Last editedJuly 20202 min read
When you need to send a large sum of money – for example, you’re closing in on a new piece of real estate for your company and want to pay the deposit – bank wire transfers can be ideal. Fast, secure, and reliable, wire transfers are an excellent tool for sending or receiving money safely. So, what is a wire transfer?
Wire transfer meaning
A wire transfer is an electronic transfer of money that enables people based in different locations to safely transfer funds to financial institutions and locales all around the world. No physical money is ever actually exchanged between the two banks, just information. There are many different networks that enable bank wire transfers, including the Federal Reserve Wire Network, the SWIFT network, and CHAPS (Clearing House Interbank Payments System). The term “wire transfer” stems from the fact that banks used to rely on telegraphic wires to complete this kind of money transfer.
How does a wire transfer work?
From the sender’s perspective, the wire transfer process is relatively simple. You’ll simply head into your local branch, speak to a teller, and follow their instructions. Alternatively, you can log into your online banking account and complete the bank wire transfer there. But what’s really happening when you ask to move your funds – how does a wire transfer work?
Essentially, after the sender pays for the transaction at their bank, the sending bank sends a message to the recipient’s bank through a secure system, such as Fedwire, including all the necessary information to make the transfer. Then, the recipient’s bank will deposit their own funds into the account, and the banks settle the payment, thereby completing the wire transfer.
What information is needed for a wire transfer?
Each bank and financial institution have different codes and conventions when it comes to sending bank wire transfers. So, what information is needed for a wire transfer? Typically, the following pieces of information are needed to send and receive a wire transfer:
Full name and address of the recipient
Full name and address of the recipient’s bank
Reason for the transfer
Recipient’s account number and account type
Recipient’s routing number
SWIFT/BIC code (if applicable)
IBAN number (if applicable)
There may be even more specific requirements for making a bank wire transfer, depending on which country you’re moving funds to. For example, if you’re sending money to a recipient in Mexico, you may also need to include an 18-digit CLABE number to identify their account number, location, and bank code. As such, it’s a good idea to contact the recipient’s bank directly to find out exactly what information is needed for a wire transfer.
How long does a bank wire transfer take?
In most cases, your wire transfer will be completed within a few days. While it only takes a few minutes to set up and initiate the wire transfer, processing times can take a little longer. In the US, the request will often be processed on the same day, and in most cases, within a few hours. However, if you’re sending an international bank wire transfer, it may take a couple of days to move the funds. This is because your money will need to pass through a US clearinghouse and a processing system from at least one foreign country.
How much do wire transfers cost?
Wire transfers can cost anywhere between $15 and $50. As such, they’re one of the most expensive ways to send money. The charge depends on your bank, the transfer amount, and whether the wire is domestic or international. Recipients may also be charged a small fee – usually around $8 to $10 – to receive the money upon arrival.
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