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How wire transfers work.
A short guide to everything you need to know about wire transfers.
Have you ever heard the term “wire transfer” and wondered about its meaning and how it works. This article is the perfect starter guide to what you need to know about wire transfers.
What are wire transfers?
To start with, a wire transfer, also known as money wire or bank transfer, refers to the act of securely moving money electronically from one bank to another irrespective of location. As such, wire transfers can be domestic or international.
This movement of funds between banks happens over a network administered by banks and transfer agencies worldwide, usually the SWIFT (Society for worldwide interbank financial telecommunication) and Fedwire networks.
Fun fact: The SWIFT network has over 10,000 banks in +200 plus countries on its network.
What you need for a wire transfer.
If you are resident in the United States, you can initiate a wire transfer via your bank’s online system or by physically visiting a branch of your bank close to you. The following details will be required of you when you want to do a wire transfer:
The name of your recipient.
The banking information of your recipient (their bank and bank account number)
Information about the bank of your recipient ⎯ This is usually in the form of an identifier known as a routing number
A SWIFT code for international transfers.
You are also likely to be asked to submit more details if your wire transfer is international.
How wire transfers work
Here is what happens when you initiate a wire transfer:
Your bank deducts the amount you are sending upfront from your account.
They send your transfer information to the bank of your recipient over the SWIFT or Fedwire network.
Once your recipient’s bank receives the details ⎯ they credit your recipient from their reserve.
The two banks later settle the payment between each other on the back end.
So what is essentially being communicated between the two banks when you do a wire transfer is information.
How long do wire transfers take?
Wire transfers usually take less than 24 hours within the US, but international wire transfers are more complex and can take anywhere from 2 - 5 business days, depending on the destination country.
How safe are wire transfers?
Wire transfers are generally regarded as safe and secure primarily because the identity of both parties in the transaction (sender and receiver) is sure to have been verified by their respective banks before they are given an account.
As long as you have the correct account information of your recipient, your transaction is reasonably safe.
How much do wire transfers cost?
The exact fee attached to a wire transfer is usually dependent on several factors, some of which are:
The policy of the bank you are sending money from.
Your account type.
Your transfer type, whether domestic or international.
The size of your transfer.
The cost of doing domestic wire transfers within the US ranges from $20 - $30, and for international transfers, it's usually between $30 - $50.
If you want to do international transfers from the US, exploring beyond your bank’s wire transfer option is always a good idea. That way, you can be sure about the option that fits you and serves your needs best.
For example, Sendcash lets anyone send money to Nigeria with Bitcoin or their bank card. Your recipient can also create a USD account on Sendcash for receiving wire transfers.