A wire transfer is a secure and convenient way to send money electronically between different accounts. It is commonly used to transfer money quickly – both domestically and internationally – since other methods like cheques can take a long time to process. There are many reasons why you may need to send money abroad. Suppose, for instance, that your family member resides in the United States (US) while you reside in India. Using a wire transfer, you can send money to them. Let’s understand what a wire transfer is, how it works, how much it costs, and more.
What is a Wire Transfer?
A wire transfer is an electronic money transfer between individuals or businesses without physical cash exchange. Initiated by a bank or financial institution, the sender provides instructions such as the recipient’s name, bank account number, and transfer amount. The transfer is processed securely via systems like SWIFT or Fedwire. Once verified, the recipient’s bank credits the specified amount to their account.
History of Wire Transfer
Wire transfer has been around since the 19th century. During the 1870s, Western Union used to send wire transfers through their telegraph network. In those days, senders brought their money to telegraph offices, and the operation would send a message and “wire” the money to another location. To ensure the funds were released to the right person, codes and passwords were used. In today’s world, the wire transfer is an electronic payment made through a global network, providing fast, irreversible, foreign or domestic electronic money transfers.
Types of Wire Transfer
Wire transfers are categorized into two types:
Domestic Wire Transfers: Transactions between two banks within the same country. These are typically processed within a few hours.
International Wire Transfers: Transactions between banks in different countries. These usually take 2-3 business days to process due to additional security checks and intermediary banks.
How Does Wire Transfer Works?
Wire transfers follow a simple process:
Initiation: The sender submits the recipient’s details (name, account number, SWIFT/IBAN code) and transfer amount.
Verification: The sender deposits the funds along with a transaction fee.
Processing: The initiating bank sends a secure message via SWIFT to the recipient’s bank.
Transfer Completion: The recipient’s bank verifies the details and deposits the funds.
Wire Transfer vs Bank Transfer: What’s the Difference?
When paying via wire transfer, a bank or a financial institution acts as a middleman. A bank receives the money from the sender. Banks act as a go-between for sender and recipient, so there is no need to link two bank accounts. Banks instead verify that you have the funds for the transfer. Your bank will then use the SWIFT system to send information about the transfer to your recipient’s bank, telling it to credit the recipient’s account.
Another form of electronic payment is a bank account transfer, which transfers money directly between bank accounts. One of the most familiar and common forms of domestic bank transfers is the ACH (Automated Clearing House). ACH is a network of banks and other financial institutions that transfers funds between them. In general, they operate via online or electronic payments and are named after the networks they utilize.
Although they sound similar, wire transfers and bank transfers are very different services. The main differences between the two are listed below.
| Factors | Wire Transfer | Bank Transfer |
|---|---|---|
| Speed | Generally, a wire transfer is the fastest method of sending money domestically, with funds usually available the next business day. | A Bank transfer on the other hand can take a little longer, taking up to three days to become available. In most cases, transfers are completed within a day. |
| Cost | Wire transfer costs can vary, depending on the amount and type of transfer, and international transfers will have a much higher price. While most charges levied on the sender, there is also a small fee for recipients to receive the money into their account with wire transfers. | Cost-wise, a bank transfer is usually the cheapest option. Although ACH fees are associated with direct deposits, they are generally lower than wire transfers. |
| Reversibility | Sending money via wire transfer is considered a secure method. However, as wire transfers are relatively instant, they cannot be reversed if they are made in error. | If money is sent in error or by mistake, an ACH transfer can be reversed, also making it a secure payment option. |
| International Transaction | Despite the fact that both Bank transfers and wire transfers can be used to send money across the country, only wire transfers can be used to transfer money internationally. | Although ACHS does have a bank-to-bank partner network, Global ACH, that offers international bank-to-bank transactions, yet to transfer money overseas, other transfer methods have to be used. |
What Are the Advantages & Disadvantages of Wire Transfer?
Advantages:
Convenient: Can be done online from the comfort of hime.
Fast: Quick processing time, ideal for urgent payments.
Secure: Regulated by financial authorities, ensuring safe transactions.
Disadvantages:
Irreversible: Once processed, funds cannot be recalled if you make any errors in recipient details.
How Much Money Can You Send via Wire Transfer?
