How does a wire transfer work

Wire transfers are often confused with other types of electronic transfers, which is quite understandable given how the 21st century has witnessed the birth of quite an extensive array of digital payment modes! However, wiring money is quite idiosyncratic in a lot of ways as it manages to provide both the sender and the receiver with security, rapidity, and flexibility. Those facilities would constitute the reason why important transactions — like those that are implied when one buys/sells a house or a car — are often made via wire transfers.

Wire transfers have appealing characteristics

The idea behind wire transfers is to allow one to move amounts of money varying tremendously in size, and that, in a relatively short period of time. Of course, delays vary depending on the banks or financial institutions involved, on whether a transfer is local or international, and on a few more minor factors… But for the most part, this particular type of transaction allows for significant funds to move in a fast and secure way. No wonder they are particularly important within financial realms!

Getting a wire transfer done is actually rather simple

Wire transfers operate in a rather simple way. However, the modus operandi of carrying out some particular wirings might depend on the parties involved. This could be because of the parties’ respective financial institutions. Sometimes, one or even both of the participants can be registered with a credit union instead of a traditional bank, for instance. But then again, getting things done — even in this quite specific case — should not be that complicated after some research.

How to send money via a wire transfer?

First of all, you need to gather some data. If you are dealing with traditional banks at both ends of the transaction, you will need the account details of the person who is to receive the funds. Simply ask the receiver for the following data:

  • Recipient’s bank name in full.
  • Recipient bank ABA number or other code. Note that the ABA number is that 9-digit code that identifies your US-based bank.
  • Payee’s bank account number in full.
  • Any additional information or delivery instructions that would be required by the payee’s bank.

The payee has to ask his or her bank for the details mentioned above. Banks generally issue an instruction sheet with all of the necessary details spelled out. Never wire money based on information you get in an email, but ask for the instruction sheet if available.

As a measure of precaution against potential scams, be wary of details sent via email. If you do receive the information you require electronically, be sure to call your payee and confirm everything orally before you proceed, especially if you are not sure about whether you can trust the person in question. But also, as a rule of thumb, try not to recourse to wire payments when dealing with complete strangers.

How to receive money via a wire transfer?

If you are receiving money, you have two options. Either you can log in to your bank’s website and grasp necessary instructions and requirements without much hassle, or call/visit your bank and ask away. Again, you will need to provide the sender with the following information:

  • Your bank’s name in full.
  • Your bank ABA number. Note that the one you can see on your checks or that you use for direct deposits might not always be the one you should be using for a wire transfer, so be sure to ask for precision when you collect data.
  • Your bank account number in full.
  • Any additional information or delivery instructions that would be required by your bank.

Once your data collected, cross-check it and then proceed to forward everything to the person who is sending you money. Make sure to ask them if they would need any other information.

Delays

Several factors could affect delays:

  • Local transfers normally take about one day. And in some cases, they can even be completed within the same day. International transfers, however, might require anywhere from 24 to 72 hours more.
  • Recently, more and more banks have been providing online wiring facilities. However, large transfers might require the parties involved to visit a branch of their bank to send or collect the funds.
  • Most banks place to hold on the receiver’s funds once they are received. However, some rare institutions might. It is possible for anyone to verify whether this could be the case by reading their bank’s policy or simply giving a quick ring to customer service.

Wire transfers are secure

During a bank transfer, funds go from one bank to the other, finally landing in the recipient’s account. This would imply that both parties need to be registered with a bank, and this in itself provides a layer of security. In the US, federal regulations press any individual who wants to open a bank account to provide both proofs of identity and of address. Since it is difficult to bank anonymously in the United Stated, thieves and scammer’s abilities to operate are considerately limited. It is indeed possible for one to keep his or her identity from other individuals and businesses during certain transactions, but only to some extent. Law enforcement generally has a way to retrace pretty much anybody utilizing banking services irrespective of transactional circumstances.

Be sure to research before you transfer money

Myriads of other services exist when it comes to transferring money. Some could be modern options like apps and P2P payment tools — in which case the services of a bank are not always required — while others could be more traditional, like ACH. A wire transfer would have advantages over both of those methods in the sense that it is more secure than some apps and globally scalable as compared to transactions effectuated via ACH. However, the decision is all up to the specifics of your transfer. So be sure to choose one that would suit your needs appropriately.

Sources:

https://www.thebalance.com/bank-wire-transfer-basics-315444

https://www.thebalance.com/how-to-do-a-bank-wire-315450

Image: Shutterstock

Article N°305849

Meta Description

Wire transfers are often confused with other types of electronic transfers, which is quite understandable given how the 21st century has witnessed the birth of quite an extensive array of digital payment modes! However, wiring money is quite idiosyncratic in a lot of ways as it manages to provide both the sender and the receiver with security, rapidity, and flexibility. Those facilities would constitute the reason why important transactions — like those that are implied when one buys/sells a house or a car — are often made via wire transfers.

Primary Source

https://www.thebalance.com/bank-wire-transfer-basics-315444

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