Wire Transfers: The What-How-&-When Guide
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A Complete Guide On How To Wire Money

Updated on March 29, 2021 11:19 am
Wire Transfers

If you want to send a large amount of money quickly and securely within the US or abroad, wire transfers will do the job for you. 

By the end of this blog, you will know what wire transfers are, how to send a wire transfer, how wire transfers work, how much they cost, how safe it is, and many more. Let's get started!

What Are Wire Transfers?

The earliest wire transfers were done over the telegraph wires, hence the term wire transfer. To send money to people in distant places, one would go to a telegraph office and pay the money. The telegraph office would send a coded message to another telegraph office near the destined location authorizing the release of funds to the recipient. 

This is not the case anymore. Wire transfers now describe the electronic transfers of money. Banks and non-bank money transfer providers offer wire transfers. 

Bank wire transfers occur via networks such as Fedwire or SWIFT (Society for Worldwide Interbank Financial Telecommunication). Most international transfers happen through SWIFT. 

SWIFT, founded in 1974 is a global messaging network used by banks and financial institutions to exchange data for the purpose of money transfers. The information sent through the SWIFT network is protected through encryption.

How to Wire Money?

Here are the steps to successfully wire money. 

  • Money Transfer Provider: Banks or Non-Banks

You can choose either banks or non-banks money transfer companies such as Western Union, MoneyGram, Ria, Wise, etc. 

With bank wire transfers, the sender's and recipient's banks are involved in the process. Domestic transfers may take less than a day but international transfers tend to take a few days to get processed. 

On the other hand, money transfer companies or third-party service providers allow you to transfer money between bank accounts, send cash for pick up, or even pay bills using wire transfers. The speed of the transfers varies with the service provider and transfer method. You can send money online through their website or mobile app or even visit their agent locations in person. 

  • Collect Information 

For bank wire transfers, you need to provide the following "wire instructions" to your bank:

  1. Recipient's name and contact information
  2. Recipient's bank name account number or IBAN (International bank account number)
  3. Recipient's BIC/SWIFT ID 
  4. Transfer amount 
  5. Any additional information required by the bank 

Each bank or financial institution in the SWIFT network is given a unique code called the bank identifier code (BIC) or SWIFT ID which can be 8 to 11 characters long. Your recipient can get the above information from their banks where the money is to be received. 

For transfers via third-party service providers, you will need to provide the recipient's name, phone number, address, bank details. Although bank details may not be needed depending on which delivery method you choose.

  • Check the Cost of the Transfers 

All wire transfers charge processing fees. The fees vary depending on the service provider. And also on whether you are sending the money online or in person. Domestic wire transfers are generally cheaper than international wires.  

  • Be Aware of Your Rights 

Whenever you do international wires, under federal law, you have the right to know details about the transfer such as the exchange rate, fees charged, the delivery date, the total amount to be received (fees excluded), and even taxes collected by the participating banks. Your bank can get you a receipt containing such details.  

  • Fill Out the Wire Transfer Form/Online Submission Form Carefully

Fill in the required information correctly: names, addresses, bank account number, routing number, etc. Check for any mistakes to ensure the transfer goes through and to the person and bank account you intend to send. Mistakes could delay or derail your money transfer. 

It is difficult to reverse a wire transfer once the funds have been disbursed. Once the recipient's bank accepts the transfer, it cannot be reversed. Sending a cancellation notice to the recipient bank before it accepts the transfer order is a race against the transfer network between the banks. 

  • Keep Hold of the Receipt 

This can come in handy for future reference in case there is a problem with the transfer. It has important information relevant to your transaction. Screengrab it.

Mistakes to Avoid in Making a Wire Transfer

Wire transfer is not complicated as long as you are careful. Keep in mind the following points to prevent you from costing money and save trouble. 

  1. No typos on account numbers, names, SWIFT ID. This is a crucial step and hence worth repeating. Making a small mistake such as account numbers being off by a single digit can mean a blocked transfer or worse- the money going to the wrong person. There is little chance that you will get the money back
  2. Being aware of exchange rates for international transfers. The final amount received by the recipient is determined by the exchange rate at the time of sending the money. If a certain amount is expected to be received at the other end, knowing the exchange rate is a must. You can also choose the most competitive rate after comparing the different rates offered by money transfer companies from a comparison site CompareRemit 
  3. Send more money, but less frequently. If you need to send funds regularly, it is wise to send a larger amount rather than frequently sending smaller amounts. Since such transfers come with a fee, it will add up
  4. Plan ahead whenever you can so that you don't have to send money in a hurry. If you want your money to reach the destination country as quickly as possible, the fees can be higher for a faster delivery method
  5. Know how to avoid wire transfer scams. Here are tips to avoid scams

How Do International Wire Transfer Work?

