It can take weeks using the Swift transfer system, as many have found to their cost

Elaine and Malcolm Thompson’s charity, St Paul’s Children’s Project, pays school fees and expenses for 36 orphans in Zambia. In October they made a payment using the Swift system of £11,000 from the charity’s Barclays account to its designated bank in Zambia, but it never arrived.

“Barclays stated that they have not received a response from the beneficiary bank and were therefore unable to pursue the matter further,” says Elaine. “The money is urgently needed to pay school fees which are due in December. The loss of such a huge sum would mean we could no longer continue and 36 young people would lose their education.”

After the Observer intervened, Barclays returned the funds, blaming the beneficiary bank in Zambia for the delays. The acronym Swift (Society of Worldwide InterBank Financial Telecommunications) proved to be a misnomer, as many people have found. The system transfers money between banks in different parts of the world but while electronic payments within the UK are now almost instantaneous, Swift transfers can take days – sometimes weeks – to reach their destinations and banks rarely warn customers of the potential timescales.

Martin Finnegan* was told the £2,450 sent from his Nationwide account to his mother-in-law in Russia would take an estimated three days. Three months later it was still in transit, location unknown.

“According to Nationwide, it is our responsibility to request updates on the investigation,” he says. The money was eventually returned after contact from the Observer, along with £400 compensation.

Elaine Thompson is certain her issue would still be unresolved but for the threat of publicity. Several other readers, mostly Nationwide customers, have contacted us to report bank inertia after their Swift payments got lost in limbo. Each time the money was only recovered when the Observer got involved.

In June, Jane Collins* nearly lost the home she was buying after moving to Canada because the £54,000 deposit transferred from her Nationwide account went missing. It eventually arrived six weeks later. Nationwide blamed poor communications along the chain of banks.

Nationwide explains that, as it is not an international bank, all overseas payments are processed by an agency bank. “The industry uses Swift messaging as time differences and language barriers can sometimes make it difficult to contact banks in other countries by phone,” it says.

Swift, a worldwide co-operative of banks, does not actually send money. The 45-year-old system is a secure message-sending service between its 11,000 members, which then relies on manual input to transfer funds.

If the sending and receiving banks do not hold commercial accounts with each other, a payment has to travel between one or more intermediary banks, each of which might deduct an unspecified fee and any of which might delay or lose the funds. Security and regulatory checks can hold things up still further.

When money goes missing, the sending bank has to liaise with all the banks along the chain to trace it.

The result is that, despite the revolution in technology, it’s still quicker to take a suitcase of money by plane to many parts of the world. Moreover, because of the charges levied by each bank along the way, combined fees of over £50 can be charged for a single payment. Poor exchange rates and fluctuating currencies can shave off an extra chunk.

According to the Financial Conduct Authority, which regulates UK banks, an online payment should reach its destination by the end of the next working day. Bank websites tend to leave it open-ended, however. Nationwide’s guidelines advise that while payments within the European Economic Area should take one working day, those sent to the rest of the world “may take longer”. Santander reckons a payment will “usually” take up to four working days, TSB up to 12 working days and Lloyds and its brands state it “should” take no more than 14. None specify the total cost.

Payments tend to take longest – and cost more – when sent to, or from, poorer parts of the world with less developed infrastructure.

Laura Fulcher waited five months for a £500 holiday deposit to reach her Ghanaian tour operator. It was eventually refunded after the Observer contacted her bank, TSB. It also repaid associated expenses and added interest and £50 in compensation for the “inconvenience”.

“Unfortunately, the payment was subject to the processing system in Ghana,” it says. “This type of delay is not uncommon in some countries with less sophisticated and reliable banking systems than the UK.”

Under Financial Conduct Authority rules, UK banks are liable for payments until they reach their destination unless the customer made a mistake with the account details. They are expected to make “immediate efforts” to trace missing funds and update the customer, and they must refund a failed transaction in full without “undue delay”.

Customers who are stalled by their bank can complain to the Financial Ombudsman Service, which will consider whether the bank was assiduous enough in chasing an errant payment.

Banks earn $200bn a year globally from transaction fees and exchange rate revenues, a figure that’s rising 6% a year. At the same time, anti-money laundering rules, cybercrime and volatile politics are slowing the progress of transfers to some parts of the world.

Last year, a new, voluntary pan-European scheme, SEPA Instant Credit Transfers, was launched, allowing payments of up to €15,000 to be completed within 10 seconds, 24 hours a day. However, the prospect of a similar global system with a single set of rules remains a pipe dream because of political and technological obstacles.

*Names have been changed