Wire Transfer?

Wire transfer or credit transfer is a method of transferring money from one person or institution (entity) to another. A wire transfer can be made from one bank account to another bank account or through a transfer of cash at a cash office.

Wire transfer has become a very popular method of payment for banking transactions such as credit card balance transfers, personal account management – e.g. transferring funds from a savings account into a checking account – and ATM-card purchases at point of sale. Every time you swipe your ATM card at a retailer, you are authorizing a wire transfer from the bank account associated with that card to the retailer’s bank account. A point of sale wire transfer is generally free to the customer, but a fee often accompanies other wire transfers. Sometimes this is a flat fee, and in other cases it is based on a percentage of the total funds being transferred. This is often true when credit card balances are transferred.

Process

Bank wire transfers are often the most expedient method for transferring funds between bank accounts. A bank wire transfer is effected as follows:

1. The person wishing to do a transfer (or someone they have appointed and empowered financially to act on their behalf) goes to the bank and gives the bank the order to transfer a certain amount of money. IBAN and BIC code are given as well so the bank knows where the money needs to be sent to.
2. The sending bank transmits a message, via a secure system (such as SWIFT or Fedwire), to the receiving bank, requesting that it effect payment according to the instructions given.
3. The message also includes settlement instructions. The actual transfer is not instantaneous: funds may take several hours or even days to move from the sender’s account to the receiver’s account.
4. Either the banks involved must hold a reciprocal account with each other, or the payment must be sent to a bank with such an account, a correspondent bank, for further benefit to the ultimate recipient.

Banks collect payment for the service from the sender as well as from the recipient. The sending bank typically collects a fee separate from the funds being transferred, while the receiving bank and intermediate banks through which the transfer travels deduct fees from the money being transferred so that the recipient receives less than when the sender sent.