Wire transfer is one of the most popular methods of moving money worldwide. But, how much do you really know about wire transfers and the actual process of wiring money?
Whether you’re sending money to your family overseas or making international business payments, it’s important to know that your money is in good hands.
Here are the top 10 things you need to know about wire transfers, so you can send payments without the stress.
#1 – What is a Wire Transfer?
Let’s start at the…well…beginning. A wire transfer is an electronic transfer of funds from one person or corporation to another business or individual. Put simply, money is transferred from one bank or financial institution to another.
#2 – How Do I Send a Wire Transfer?
Typically, you will need to visit your bank and fill out a form with the following information:
– The recipient’s name and full address
– The recipient’s branch number and full address
– The recipient’s bank account number
– The recipient bank’s BIC/Swift Code
– ABA (American Bankers Association) or Routing Number: If sending money to the USA
– IBAN (International Bank Account Number): If sending money to Europe.
It may be worth calling your bank in advance to double-check exactly what your branch requires, as some may seek additional information.
#3 – What Are The Different Types of Wire Transfers?
Wire transfers can be:
a) Domestic: Sent from one bank account to another within the same country.
b) International: Sent to a bank account that is based in another country.
Both domestic and international wire transfers can be broken down into two further categories:
– Intra-Bank: Transfer from one account to another account within the same bank.
– Inter-Bank: Transfer from an account with one bank to an account with another bank.
#4 – How Do Wire Transfers Work?
Ok, here we go. Wire transfers are sent via networks that connect banks to each other. Think of a network as the messenger between the banks in an electronic money-sending transaction.
They don’t actually handle any money, but instead send the international money orders from one bank to another.
Domestic Wire Transfers:
Both the sender and recipient of the transfer belong to the same bank. The bank’s software is instructed to transfer the funds between its accounts or branches. Simply put, money is removed from one account and added to another.
The sender and recipient of the transfer belong to different banks. Banks are members of a secure, closed network that collects and settles the intra-bank wire transfers. Simply put, money is removed from one bank’s account and added to another bank’s account. Examples of networks: RTGS, ACH.
International Wire Transfers:
Some big banks have branches in several countries, while some banks have accounts of their own (Nostro Accounts) in foreign banks. This means it’s (technically) possible for both the sender & recipient of an international payment to belong to the same bank.
The SWIFT network is the network banks typically use for these transactions – meaning transfers can be sent without the involvement of an intermediary bank.
Not all banks own accounts in banks overseas. This is when an intermediary bank is used – essentially a pit stop for the payment. When this happens, the payment must pass through compliance regulations in the country of the sender, the intermediary bank and the recipient. This means they can take much longer.
Different networks can be used for this payment type, depending on the location of the banks involved. Examples of networks by country: Canada & U.S: ACH. Europe: SEPA. India: NEFT / IMPS / RTGS.
#5 – How Much Do Wire Transfers Cost?
There is no denying the fact that wire transfers are expensive. Domestic wire transfers, on average, cost a minimum of $25 per transfer, but can go up to $35.
International wire transfers cost anywhere from $30-80…sometimes even more! This is all before you take into account that the recipient will also likely have to pay a receiving fee of $10-15.
Wire transfers are so expensive because of numerous hidden fees that accrue throughout the wiring process. For more info on these hidden fees (and how to avoid them!)
Check out our blog: Why Are Wire Transfers So Expensive
#6 – How Long Do Wire Transfers Take?
Wiring money is outdated in this world of speedy online transfers and people are often surprised at how long they can take.
Domestic wire transfers are purported to be same-day transactions, but typically take at least one additional business day.
International wire transfers can take anywhere from 3-5 business days, but it’s not uncommon for them to take a week (or more!)
These processing times differ because a domestic wire transfer goes through a domestic network (i.e. the ACH in that country), whereas international wires have to clear through a domestic ACH and its overseas equivalent, which adds another day (or more) to the protocol.
When you factor in the difference in time zones and opening times of banks in the destination country, you’re likely looking at additional hours/days until your transaction is processed and your recipient receives their funds.
#7 – How Safe are Wire Transfers?
Wire transfers are quite secure, but not entirely without risk.
Since wire transfers require the recipient’s bank account number and a network (i.e. SWIFT) code, any errors in these numbers (like incorrectly entered digits) can sidetrack your transfer, or have it land in the wrong hands.
In this case, it can take weeks to recover the money – or you may never get it back. This is especially true if the errored wire transfer has passed through multiple intermediaries.
As such, you should always be wary when sending a wire transfer to a new recipient. Fraudsters can claim they’re a legitimate business, or design themselves as such. Once you’ve wired money to them, you won’t be able to get it back.
#8 – Can You Track Your Wire Transfers?
Not all wire transfers are completed smoothly or successfully, but you can trace your wires to ensure they’re still on track, or to get them back on it.
When you make a wire transfer, you will get a Federal Reference Number as confirmation of your transaction. You can call or visit your bank to track your wire, and they will use your Federal Reference number to trace it.
They’ll be able to see the transactional details between your bank and the corresponding one (to which your funds are supposed to funnel into) as well as identify its current location.
If you find out your wire is being posted to an incorrect account, you can request a recall wire where your funds will get transferred back into your account.
If your wire is taking longer than it’s supposed to and you’re getting worried, here’s what you can do. Contact the sender to acquire some of the following info:
– The Federal Reference number attached to the transfer
– The SWIFT number for the bank of the sender
– The date the transfer should have been available
– The exact amount of the transfer
Your bank will then use this information to determine if a wire deposit to your account is pending.
If your bank can’t locate the wire, notify your transfer sender so they can check their transaction, and initiate a wire trace to locate the funds if necessary.
#9 – Non-Bank Wire Transfers
Some companies that are not banks offer wire transfer services, a well known example being Western Union.
Some may think that because they’re not using a traditional wire transfer, they’re using the better option – this is not usually the case.
For example, a non-bank wire transfer may be slightly quicker, but they sure won’t be less expensive. Plus, if you wire a payment to be collected in cash, scammers can easily use a false ID to claim your money.
There’s also some non-banks that offer digital services (or e-wallets), where you set up an online account that acts as an intermediary between the banks of your transfer. Paypal is a prime example. Paypal charges a very high percentage for currency conversions when making international payments, and it can often take a week before the payment is complete.
#10 – Alternatives to Wire Transfers
Payment methods grounded in blockchain technology allow domestic and international payments to be processed, faster, easier…and for much cheaper than wires!
Here at Remitr, we – offer effortless, on time payments, wherever you do business.
With us, registered Canadian businesses can pay local staff, vendors, suppliers etc. without the hefty bank wire fees or the delays. We offer same-day local payments for a flat fee of $1!
Remitr also offers non-stop international business payments. You can send payments to 150+ countries in our global network in 1-2 business days – all for a flat fee of just $5.
We’ve even got you covered for receiving your online sales payouts. The FREE Remitr Global Business Account (GBA) makes getting paid painless. Receive in USD, EUR or GBP from your customers or your payment processor, and save up to 2% in currency fees.
And there you have it. Oh, one more thing…
#11- Wire Transfers Suck #SorryNotSorry