Have you ever been in a situation where you want to transfer or receive funds within and outside your locality, but you don't know what to do or how to go about that?
Funds transfer has become an inevitable part of life as humans cannot do without transactions resulting in funds transfer. To this end, we have what we refer to as Wire transfer.
What is a Money wire transfer?
Wire transfer just as the name suggests is the electronic means of transferring funds from one person to another within and outside your locality. It supports global transfers. That is to say, you can transfer to someone outside your country, and at the same receive from within and outside the country.
Wire transfer is electronic and as such does not require physical contact between the two transacting parties.
The major requirement during money wire transfer is that as at the time of transfer, information is passed between two banks on the recipient's identity, account number, and the amount such an account holder is eligible to receive.
As the manner of a wire transfer is, the person initiating the transfer will usually have to pay charges in the name of transfer charges.
The concept of money wire transfer
The entity or individual initiating the transfer will have to approach a financial or banking institution and direct them to transfer a certain amount of money.
At the time of sending the money, the sender will have to provide the SWIFT, IBAN, or BIC code of the recipient. This helps the bank ascertain where the money is to be sent.
A SWIFT/BIC code is a code used to identify the country, bank, and branch that an account is registered to.
Before the transaction, the sender will have to deposit the amount that will be sent with the charge for the transfer. The bank determines the amount for the transfer charge. The sending bank then transmits a message via a secure system like SWIFT or FedWire to clear the funds.
Once funds are cleared, the beneficiary's bank receives a message requesting it to execute the payment according to the instructions provided.
Wire transfer might take a few days to get to the beneficiary's account.
What wire transfer is used for
Wire transfer is used for the following;
1. To receive money
Receiving money is one of the commonest uses of a wire transfer. The recipient is usually required to provide his account information to the sender and the " wire instructions" that are provided by the receiving bank. When the information is released, the sender's bank will now go ahead to initiate the transaction and send the funds.
The recipient's bank deducts a transaction fee as soon as they receive the transfer.
2. To wire money
This is the main idea of wire transfer - to wire money.
To wire money, the sender should, first of all, obtain "wire instructions" from the recipient. The Receiver can get these wire instructions from the banking institution where he or she wishes to receive the money.
The sender now sends this wire instruction alongside the money (charges included) to be transferred. At the bank, the sender will be required to fill out a wire form.
Even though these banking institutions perform the duty of transferring money, they can put to a halt or terminate a transaction as a result of any of the following;
Transfers to non-account holders
Regular transfers for no tangible reason
The constant transfer of the same dollar amount
Bulky amounts wired by cash businesses
Types of wire transfer
There are no types of wire transfers. But one can classify wire transfer based on location and distance, hence, local/domestic and international wire transfer.
Charges and costs for domestic and international wire transfers vary, as international wire transfers cost more and take more time.
For instance, in the United States, wire transfers within the country are charged a minimum of $25 per transaction, but some banking institutions charge higher.
To carry out international wire transfers, such transfers must be cleared by a United States clearinghouse and at least one foreign country’s processing system, which prolongs the processing time to several days.
This is the most common technique for transferring large volumes of money in a foreign currency.
International wire transfers cost about $43 to send money from the United States to another country. The recipient’s bank deducts about $8 to $10 from the amount of money wired to the recipient.
Closing Thought
Wire transfers are reliable but become risky only when scammers take control of another person’s bank account and manage to withdraw cash or re-route the funds to another account. In such a situation, account holders may be unable to recover their funds unless they report the cases early enough before the scammers execute their plans.
Nice explanation sir. I am informed now.