A wire transfer is perhaps the fastest and most efficient way to move money from one business to another or from one person to another.
Though it may sound like an antiquated way of doing things in this high-tech age of smartphones, PayPal, and banking apps, there may come a time when you need to get money to someone quickly or across international borders — and wire transfers present your best option.
With that in mind, here’s your wire transfer primer.
What Is a Wire Transfer?
Let’s start with the basics. A wire transfer takes place either between one bank and another through an electronic funds transfer, or through a transfer of cash via non-bank providers such as Western Union, MoneyGram or Ria.
To initiate a wire transfer from one bank to another, you’ll need to have several pieces of information on hand, including:
- The recipient’s name, bank, address, and account number.
- For transfers within the U.S., you’ll need the bank’s American Bankers Association (ABA) number, commonly called the routing number.
- For transfers outside the U.S., you’ll need the Bank Identifier Code.
When using a non-bank provider, a bank account number may not be needed, but you’ll still need the recipient’s name, the transfer amount, and the destination.
Typically, wire transfers can be processed in person, online or via telephone.
Types of Wire Transfers
There are both domestic and international wire transfers. International transfers are typically more expensive, and take longer to process.
How Much Does a Wire Transfer Cost?
As of 2016, sending wire transfers can cost anywhere from $25 to $65, according to an analysis of fees at the top 10 banks in the U.S. conducted by MyBankTracker. The fees vary based on the financial institution and whether you’re making a domestic or international transfer, with international being more expensive.
The recipient of the transfer must also pay a fee. The MyBankTracker analysis shows that the 2016 costs for the individual receiving the money range from $15 to $30.
One way to decrease such fees is to use a credit union rather than a traditional bank. Many credit unions do not charge anything at all for incoming wire transfers, whether domestic or foreign, according to MyBankTracker. In addition, the outgoing fees are substantially lower then at traditional banks – ranging from $5 for domestic transfers to $61 for international.
Regardless of which type of provider you choose, it’s important to ask about all fees up front, before sending any money.
Non-Bank Wire Transfers
Yet another option is non-bank wire transfers, sent through companies such as Western Union, Ria, and MoneyGram.
This option makes the most sense for people who don’t have a bank account or who want to make sure the funds are available quickly. If you’re willing to pay a higher price, the money can even reach the recipient on the same day, in as little as 10 minutes. What’s more, you can send money using your credit card — for a higher fee.
How Long Do Wire Transfers Take?
The non-bank option aside, international transfers take at least four business days from start to finish. Domestic transfers tend to be much quicker, sometimes processing in just a few hours.
Wire Transfer Mistakes to Avoid
Be sure to double- and triple-check all of the information when preparing a wire transfer. One wrong number on a bank account or a misspelling in the recipient’s name could delay the transfer of funds, or even cause the money to end up in the wrong account entirely.
When making an international transfer, it’s also critical to keep the exchange rate in the destination country in mind. Why? Because it will affect how much cash ultimately arrives in the recipient’s hands.
Additional Facts to Consider
One final factor to consider – a wire transfer is very different then writing a check or paying for something via credit card. Transfers cannot be canceled or reversed, so once sent that money cannot be returned to your account. In other words, once you’ve initiated a transfer, that cash is gone.
“Once your payment is sent, it isn’t recoverable as it can be with a credit card payment such as a chargeback, or disputable as in the case of PayPal payments,” explains international businessman Matt Iswariah. “So you need to trust who you’re sending the money to.”