Ben Todd | Jun 2, 2017 | 1
What is a Wire Transfer?
So, what is a wire transfer? A wire transfer is one of the fastest ways of sending money electronically, but it is often the most expensive way of sending money electronically. In its basic form, it is a direct transfer of funds from one account provider to another account provider. An account provider may be a money company, it may be a bank, and it may be a credit union.
What Is A Wire Transfer And How Is It Sent?
When one account provider sends money to another account provider, it sends the money directly and the transaction is often initiated right away and credited right away.
If the money is sent from one account to another account, and the account provider is the same, then the transfer is often free and quick. That is because the account provider uses its own transfer network. For example, if you have a HSBC account and you are sending money to another HSBC account, then HSBC will use its own network to wire the money.
If the money is being sent from one account provider to another account provider, then the account providers connect via an outside network such as the Fedwire or SWIFT network.
The Term “Wire Transfer” May Mean Something Else
Some people call electronic transfers a wire transfer when they actually mean an ACH transfer. When somebody says “Wire Transfer” to you, it may be a good idea to ask for a little clarification.
You don’t have to worry so much when you are dealing with banks, money companies and credit unions because they often make it very clear what a “Wire transfer” is in their terms and conditions. For example, you often see their fees for wire transfers and fees for other bank transfers in their terms and conditions.
A Quick Way To Recognize A Wire Transfer
Wire transfers are always quick. They take between a few seconds and two hours to complete. The only times they are slower is if there are security checks that hold up the process, or if the recipient’s account provider takes an overly long time to credit the funds in the recipient’s account.
Wire transfers often cost money too. These days, a wire transfer doesn’t cost a bank or credit union very much money at all. They may have to pay for using the transfer networks, but each wire transfer costs a fraction of a cent. Nevertheless, many credit unions, banks and money companies will charge you a fee to use wire transfers.
Why Does It Cost Money To Send And Receive Wire Transfers?
It may cost you a fee to send or receive wire transfers. The reason it may cost you is because your account provider chooses to charge you a fee for the wire transfer service.
Some money companies, banks and credit unions charge nothing for wire transfers. Many charge people money to send wire transfers, but they charge nothing for people to receive them.
Some will charge you to send and receive wire transfers, and some will charge you extra for sending money abroad or receiving it from abroad.
Why do banks, credit unions and money companies charge people for wire transfers? The most common reason is because it is a nice little earner for the account provider. They often offer you free electronic transfers that take a day to process, and they offer you wire transfers that are processed right away. They know you may be willing to pay for the convenience of a quicker transfer, so they add a charge for the service.
Some say that banks, credit unions and money companies charge you extra for wire transfers because the networks they use cost them more money, but it is only marginally more than they pay automated clearing houses to send the money overnight.
Some account providers may charge money for wire transfers because it encourages people to use overnight transfers (electronic ACH transfers), and ACH transfers cost the account provider a little less.
Why Do Scammers Ask For Wire Transfers?
Scammers ask for wire transfers because they are quick, and because they are very difficult to reverse. A scammer may receive your funds and remove them very quickly, and there is very little you can do after the money has been sent.
This is where wire transfers are at their most unsafe. It is not about how safe the network is; it is about who is sending the money and who is receiving it.
If somebody makes their way into your account, they may be able to send a wire transfer and you will be unable to get your money back. If you send your money to a scammer via a wire transfer, then there is almost nothing you can do to reverse the transaction.
What Do People Want When They Ask For A Bank Wire?
They may mean that they want a wire transfer, which means the money is sent right away and it may mean you have to pay a fee for sending it. You will also be unable to reverse the transaction in 99% of cases.
However, when some people say a bank transfer, they may mean a bank-to-bank transfer, which may be quick and free, but make sure you check with your account provider prior to sending it. A bank wire may also mean an overnight transfer, which is often free, but takes at least one night to reach the recipient’s account.
How Fast Are International Wire Transfers?
Your domestic wire transfer (incoming or outgoing) is probably going to take between a few seconds and two hours. An international wire transfer (incoming or outgoing) is going to take anywhere from a few hours to two or three business days. The reasons for this are numerous, but it is usually because of the added security and due diligence that takes place when money moves from one country to another.
Sellers And Merchants Love Wire Transfers More Than Checks
A paper check and even an e-check may bounce, but a wire transfer sends money right away. Even if the funds are sent and have not appeared in the recipients account yet, the money is still all-but guaranteed to arrive when a wire transfer is used (unless the sender entered the wrong details). However, when a paper or electronic check is used, it may bounce if there are not enough funds in the account to cover the amount on the check.
Conclusion – What is a Wire Transfer Used For?
Wire transfers are used when a merchant or a money company demands it. For example, you may wish to put a deposit on a car and the car sales company demands that you wire them the deposit.
Wire transfers may also be required if you wish to send money abroad. For example, some money transfer companies require wire transfers, which send the money to them so that they may convert it into another currency.
A wire transfer may also be used if you wish to send money quickly. For example, you may have a friend or family member who is stuck in another state and has run out of money. You may send that person money to his or her bank/credit union/money-company account right now. The recipient may not be in a position to be able to wait overnight for the funds, so a wire transfer would be more apt.