There is no physical exchange of funds in wire transfers. When two banks are in the SWIFT network, the transfer is carried out through an exchange of encrypted information that contains the wire instructions. The money from one's bank account is transferred to the other person's bank account through the network. 

If the two banks can't communicate with each other, an intermediary bank can facilitate the transfer process. Regardless of the type of wire transfer, there will always be an entity that facilitates the movement of funds from the sending party to the receiving party. That is why you need to pay a fee for the service. 

The sender first approaches the bank or third-party service provider and makes the payment for the transfer which includes the amount to be sent and a transaction fee. The sender provides all the necessary information (discussed above). The sender's bank then transmits a coded message via the SWIFT network to clear the funds.

Once the recipient's bank receives the message, the bank deposits money to the recipient's account from its reserve funds as per the wire instructions. It may take several hours to days for the funds to be deposited into the recipient's account from the initiation of the transaction.  

Since there is no physical transfer of funds, the two institutions settle the payments on the back end once the transaction between the sender and recipient is complete.

What Is the Cost of Wire Transfers?

It is a good practice to check transfer fees before initiating a wire transfer. Get to know the wire transfer fees upfront whenever possible. 

Domestic bank wire transfers range from $25 to $30 or more and for international wires, the cost may range from $45 to $50 or more. 

Some banks also waive fees for incoming wire transfers or charge less for outgoing wire transfers. Check with your bank for such offers. Also, be aware that banks often give a poor exchange rate and may have hidden fees. This is one of the ways banks make money off of money transfers. 

Also, intermediary banks involved in the transfer process may charge additional fees. Make sure you have enough money in your bank account to cover all the fees. 

In some cases, the receiving bank may charge a fee. 

When you send through a third party transfer, the fees vary with transfer amount, delivery speed, transfer method, payment methods such as whether you use a credit card, debit card, or a bank account, destination country, and several other factors.

How Long Does a Wire Transfer Take? 

The transmission time may take a few hours to days. If the destination banks are in a different time zone and the working hours are not the same, the time taken will be longer even if the transfer is initiated on the same day. 

Banks also have a certain cutoff time for same-day wire transfers, so if you submit by the cutoff time, the recipient may receive the funds on the same day. 

In cases where 2-3 banks get involved, it is bound to take longer than usual. SWIFT transfers are always swift unlike the name suggests. Sending money via the SWIFT network can be compared to traveling by plane to a place where there is no direct route and hence have to catch a connecting flight or two from another airport to reach your destination.   

How Safe Are Wire Transfers?

With bank-to-bank wire transfers, the sender and recipient are account holders, hence their identity is known. Federal regulations require banks to verify account holders' identity, home addresses, and other documents. The lack of anonymity makes it safe and less fraud to scams. 

Banks are also required to follow banking regulations. All wire transfers exceeding $10,000 must be reported by the banks to the Financial Crimes Enforcement Network using a Currency Transaction Report (CTR). 

Banks have the responsibility to report any suspicious bank wire activity to the regulators. 

Failing to file such reports is subject to fines for violation of banking rules.  

Cased-based wire transfers such as via Western Union or equivalent where the receiver can be anonymous are prone to fraud. It is harder to identify and track the receiver. Receivers at the cash offices are not always required to show their ID. Anyone with a fake ID can collect the cash. 

The fact that a wire transfer is one of the fastest ways to transfer money can be a detriment to both the sender and the recipient. Once initiated, it is extremely difficult to cancel it. 

That is why it is important that you are sending your money to businesses or individuals that you trust. 

There are many instances where scammers entice people to wire money instead of sending a check or paying using a credit card because it is difficult to reverse and the money reaches quickly. 

Other Types Electronic Money Transfers

Various electronic money transfers may be termed as 'wire transfers' but are not similar to the ones described above. 

ACH Transfers

ACH transfers or Automated Clearing House Transfers are bank-to-bank transfers through the ACH network. The money is transferred within one-two days without any additional fees or minimum fees or trips to the bank. It can be reversed but only in some cases. It is convenient for small and frequent payments like bill payments or direct deposits. 

Peer-to-Peer Payment Tools

P2P payment services like Paypal, Venmo, Zelle, Cash App allows customers to send money directly to other people, even without a bank account. These services are easy to use and inexpensive. There are lots of options to choose and each P2P service has its own strengths and weaknesses. It is best to do little research and use the one that works best for you. 

Wire transfers are a safe way to transfer money domestically and internationally. While there are many aspects to consider when sending money overseas, such as exchange rates, speed, fees, etc, it is guaranteed that the money will reach your intended destination if one is careful and aware of the process. 

However, it is also smart to review all the available options from wire transfers to P2P payment tools to decide on the best ways to send money so that your transactions are safe, convenient, and cost-effective. 

Modern financial technology has changed the way people transfer money and has allowed businesses to thrive and expand across the globe.

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