What is a wire transfer?
Wire transfers allow people and organizations to send money across the world safely and securely. Find out all you need to know about wire transfers, including the fees involved, how long they take, and how to receive them.
A wire transfer, also known as wire payments, 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 term wire transfers 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.
However, in this resource, we will be focused on the most common definition of wire transfers – wiring money 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 and can be used for both domestic and international payments.
How do I wire money and receive funds?
Wiring an amount of money between accounts is a simple process. To send funds, you will first need your recipient’s bank account details and wire instructions. You will then work with your bank, credit union, bill pay software, or financial technology company to send the wire. This typically requires you to fill out a form in branch or online. Brex allows Brex business account customers to send domestic and international wires in USD and local currency directly from the Brex dashboard. To send an international wire, please follow these steps.
If you’re wiring money online through transfer services like Western Union or Bill.com, you might not require the recipient’s bank account numbers. You may only need the recipient's name, email address, mobile number, or invoice depending on the wire transfer method.
To receive domestic and international wires, you will need to ensure you provide the sender with the correct details. If you’re unsure, request “incoming wire instructions” from your bank. Brex business account customers can find their account routing number, account number, and download wire instructions any time in their Brex dashboard by following these steps.
Once the transfer is sent, the two banking institutions will settle the payment. Wire transfers don't involve the physical exchange of cash as they are settled electronically.
Can wires be sent internationally?
Yes, you can send wires domestically and internationally. However, please note that certain countries may have sanctions on which companies you can send money to.
If you are sending international wires, the SWIFT network functions similarly to if you were to take money in a briefcase on an international trip. You may have multiple connections, delays, and fees at each connection or process (i.e., converting currency). This is because your money may travel through several different banks on the way to your destination. For instance, you may send an international wire from Brex to your supplier in Beijing. Depending on the bank relationships, the wire could pass through Barclays London and Bank of Hong Kong, before being deposited in your recipient’s account at Bank of China Beijing.
When sending an International wire, you may have the option of sending your international wire in either USD or in foreign currency. Choosing to send payment in foreign currency offers a few important advantages over sending in USD:
- Exchange rate certainty. Brex shows you your exchange rate prior to sending, so you are not subject to guessing what rate you might get from an intermediary bank.
- Streamlined delivery. As there are fewer intermediary banks involved in LCW transactions, wires will typically have shorter processing times and often arrive sooner than wires sent in USD.
- Fewer hidden fees. Having fewer intermediary banks involved in the process means fewer fees for processing your transaction that are often taken out of the wire amount your recipient receives. As a result, you can have higher confidence that your beneficiary will receive the amount you sent (although they may still be charged fees by their bank to receive the wire).
To send a local currency wire with Brex business accounts, please follow these steps.
Do wire transfers have fees?
Whether you are sending a domestic or international wire transfer, you may be subject to fees. These fees vary by provider and may include an origin fee, a fee to convert foreign currency (FX), a processing fee, and even fees to receive an incoming wire transfer.
In the US, most banks and financial institutions require the sender to pay a fee prior to processing and sending a domestic wire. Domestic fees typically cost around $25 per transaction. Brex business accounts can send and receive domestic wires for free.
Due to the nature of international wires, it is often difficult to predict the fees you may encounter as it depends on the intermediary banks used and any foreign currency conversions needed. These fees are often deducted from the total amount your recipient receives. To mitigate the uncertainty of the final wire amount, many send international wires in local currency instead of USD.
It is best to fund wire transfers from your checking or business 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.
What is a reverse wire?
Reverse wires, also known as wire draw-downs or draw-down requests, allow you to authorize another party to withdraw a certain amount of funds from your bank account. The most common use case is when running company payroll.
Many payroll providers prefer or even require reverse wires because they pull money directly from your account and are preferable for large, recurring transactions (even if the exact amount of the recurring payment varies).
Reverse wires offer a few important advantages over ACH debits for payroll processing:
- Reliability: If you have enough funds in your account, wire drawdowns are much more likely to go through than traditional ACH debit or check transactions.
- Cash on hand: Wire drawdowns are processed in real time, like a wire, so the withdrawal date is usually less than two days before payroll. By leaving money in your bank account longer, you keep more cash on hand.
- Easy reconciliation: If you regularly send employee payroll, contractor payroll, and payroll tax payments every two weeks, wire drawdowns will consolidate all three payroll withdraws into a single transaction.
Brex business account customers can set up a reverse wire authorization right from their Brex dashboard by following these steps and then contacting their Payroll provider.
Are wire transfers secure?
Wire transfers are a safe method of sending money. However, you must know the identity of the recipient and ensure you have the correct wire instructions, as they are very difficult to reverse once sent. This is especially true for reverse wires as you must contact your bank or financial institution to revoke their account access.
Domestic bank wire transfers are the most secure. Each party must have a US 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.
If you are ever in doubt, it may be best to utilize another form of payment, such as ACH or check.
Find out about wire transfers with Brex.