As a resident Indian, one can transfer up to $250,000 (USD) per financial year via wire transfer under the Liberalized Remittance Scheme (LRS). Banks and money transfer companies may have wire transfer limits and requirements that must be followed. For instance, there can be a limit of $100,000 per transfer or per day, so you must check with your bank/money transfer platform.
How Much Does Wire Transfer Cost?
Different financial institutions charge different fees. There are several factors to consider. The following variables determine the final cost of your wire transfer:
- The amount transferred
- The current Goods and Services Tax (GST) rate
- Banks charge fixed processing fees for senders and recipients
- Any fee set by a correspondent or intermediary bank
- The bank charges a markup on exchange rates
Different financial institutions have different policies, terms, and conditions that affect the final cost. With BookMyForex, you won’t have to worry about any wire transfer fees. It is estimated that most banks charge between Rs. 500 and Rs. 2,500,but BookMyForex offers zero transfer fees..
How Long Does a Wire Transfer Take?
Domestic wire transfers usually take a day or two. When it comes to international wire transfers, how long does it take? There are quite a few steps involved, either online or offline. To begin with, you need to write down the necessary information. Filling out a wire transfer form is the next step. The process will take only a few minutes if you do it online. Offline processes take longer.
Wire transfers are processed by banks only during business hours. Normally, the transfer takes 24 working hours, but you should check with your bank or institution. Nowadays, most banking transactions are conducted online. Hence, money should reach the recipient’s account immediately, thus making wire transfer an instantaneous process.
However, a wire transfer instruction passes through the SWIFT network. Banks acting as intermediaries may also be involved. In some cases, the money may be passed through three intermediary banks. Then, it reaches the recipient’s bank in a few days. It is therefore possible for international wire transfers to take up to two to three working days. It may take more time in some cases.
There are some factors that influence wire transfer time and cause a delay in its progress. Several details have to be entered such as account numbers and SWIFT codes. A wire transfer will be severely delayed if these details are entered incorrectly. Wire transfers also tend to be delayed during bank holidays. Bank holidays vary from country to country. Additionally, weekends can delay wire transfers. Some other factors can affect the speed of a wire transfer, such as the number of intermediary banks or currency conversions. When wondering how long a wire transfer takes, pre-planning is a good answer.
Is It Safe to Transfer Money via Wire Transfer?
Wire transfers are one of the most popular methods of money transfer. Is wire transfer safe, though? Is your money going to reach your child or relative on time and in full? Yes! Wire transfers are reliable, fast, and paperless. A wire transfer is considered to be one of the most secure methods of transferring money.
Can You Cancel a Wire Transfer?
In most cases, wire transfers are final. Once the recipient’s bank accepts the transfer and receives the funds, the transfer is complete. At that point, you probably won’t be able to get your money back. Therefore, once the funds have been transferred to the recipient and there were no extenuating circumstances involved in the error-laden transfer, you cannot reverse the wire transfer. If the sender provides the wrong account information, wire transfer institutions and banks generally address the sender’s liability.
Why BookMyforex is the Best Option for International Wire Transfer?
The easiest and most convenient way to transfer money from India to abroad is via wire transfer. Even though banks handle wire transfers online, BookMyForex offer a cheaper alternative. The rates you get from an online marketplace like BookMyForex will be better than those you can get from banks. To process it, banks in India charge between Rs. 500 and Rs. 2500. BookMyForex waives off all sending charges associated with processing wire transfers.
BookMyForex through its exclusive tie-ups with leading banks can offer you the absolute best rates for sending money abroad with following advantages:
- Send money abroad from India at guaranteed lowest rates
- Fully online remittance process: Do everything from the comfort of your home.
- Fastest Transfers – Takes only 12-48 Hours
- Options to lock-in your rates
- Rate alerts to notify you when your desired rates are available.
To book your order or more information on international wire transfer visit Bookmyforex.com.
Related Resources:
Best Platform for International Money Transfer
Intermediary Bank Fee in International Money Transfers
Factors to Consider Before Sending Money Abroad
Best Ways of Sending Money from India to Abroad
New TCS Rate on Foreign Remittances
Types Of Money Transfer Frauds and How To Avoid Them
How to pay tuition fees abroad from India
How to save big on your Overseas Money Transfer with BookMyForex
How to Avoid Hidden Fees and Charges When Using Forex Providers for International Money Transfers
