A wire transfer is a form of electronic money transfer managed by a global network of financial institutions and money transfer companies. At the start of a transfer, the sender must provide the receiving institution with information about the recipient, including the recipient's name and account number. Wire transfer payments are processed electronically rather than through actual currency exchange.
Financial transactions can be processed directly between banks or through third parties such as Western Union. The Basics of Bank Transfers Money can be transferred quickly and securely over the Internet using a bank transfer, commonly called a wire transfer. They provide a secure method of currency exchange between two people in different (geographical) regions. Money transfers usually start at one financial institution and end at another.
As an alternative to physically exchanging currency, participating institutions exchange data about the recipient, the bank account number of the receiving bank, and the amount transferred. Transfers between financial institutions in the same country are domestic transfers. Some transactions may require a code or the intended recipient's branch number, both of which may be requested by the sender.
These deals are usually closed and delivered within a day of origination, sometimes within hours. International Wire Transfer This is a common practice for financial transactions initiated in one country and completed in another by an international wire transfer. A SWIFT or sort code is required for such transfers. The standard processing time for these transfers is two business days.
An extra day is required because domestic ACHs and their foreign counterparts must be cleared before international transfers can be processed. If you use a legitimate transport provider, IDs will be required from you and all participants. The Office of Foreign Assets Control is a department of the U.S. Treasury Department that oversees all international money transfer transactions originating in the United States.
Authorities check funds leaving the country to ensure they are not being used to finance terrorism or launder money. They are also responsible for preventing financial transactions in countries targeted by U.S. government sanctions. Wire Transfer: Pros and Cons Wire transfers make it easier to send or make payments to people who have separate bank accounts.
Today, local transfers are usually processed the same day, and even international transfers can be cleared in just a few days. They are less likely to get lost in the mail than paper checks. They're also reliable: while invoices can't be delivered, transfers can't start unless there's enough cash in the remittance account to cover the transfer.
It's not without flaws, though. Typically, banks charge a flat fee of $15 to $50 for wire transfers. Even modest transfers can tie up a lot of money. Also, some financial institutions limit the daily transfer amount. Alternatives to Wire Transfers The most common alternative to wire transfers was sending a physical check or money order before electronic networks became commonplace. This is a big disadvantage since mail can easily get lost or delayed in transit.
Payment can be made over the phone using a credit or debit card, although there are some identity theft concerns associated with this option. The National Automated Clearing House Association operates an electronic network called the Automated Clearing House (ACH) through which payments can be sent when urgent payments are not required. Bill payments, payroll, and tax refunds are common uses for ACH transfers because they can be processed in batches.
However, ACH transfers are also available for certain transactions. Sending large sums of money across borders or across the country can be a hassle, but bank transfers are quick and easy. However, transfers may take a while to process and fees may apply.