What is a wire transfer?

wire-transferWhen you need to send money quickly and safely, you may start to consider using a wire transfer. Wire transfers originated in the 19th century when people would use them to send money over the telegraph lines or wires, hence the name “wire transfer.” Also known as a credit transfer, today they are used to electronically transfer funds from one entity to another. They can either be initiated from a bank account, or through a cash office with cash. Here is everything you need to know about the methods, process, and reliability of using a wire transfer.

The Methods
There are a few different ways to send and receive the funds involved in a wire transfer. The most common transfers are either domestic, international, or retail money transfers.

Domestic Transfers
Wire exchanges that occur between two United States bank account numbers are conducted through the Fedwire system. This system is operated by the United States Federal Reserve and it enables financial institutions to transfer funds by assigning a unique routing transit number to each bank.

International Transfers
Wire exchanges that occur between an American bank or credit union and a foreign bank are executed through SWIFT. This stands for the Society for Worldwide Interbank Financial Telecommunication, and it provides a network that enables institutions to participate in transactions that are secured and standardized. Founded in 1974, by a group of international banks, SWIFT generates and exchanges messages that hold the data for the funds transfer. Each foreign institution is assigned a code called a Bank Identifier Code (BIC) or SWIFT Code that is generally eight characters long. By extending the code to eleven characters, the wire transfer can be sent not only to a specific bank but a particular location, office, or branch of that bank.

Retail Money Transfers
These types of exchanges use retail companies like Western Union, MoneyGram, TransferWise, and Dwolla to send or receive cash money without an account number at a financial institution. Usually, these transfers are immediately ready for pickup at any of the retail chain’s locations, and they are cheaper than the previously mentioned domestic and international wire transfers. Most of these companies keep the information about the senders and receivers for their records, and some sort of I.D. is needed to collect the funds. Other times, retail wire transfers can remain anonymous and the receiver may not be required to show identification at all.

The Process
The process of retail wire transfers requires locating a company that will conduct the transfer and filling out the appropriate paperwork. Domestic and international bank wire transfers require meeting with a banker at the initiating (sending) branch. Here are the steps:

1. First, you must have an account at the bank that will be sending the money. You will then sit down with a banker who will fill out both an electronic form and paper form to gain the IBAN and BIC codes. Make sure to have account numbers, locations, and accountholder names readily available.

2. Once the information is in, the fees should be calculated. These fees can be costly but they vary from bank to bank so most people use wire transfers to send only large funds. While the majority of banks and credit unions charge an initiation or outgoing fee, only few charge an incoming wire fee. After you and the banker sign the wire approval, your bank will send a secure message to the receiving bank using SWIFT or FedWire.

3. Although the money will immediately be withdrawn from the sending account, the funds can take anywhere from a few hours to a couple of days to show up in the receiver’s account depending on both banks and accounts. Access to those funds is also dependent on the branch.

The Reliability
When choosing to send money for business deals or personal means, there are many options. Most people choose wires because of their dependability, quickness, and security. The majority of wire transfers require proving the identity of the sender and receiver, but the information that is contained within the wires is transmitted through encrypted messages, keeping the information secure. Because the process involves government organizations and standards, chargebacks and errors are unlikely. Wires are also a great form of payment because banks will only initiate the wire if the sender has the funds available in the account. If you ever feel like the banker is asking too many questions, remember that it is in order to make sure that the money goes to the right account and that the reason for the wire is not fraudulent. Bankers are trained to recognize fraud for the sender’s protection because once the money is sent (domestic, international, or retail money transfers), it is nearly impossible to get it back.


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10 Comments

  1. Thank you @admin for your explanation of wire transfers. I have used western union for transfers of funds to poker sites. And it is a long process that requires a few days to take effect.
    It could take up to 5 business days or longer to receive money from international transfers.

  2. In my opinion, This is more like it and far safer then the other methods. Why? First it involve the bank entity which guaranteed by some central bank. Second, The international inter-bank clearance allow the currency flow using an international currency exchange which make the US$ as a standard exchange. Third, although it seem old fashioned and conservative, but surely 100% your money is a “real” money and every single of it guarantee by “real” gold.

  3. yes i agree with bernardbear, is considered very safe. because at this time should be available in every country who accept payment by bank wire transfer. and as a suggestion to the members who use wire transfer we should know how much the fees charged by banks in each receive the funds, because of the cost of each bank is different, although not too much difference

    • Yes mbach, and almost in every prime bank on every country that goes online, they provide wire transfer feature. So now it easier to shop online trough your own bank account. Unfortunately, not all online shopping provide wire transfer feature…

  4. @admin very nice information on wire transfer. I like wire transfer because it is safe to use and now there is no need to go to banks for it you can wire transfer money through your net banking account.

  5. Thanks Admin for sharing such an informative article about the Wire transfer. You have provided almost complete details for it. Before reading this I think that Western Union and Money Grams are the currency exchanges.
    Well I consider the these Retailer methods quicker than other two types of wire transfer.
    As other takes some days for complete the money transfer. But all of these methods are much more safer than other online transfer methods.

    • @post2search : Yes, you should try it, in my opinion this is the safest payment methods exist. Because almost every bank in every nation has it. There’s no worry about fraudulent, credit card steal, or account cracking. Because your account is safe in your bank.

  6. Thanks for this review. No doubt, wire transfer have made the banking life more easy now a days. Now we can transfer money worldwide within 2-5 days through wire transfer. And I think SWIFT code has very importance in this process. With out this code, it’s very difficult to trace out the bank location, I think….
    Now in this modern age, almost all the persons are using this method to send their money to their love ones.

    • Yes @hafiz786, i agree with you, in my opinion this transaction method probably the best and safest method so far. Simple, real time and fast.every nation can use it. from the superpower nation to the third developing nation.

  7. Hello
    It is impossible to withdraw money on my account and PayPal and Skrill
    He writes: recipient not found please try again
    No pending transfers and fund
    Why is not my account
    I already Points: 5 145.00

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