What is a wire transfer?
A wire transfer is a fast and reliable method of transferring or receiving funds. It allows individuals in different locations to securely send money to other people or organizations across the world via a network of banks or transfer agencies.
The traditional method of wiring money is between banks or credit unions by using a network like SWIFT (Society for Worldwide Interbank Financial Telecommunication). This is the most secure method of wiring funds.
The term can also refer to any type of electronic money transfer. These can include Automated Clearing House (ACH) payments, money transfer services from companies like Western Union, and even digital payment tools such as PayPal. It is also possible to make wire transfers in cash by visiting a cash office or retail transfer shop.
How to wire money and receive funds
Wiring an amount of money between accounts is a simple process. The sender needs to submit instructions to their bank or credit union using the recipient’s bank account details. You can provide this information to the bank by filling out a form in branch or online.
To receive the money, recipients will need to ensure they provide the sender with the correct details. If you’re unsure, request “incoming wire instructions” from your bank.
Once the sender has paid for the wire transfer, the funds will appear in the recipient’s bank account. Upon deposit, the two banking institutions will settle the payment, meaning no physical money is required.
If you’re wiring money online through transfer services, you might not require the recipient’s bank account numbers. You may only need the recipient's name, email address or mobile number, depending on the wire transfer method.
Do wire transfers have fees?
Whether you are sending a domestic or international wire transfer, you will be subject to fees. These fees vary by provider, with domestic fees costing around $25 per transaction. There may also be fees to receive a wire transfer, although some services are free.
It is best to fund wire transfers from your checking account. If you want to use your credit card to pay for a wire transfer, your issuer will define this as a cash advance. You will be subject to cash advance fees and higher interest rates along with the wire transfer costs.
How long does a wire transfer take?
One of the biggest advantages of wire transfers is their speed. Banks will process domestic wire transfers on the same day, as long as the request is made before the bank’s cut-off time. The funds can appear in the recipient’s account in a few hours.
The recipient will not have to wait for funds sent by wire transfer to clear before spending or withdrawing the money. This is helpful for merchants to quickly verify that payments are legitimate. In contrast, if a check bounces, it can take weeks for the financial institution to notify the recipient.
International transfers take longer to process. This is because both the domestic ACH and its foreign equivalent need to assess and clear the transfer. The process should be completed within two working days.
Are wire transfers secure?
Wire transfers are a safe method of sending money. However, you must know the identity of the recipient, as they are very difficult to reverse.
Traditional bank wire transfers are more secure. Each party must have a U.S. bank account, as banks need to verify the account holder’s identity and register a physical address, as required by federal regulations. This lack of anonymity makes wire transfers a less attractive target for fraudsters.
Wire transfer scams are still possible. Transfers using cash shops or services are more vulnerable. Criminals can use fake IDs to collect payments, making it difficult to verify if the correct party received the funds. For security reasons, it is best to send domestic wire transfers through your bank or credit union.
Find out about wire transfers with Brex Cash.