A telegraphic transfer is an electronic method of transferring funds, utilized primarily for overseas wire transactions.
Originally, as the name suggests, telegraphs were used to communicate the transfer between financial institutions.
However, telegraphs have become obsolete, with modern technology now allowing cable networks to transfer funds. As a result, you may also see the telegraphic transfer being referred to by the more general term wire transfer.
Telegraphic transfers are a safe way to send money overseas, but it’s important to learn about them so you are aware of what is involved – and the potential downsides.
How Do They Work?
Funds sent between institutions are typically transferred through the Society for Worldwide Interbank Financial Telecommunication (SWIFT) for international transfers.
There are usually three steps involved when sending a telegraphic transfer:
- The sender instructs their bank to send funds overseas to a beneficiary. This can be done at a branch or via online banking.
- The sender’s bank sends the funds to a bank it deals with in the destination country. If the beneficiary has an account at that bank, the funds are credited to his or her account and the transaction is complete.
- If the beneficiary’s accounts are at another bank, the funds are transferred again to that bank, at which point the transaction is complete. It is possible the funds will pass through two or more correspondent banks before it finally reaches the beneficiary’s bank.
How Do They Differ From Wire Transfers?
Telegraphic/online transfers differ from wire transfers in four main ways:
Bank wire transfers can cost a lot of money, especially when it comes to international payments. Financial institutes can charge almost $40 or more to send $5000 to the United States. For larger payments you could be charged even more.
As mentioned above, funds may be passed through more than one intermediary bank on their way to the recipient’s account. Each of these banks will take their own piece of the cake – meaning an even higher sending fee! Some banks and credit unions will even charge the recipient a fee to receive funds by wire.
Due to the fast nature of the transaction, online transfers can be expensive too, with certain transfer companies charging high fees to make payments. However, if you look around you will find that some transfer companies offer a very low and favourable flat fee.
Wire transfers typically take around 3 business days to move money between bank accounts. For international transfers, they can take up to 5 business days – with a small chance they take even longer. This is because some countries have inefficient, outdated banking systems.
Online transfers are usually complete within one business day, and in some cases can even be instant!
Both methods are a very secure way to transfer funds, when you transfer to bank accounts. However, there is a risk of fraud when you send cash via wire transfer.
A false identity can be used on the receiving end – once the wire transfer turns into cash, it cannot be traced. Transactions using online transfers can be reversed, meaning you are protected from fraud. Mistakes can be made, and if you are overcharged by a business, you will be refunded.
Fraud liability laws also protect you when you make an online payment. So if you pay for something with your card that’s damaged/not delivered, you are protected and can be refunded.
Sometimes sending a wire transfer will require taking a trip to the bank to fill out forms – especially for large payments. Wire transfers can also be sent over an online banking website or through a company that processed wire transfers.
Online transfers are very easy to make, especially person to person. They typically involve filling out a simple online form. With online transfers, there is no need to go to a money wiring office, telegraph station or even a bank.
What Is The Best Way To Send Money Overseas?
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