Wire Transfer
Wire Transfer Introduction
The term “Wire Transfer” refers to a method of transferring funds from one institution from another whether it is from one bank account to another or the transfer of cash at a designated cash office. Wire Transfers are one the fastest ways to transfer funds to a bank account.Across the globe, there are many different ways to conduct a wire transfer. The most common methods are FX Global Transfer, Western Union Money Transfers, International Money Transfers (using SWIFT) and Domestic Transfers. Some banks allow wire transfers to be effected online, and in many countries, this has become the only mode of payment.
Institutions like Western Union allow you to go into a cash office with a requisite amount of money, and they will then allow you to transfer this money to a Western Union office that is most convenient for the receiver.
How does Wire Transfer Work?
If you wish to conduct a wire transfer between two banks, you will first need to approach the bank with a request to transfer funds and will be asked to provide an IBAN (International Bank Account Number) and a BIC (Bank Identifier Code). Once this information has been collected, the bank sends a message using a secure system like SWIFT or Fedwire. The message will also include settlement details. Once the message is sent, the transfer takes place, but it must be noted that this transfer is not immediate, and sometimes takes several hours before the wire transfer takes place. It is only possible to transfer money between banks that hold a reciprocal account with each other. Various types of wire transfers use this basic idea to transfer funds, but the actual method might vary slightly.The most popular means of executing an international money transfer is through a co-operative society known as SWIFT. This society was founded in 1974 by seven international banks and operates a network to facilitate the transfer of financial messages. The banks use these messages to exchange data on fund transfers. The Bank Identifier Code or SWIFT code is an ISO 9362 code that are generally eight characters long with an additional 3 digit code to identify specific branches. The Fedwire system is similar to SWIFT, but it uses the Federal Reserve System’s routing transit numbers in order to make domestic transfers within the US.
The most important factor that keeps the wire transfer at a low cost is the exchange rate offered. Essentially, an international wire transfer consists of selling one currency to buy another. The difference between the price of buying the delivery currency and the rate at which the primary currency is sold is the mark up in the exchange rate by the Currency dealers.