Wire transfer is a method of transferring money from one entity to another. A wire transfer can be made from one entity's bank account to the other entity's bank account, and by a transfer of cash at a cash office.
A bank wire transfer is effected as follows:
- The sending bank transmits a message, via a secure system (such as SWIFT or Fedwire), to the receiving bank, requesting that it effect payment according to the instructions given.
- The message also includes settlement instructions. The actual transfer is not instantaneous: funds may take several hours or even days to move from the sender's account to the receiver's account.
- Either the banks involved must hold a reciprocal account with each other, or the payment must be sent to a bank with such an account, a correspondent bank, for further benefit to the ultimate recipient.
Bank-to-bank wire transfer is considered the safest international payment method. Each account holder must have a proven identity. Chargeback is unlikely, although wires can be recalled. Information contained in wires is transmitted securely through encrypted communications methods. The price of bank wire transfers varies greatly, depending on the bank and its location; in some countries, the fee associated with the service can be costly.
Wire transfers done through cash offices are essentially anonymous and are designed for transfer between persons who trust each other. It is unsafe to send money by wire to an unknown person to collect at a cash office.Transfer Methods:
1. Western Union
One of the largest companies that offers wire transfer is Western Union, which allows individuals to transfer or receive money without an account with Western Union or any financial institution.
2. SWIFT (Society for Worldwide Interbank Financial Telecommunication)
Most international transfers are executed through SWIFT, a co-operative society, founded in 1974 by seven international banks, which operates a global network to facilitate the transfer of financial messages. Using these messages, banks can exchange data for funds transfer between financial institutions. The society also acts as a United Nations–sanctioned international-standards body, for the creation and maintenance of financial-messaging standards.
Each financial institution is provided an ISO 9362 code, also called a Bank Identifier Code (BIC) or SWIFT Code. These codes generally are eight characters long.[7] For example: Deutsche Bank is an international bank, with its head office in Frankfurt, Germany, the SWIFT Code for which is DEUTDEFF:
- DEUT identifies Deutsche Bank.
- DE is the country code for Germany.
- FF is the code for Frankfurt.
Using an extended code of 11 digits (if the receiving bank has assigned extended codes to branches or to processing areas) allows the payment to be directed to a specific office. For example: DEUTDEFF500 would direct the payment to an office of Deutsche Bank in Bad Homburg.
European banks making transfers within the European Union also use the International Bank Account Number, or IBAN.
