Wire Transfers Explained: 10 Things You Absolutely Need To Know - Truly Financial

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Wire Transfers Explained: 10 Things You Absolutely Need To Know

BlogTips • February 23, 2022 • Team Truly


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Wire transfer is one of the most popular methods of moving money worldwide. But, how much do we 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 wire transfer services are in good hands.

Here are the top 10 things you need to know about wire transfers, so you can start sending payments without the stress.

#1: What is a Wire Transfer? 

A wire transfer is an electronic transfer of funds from one person or corporation to another business or individual. In other words, 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.

You may also want to check ahead to see what wire transfer fees your bank will charge you per transaction.

#3: What Are The Different Types of Wire Transfers?

Wire transfers can be:

a) Domestic: Sent locally between accounts 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 additional sub-categories:

- Intra-Bank: Transferring between accounts within the same bank.

- Inter-Bank: Transferring from an account with one financial institution to an account with another.

#4: How Do Wire Transfers Work?

Wire transfers are sent using internal networks that connect banks. Think of the networks like a messenger that’s going between banks in an electronic money-sending transaction.

These networks don’t actually handle any money, but instead, act as the secure pathway for sending international money orders from one bank to another.

Domestic Wire Transfers:

Intra-bank

Both the sender and the recipient of the transfer belong to the same bank. The bank’s software is instructed to transfer funds between its accounts or branches. Simply put, money is removed from one account and added to another.

Inter-bank

The sender and recipient of the transfer belong to different financial institutions. Banks are members of a secure, closed network that collects and settles intra-bank wire transfers. Money is removed from the sender’s bank account and then added to the recipient's account. Examples of networks: RTGS, ACH

International Wire Transfers:

Intra-bank

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 possible for both the sender and recipient of an international payment to belong to the same bank.

The SWIFT network is the network that banks typically use for these transactions. This means that transfers can be sent without using an intermediary bank.

Inter-bank

Not all banks own accounts in banks overseas. This is when an intermediary bank is used. It essentially acts as a pit stop for the payment on the way to its final destination.

When this happens, the payment must pass through compliance regulations in the country of the sender, the intermediary bank, as well as the recipient. These additional requirements can result in a slightly longer process than other wire transfer services.

Different networks can be used for this payment type, depending on the location of the banks involved.

Examples of networks by country: 

Domestic Wire Transfers
Intra-bank Inter-bank
  • 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 own accounts or branches. 
  • 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. 
  • Money is removed from one bank’s account and added to an account at a different financial institution.  
Examples of networks: RTGS, ACH
International Wire Transfers
Intra-bank Inter-bank
  • Some big banks have branches in several countries, while others have accounts of their own (Nostro Accounts) in foreign banks.
  • It’s possible for both the sender & recipient of an international payment to belong to the same bank.
  • The SWIFT network is the network that banks typically use for intra-bank transactions. This means that transfers can be sent without using an intermediary bank.
  • When a bank doesn’t own accounts in banks overseas, they use an intermediary bank, which acts as a pit stop for the payment on the way to its final destination.
  • The payment must pass through compliance regulations in the country of the sender, the intermediary bank, and the recipient. This can result in a slightly longer process than other wire transfer services.
  • Different networks can be used for inter-bank payments, 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 that wire transfers can be expensive. Domestic wire transfers, on average, cost a minimum of $20 per transfer, but can go up to $30.

International wire transfer services only usually cost between $45-50, although you can expect some additional wire transfer fees for accepting incoming payments from certain countries.

Wire transfers may not always be cheap, but the good news is that as long as you track them, you can actually claim them as business expenses at the end of the year when you file your taxes. There are lots of useful expenses you can deduct - for more suggestions check out our blog on Small Business Tax Deductions.

#6: How Long Does a Wire Transfer Take?

Wiring money may be considered outdated by some, but that’s only because they’re using financial institutions that don’t appreciate the value of fast, efficient wire transfers.

Domestic wire transfers are purported to be same-day transactions but typically take at least one additional business day at some banks.

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, and international wires also have to clear their overseas equivalent, which can add additional time to the process.

Thankfully, there are some institutions like Truly Financial, that can provide easy, reliable wire transfer services to a host of countries.

This helps cut down on how long a wire transfer does take to complete, as well as minimizes fluctuating wire transfer fees.

#7: How Safe are Wire Transfers?

Wire transfers are quite secure, but they do carry some risks.

Since wire transfers require the recipient’s bank account number and a network (i.e. SWIFT) code, any errors in these numbers (such as incorrect digits) can sidetrack your transfer, or result in it being deposited into the wrong account.

In these cases, it can take weeks to recover the money, and sometimes you may not get it back at all. This is especially true if the errored wire transfer has passed through multiple intermediaries.

As such, you need to be careful when entering the information you’ll be using with your wire transfer services. You should also use a financial institution you trust, that you know has security features in place to protect your wire transfer from avoidable issues in the delivery process.

#8: Can You Track Your Wire Transfers?

Most of the time, wire transfers are completed smoothly and successfully, but occasionally you may face an unexpected issue. Thankfully, you can trace your wire transfer services throughout processing to ensure it’s completed properly.

This way, if something unexpected occurs, you can step in quickly to help rectify the issue.

Senders:

When you make a wire transfer, you get a Federal Reference Number as the confirmation of your transaction. You can contact your bank to track your wire transfer, and they’ll use your Federal Reference number to trace it.

They’ll be able to see the transactional details between your bank, the corresponding bank into which funds are being deposited, as well as identify the wire transfer’s current location.

If you notice your wire isn’t being posted to the correct account, you can request a recall wire. In this situation, your funds are transferred back into your account. Ideally, this should always be done before funds end up in the wrong account, and it becomes more challenging to retrieve them.

Recipients:

If your wire is taking longer than it’s supposed to and you’re starting to become concerned, contact the sender to acquire 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 can 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. You can also initiate a wire trace to locate the funds if necessary.

Truly Financial allows you to track all of your ongoing wire transfers quickly and easily. Since we offer convenient worldwide wire transfers, we can also reduce the time wire transfers take compared to other financial institutions.

#9: Non-Bank Wire Transfers

Some businesses that aren’t banks offer wire transfer services as well. For example, one well-known company that provides wire transfers is Western Union.

Some may think that because they’re not using a traditional wire transfer, they’re using a better alternative. Unfortunately, that’s not usually the case. 

A non-bank wire transfer may process slightly faster, but their wire transfer fees will be much higher than using a bank.

There are 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 of these types of wire transfer services. 

Paypal charges an extremely high percentage for currency conversions when making international payments compared to banks, and it can often take a week or more before the payment is complete.

On the other hand, Truly Financial provides convenient, affordable wire transfer services across a huge number of countries. And best of all, when you send wire transfers to vendors that are also using Truly Financial, they receive your payment in one business day.

#10: Alternatives to Wire Transfers

There is a wide selection of other payment options available through Truly Financial, in addition to wire transfer services.

Not only can you send one-day payments to any of the 50 countries in Truly Financial’s Express Network, but you have the option of sending payments through EFT and ACH as well.

We believe in taking back the power from big banks and putting it in the hands of small businesses owners. Now you can avoid high bank fees and scale your companies while reducing the time spent waiting on transfers and vendor payments. 

You can even easily delegate payment responsibilities to others on your team, so you’ll be able to focus your attention on other valuable areas of improvement and growth for your business.

Are you ready to join the better business banking revolution?