What Is Wire Transfer & How Does It Work?

A wire transfer refers to an electronic funds transfer from one individual or entity to another. It includes transferring money from one bank account to another using a network managed by hundreds of banks worldwide. Wire transfers allow for the individualised transmission of funds and are often used for events such as purchasing a home or paying an international invoice.

Let us say a person in the US goes to Bank A. He wishes to transfer some money to India. The account he wants to transfer money to is with Bank B. Bank A sends transfer instructions to Bank B. These instructions would include data. Firstly, the recipient’s name and bank account number. It will also have information regarding the transfer amount. Such instructions may not be directly sent from one bank to another. They may be sent via an intermediary bank. One needs to understand that there is no actual transfer of money. The money is deducted from the sender’s bank account. It is then added to the recipient’s bank account. That’s how wire transfer works. 

Wire transfers are mostly used to send money overseas. Domestic wire transfers take a day. International wire transfers may take up to five days or even more. 

Here’s a step-by-step guide to proceed with a telegraphic wire transfer:

• Identify the Transfer Requirements: Different banks have different requirements for wire transfers. You may need to visit the bank in person, make the transfer online, or over the phone. Make sure you understand your bank’s policies.
• Gather the Necessary Information: You will need the recipient’s name, their bank’s name, the bank’s address, the bank’s SWIFT code or BIC (Bank Identifier Code), and the recipient’s account number.
• Contact Your Bank: Once you have all the necessary information, contact your bank to initiate the wire transfer. This can often be done online or in person.
• Costs involved: Wire transfer involves certain costs. The remittance charges are mostly nil. The remitting or intermediary bank may levy a fee. There is a foreign currency conversion charge, which is a flat fee. Service tax is also levied. The service tax is a percentage of the total amount. It varies between 1 percent and 0.1 percent of the transferred amount. 

Wire transfers are thus quick, convenient, and safe. Wire transfers make sending money abroad a breeze. 

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