Whenever you transfer money, you’ll always be asked to add a payment reference. But what purpose does this often overlooked aspect of money movement serve?
Whether you’re paying bills or sending money to friends and family, this helpful guide will look at what a reference on a bank transfer is, how it works and what you need to do if you submit the wrong reference.
WorldRemit Content Team
• 5 mins read •
Updated
What is a bank transfer reference?
Put simply, a bank transfer reference, also known as a Payment Reference, is a message to the person being paid that allows them to easily identify where the money has come from – and the reason for that transfer being sent. The transfer doesn’t have to be a bank transfer: you’ll also require a reference for a direct debit payment or standing order.
If you’re transferring money to a friend or family member, then the bank transfer reference may be something as simple as ‘Holiday money’ or ‘bill for restaurant’.
However, if you’re sending money to a company, then you’ll need to think a bit more carefully about the reference you use for a bank transfer. This is important for both the customer and the business, as accurate payment references allow a company to successfully record money flowing in and out of their business and link the payment to the corresponding customer account. Quite often, this reference will be in the form of numbers, which we will discuss in the next section.
To help speed up the money transfer process for future bank transfers to the same company or individual, you can save the payment reference.
How do bank transfer reference numbers work?
For any bank transfer you complete, a payment reference number will automatically be generated and assigned to that single transaction. As we mentioned in the previous section, you can use the same reference name for bank transfers – but the number assigned to that particular transfer will be different.
This is because the number doesn’t apply to an individual customer or account, it links to that specific transfer. This is the case no matter the amount of money being moved.
The bank transfer reference number makes it much easier for businesses to monitor all transactions associated with a particular card and customer. You’ll also notice that this payment reference number is included on any bank account statement.
If you want to find your payment reference number, then you can usually do so in invoice letters or bills. It’s always worth getting in touch with the company for further clarification, if you’re unsure.
Why is this important for businesses?
A bank transfer reference number means that the interaction between a customer and a company can become a lot more efficient – and any queries can get resolved quickly. A business will be able to find a particular transaction on its database, meaning it can easily find important details such as the date of the bank transfer, the amount paid and where that money was paid to.
This information is also important if you’ve been the victim of a fraudulent transaction, as the location of the card terminal used can be tracked – and any payments can be made void while investigations are carried out.
Why do I need a bank transfer reference?
If you’re sending a bank transfer to friends or family, then the reason for entering one is a little more obvious. While it’s not essential, it means that your receiver is able to identify why the funds have been sent to them and allows them to keep track of their financial history better. A more detailed bank transfer reference is better than sending a payment with the reference name ‘money’, for example.
If you’re sending money to a company, then providing this information becomes even more important, as they will have to deal with a large volume of financial transactions. A bank transfer reference number for each individual transaction means that they will be able to track transfers easily, and monitor data that empowers them to deliver services in an efficient way.
This is why a lot of businesses will give you instructions when it comes to creating a bank transfer reference. Quite often, they may ask you to include your name, the reference number or another detail that is linked with that particular transaction.
What happens if I submit the wrong reference for a bank transfer?
If you do happen to submit the wrong bank transfer reference on a casual transfer, the good news is that it’s not the end of the world. You won’t have to pay again because of your error, and the individual is still able to see your account number and sort code.
Where this can become a little tricky is when you get it wrong when sending money to companies, as this can cause complications for them when matching your bank details to your customer account.
Not only is this a drain on business resources, but it can also cause delays and issues that inevitably frustrate you as the customer. Therefore, it’s always best that you spot your mistake early and get the bank transfer reference right – the first time. If you do make an error, then make sure you let the company know as soon as possible.
Summary: Understanding a bank transfer reference
So, there you have it, your guide to what a bank transfer reference is – and why it’s important. As we mentioned in this article, it’s not absolutely essential that you get this information right when transferring money to acquaintances or a company, but it can certainly help reduce complications and streamline the money transfer process.
At WorldRemit, we want our customers to feel fully empowered when they make a money transfer by having all of the correct information at their disposal. That’s why we have created helpful blogs like this one to guide you.
We offer fast, flexible and secure international money transfers around the world – meaning you can save time and money when you send cash internationally with us.
Bank transfer reference FAQs
Who sees the reference in a bank transfer?
Only you and the receiver can see the bank transfer reference, so you don’t need to worry about this information being shared with external sources and getting into the hands of the wrong people. The only way someone is able to find out this information is if you tell them.
Where is the payment reference?
Whenever you send a payment you’ll need a reference. Whether you’re sending money to loved ones or to a company, you can find the bank transfer reference by doing the following.
Company reference number: usually printed on a previous bill. If you can’t find it on the bill, then make sure you contact the company.
Friends or family reference: displayed in both your statement and your receiver’s. This could be titled something like ‘birthday gift’ or ‘flight costs’ and helps you to stay on track with your financial history by clearly naming your bank transfers – and getting others to do the same.
How long is a bank transfer reference number?
For payment references on a bank transfer, there is a limit of 18 characters, so you’ll need to make sure you don’t exceed this total in order for your bank transfer to successfully be completed. If you do happen to receive a reference number from a company that is too long, then make sure you get in touch with them as soon as possible to rectify the situation.
What other details do you need for a bank transfer?
Some of the other important details you’ll need alongside your bank transfer reference include:
the amount of money you want to send
name of the person or business you’re transferring money to
the six-digit sort code for the account you’re sending the money to
the eight-digit account number
the bank transfer reference that lets the receiver know the money is coming from you
you may need the name and address of the bank you’re sending the money to.
Useful Resources |
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Money Helper – a detailed guide on how to transfer money from your bank account. |
Barclays help section – good resource for any bank transfer related queries. |
Payment reference example – a good example of what a bank transfer reference number looks like. |
This communication is intended for marketing purposes only and does not constitute or provide legal, tax, investment or financial planning related advice.
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WorldRemit Content Team
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