Wire transfers: What are they and how do they work?

One way to send money is through a wire transfer. Generally secure and convenient, a wire transfer involves electronically transferring funds from one person to another, all without physically exchanging cash or a check.

Wire payments are commonly facilitated by banks, although certain apps and online platforms may also offer this service.

Learn the basics of sending money via wire transfers, wiring money domestically and internationally, and potential pros and cons.

How to wire money

The process of wiring money typically involves the following steps, whether done through a bank or an app/online platform:

1. Choose a platform: Create an account and input the necessary personal and payment information. Individuals can typically provide funds for a wire transfer by linking a bank account, using a debit or credit card, or transferring money from a digital wallet. Note that individuals may also be able to wire money through an existing bank account online, in person, or via phone.
2. Add recipient information: Enter the recipient's details, including their full name, bank account number, bank name, and routing number.
3. Choose the transfer amount and currency: Specify the amount to wire and select the desired currency.
4. Review transfer details: Carefully review the transfer details, including the amount, fees, exchange rate (if applicable), and any additional instructions or notes.
5. Authorize the transfer: Confirm the authorization to initiate the transfer. This may involve providing a digital signature, entering a verification code, or using biometric authentication.
6. Submit the wire request: Once all the required information has been provided and the necessary funds are available, submit the transfer request.
7. Confirmation and tracking: After the transfer is processed, wait for confirmation of the completed transaction. Some services may provide the option to monitor and track the transfer in real time.

The process may vary depending on the platform being used, amount being sent, and the recipient’s account details. Fees may apply depending on the wire transfer provider.

Types of wire transfers

There are generally two main types of wire transfers: domestic wire transfers and international wire transfers.

Domestic wire transfers

Domestic wires refer to the transfer of money between bank accounts within the same country. They are used for transactions within the sender's country, where both the sender and recipient have bank accounts. Domestic wire transfers typically process within 24 hours but can take up to several business days to complete, depending on the bank or financial institution being used and amount being transferred. Fees may be charged for domestic wire transfers.

International wire transfers

International wire transfers involve the transfer of funds between bank accounts in different countries. They may require additional steps and potentially will involve intermediary banks to facilitate the transfer between different banking systems and currencies. Fees and processing times may vary depending on the bank or financial institution being used, the amount being transferred, and the countries the accounts are in.

Potential pros and cons of wiring money

Before wiring money to someone, consider the possible advantages and disadvantages associated with wire transfers.

Potential benefits of wire transfers

Some of the possible benefits of wire transfers include:

• Convenience: Wire transfers may provide speed and efficiency in transferring funds. Once initiated, domestic wire transfers can often be completed within the same business day, allowing for quick access to the transferred funds. Timing may vary depending on the banks or financial platforms used and the amount being sent.
• Security: These transfers are generally considered secure as they may involve strict verification processes and encryption protocols to protect financial information.
• Ability to send money abroad: Wire transfers may be particularly helpful when it comes to sending money internationally, providing a reliable and regulated means to transfer funds to recipients in different countries.

Potential downsides of wire transfers

Some of the possible drawbacks of wire transfers include:

• Fees: Wire transfers may be costly, particularly for international transfers. Banks and service providers often charge fees for initiating and processing wire transfers, which can vary depending on the amount being transferred and the destination country.
• Transfer limits: Banks and wire transfer service providers often impose limits on the amount of money that can be transferred in a single transaction or within a specific period.
• Processing time: While domestic wire transfers are generally quick, international transfers can take longer to process. Factors such as intermediary banks, currency conversions, and different time zones may contribute to delays in the transfer.

Learn about transferring money online.