $1000 USD can look like this:

• Payment initiation: Sending bank levies upfront changes of SWIFT message initiation, ranging from $25-$50. 
• Intermediary bank processing: A payment may be processed via one or two intermediary banks. Each one charges a processing fee ranging from $15-$30.
• Receiving bank: To move the fund into the receiver’s account, their bank charges them a lifting fee, which can range from $5 to $30.

Assuming that each process had the lower value charged with only one intermediary bank, in a $1000 transaction, the end amount credited to the receiver would be $955 USD.

Lifting fee and most other charges are not disclosed to exporters until funds are credited to their accounts. For any business to run smoothly, it must have a clear visibility into its cash flow to plan its expenses accordingly. Uncertainty about the lifting charges applied not only ties up their working capital but can also affect their profit margins.

SMEs that process low-value transactions suffer the most due to the uncertainty of lifting charges, as it often cuts into their profits and discourages them from trading globally.

Lifting charges easily impact an exporter's profit margins, making it necessary to look into methods to reduce them. This can be achieved through the following methods:

Bank preference

Different banks have different sets of policies for applying the lifting fee. When making your merchant account, look into the policies of different banks and question them about their fee structure. The bank with the lowest and most transparent lifting fee structure should be the one you choose.

Charge indicator

A charge indicator is used in SWIFT transactions to determine who will bear the fees levied by the sending, intermediary, and receiving banks. For exporters, a BEN charge indicator would be the most costly, making it necessary to communicate with your payee to either have OUR or SHA charge indicators to reduce your lifting fee burden.

Xflow’s payment solution

Rather than relying on banks to handle your international payments that have different hidden fees involved, use a payment solution like Xflow, which has a no hidden fee policy, meaning you do not have to pay any lifting fee or any other charges like corresponding bank charges or forex markup.

Lifting charges are not the only hurdle in international payments. Bank processing charges, forex spreads, and the SWIFT initiation fee are other unpredictable charges that eat away at your profits in global trade. Moreover, settling payments in your merchant account easily takes up 2-5 days, due to delays in bank processes and the need to obtain FIRA for compliance purposes.

This is where Xflow can make a difference for you. We do the same things as your banks, but faster and more cost-effectively. With immediate fund transfer, transparent fee structure, no hidden fees and mid-market foreign exchange rate, we streamline your global payments so that you can focus on expanding your business across borders.

Sign Up with Xflow today and see the difference for yourself!