How Do International Wire Transfers Work?

Table of Contents

• What is a Wire Transfer?
• Wire Transfer Types
• Wire Transfer Fees
• How to Save on Wire Transfers?
• How Do International Wire Transfers Work?
• How Long Does It Take for Wire Transfers to finish?
• Factors Affecting How long International Wire Transfer Takes
• Payment Method
• Cut-off Times
• Weekends & Holidays
• Currency Used
• How Safe Is a Wire Transfer?
• Safety Tips for Wire Transfer
• Conclusion

If you travel abroad frequently, you have likely heard of international wire transfers. How do international wire transfers work, and how can you transfer or receive money to and from another country? In this guide, we will show you exactly how wire transfers works.

What is a Wire Transfer?

At its core, a wire transfer refers to the process of transferring an amount of money from one bank account to another electronically. Wire transfers generally entail the movement of money from one account to another through an intermediary payment network such as SWIFT or Fedwire.

Additionally, wire transfers can also refer to other money transfer transactions. For example, a US consumer can transfer money to someone on the other side of the globe through international wire transfers. Wire transfers can be executed by banks as well as other financial institutions and financial service providers.

Wire Transfer Types

Wire transfers are categorized into two - international and domestic.

Domestic wire transfers deal with money transfer nationwide or between parties in the same country. Usually, these types of transfers only take one day to process. Most of the time, you just simply transfer money real-time (though this would depend on the provider that you are using).

Meanwhile, international wire transfers involve transferring from one country to another. In this instance, it will require both country's processing systems to work with each other. This explains why international wire transfers normally have longer processing times.

International wire transfers also undergo currency conversion. For instance, if you plan to wire money from the US to Japan, you need to shoulder the conversion rate from your financial institution to convert US Dollars to Japanese Yen.

Wire Transfer Fees

Domestic wire transfers usually have small or standard charges. In some cases, domestic wire transfers can be free.

For international wire transfers, higher fees are usually common. First of all, you have to shoulder the costs for transferring your money. After that, the receiving bank will deduct another fixed amount or percentage from the money that's coming in.

Let's use this example where we wire $1,000 from the US to the UK. We're going to use Union Bank for this example (there are many other popular US banks you can send wire transfers with). According to their international transfer fees table, you should pay $15 per transfer for an incoming wire transfer. The rates will go higher depending on the mode of transfer you opt for.

The problem is, you'll most likely have to cover other fees too. Most banks will also charge a markup for international transfers which usually ranges from 4 to 6%. Technically, it's a hidden fee you should pay, not to mention you might also be charged by a couple of intermediary and recipient banks.

In simpler words, you'll have to pay for your bank's fee + exchange rate markup + possible fees from recipient and intermediary banks every time you wire money internationally. Do keep in mind that each financial institution has its own fees - some higher and some lower.

How to Save on Wire Transfers?

Knowing that the costs can be pretty high, is there a way to save on international wire transfers? The below tips can help you save on wire transfer fees.

• Explore various services and compare each of their costs.
• If you plan to send money, send all in one shot rather than send multiple times. There are fixed fees that will make a single transaction more economical in the long run.
• Take note of all the fees and costs.
• Always pay attention to the conversion rates.

How Do International Wire Transfers Work?

To transfer money, you first have to decide on the bank or institution that you want to use for your wire transfer. From there, you need to provide some details of your transaction. First of all, you need to determine how much you will send. You also need to provide the financial institution with detailed recipient information that includes the recipient's name and address, as well as their bank information. An important part of the recipient's bank information is a SWIFT code or an IBAN code - these are globally recognized numbers that help to uniquely identify the recipient bank in the global payment networks.

Once you've provided all of the necessary information, the next step is to deposit a transaction fee. Keep in mind that the fees will vary based on the financial institution or bank you choose. After depositing the money, it goes through a system like SWIFT to move the money from one end of the globe to the other.

First, the sending institution will clear the money on their end. After that, the receiving bank will then get a notification wherein an incoming payment will reflect.

How Long Does It Take for Wire Transfers to finish?

An important question about wire transfers is how long it'll take for the transaction to complete. Floating money is always a scary thing, so it pays to know beforehand to know how long you can expect to wait.

Generally, this depends on the institution or the platform you are receiving to transact money. Take note that the processing time is in business days, and this will range from 1 to 5 business days. At most, these bank transfers can reach up to a week, though it's not that common.

Let's have a look at some known banks with their average processing time:

• Chase Bank - same day if processed before 5 PM ET
• CitiBank - within the same day if processed before 5:15 PM ET
• Bank of America - within 1 to 2 days
• Wells Fargo - same day if processed before 2 PM Pacific Time

On average, processing times will normally take 1-2 days; some may take 3 days while others could go for 5 days, though the latter rarely happens.

Factors Affecting How long International Wire Transfer Takes

While 1 to 5 days is a standard or general timeframe to look at, some factors may affect this timeframe and even delay it. Here are the factors to consider.

Payment Method

First off, the payment method determines how long the processing time takes. Different banks or institutions have their policies when it comes to processing time. Wire transfers using credit cards or debit cards often have quicker processing times.

Cut-off Times

Take note of certain cut-off times. For instance, you decide to transfer money through Bank X with a cut-off time of 5 pm and four days processing time. If you send the money after 5 pm, the four days processing will only begin the next banking day. In a sense, your processing time will be four and a half days.

Weekends & Holidays

Holidays don't count in the processing time. If Bank X has a processing time of 4 days, but there is a holiday somewhere in the middle of those four days, the processing time will take five days. Aside from holidays, weekends also don't count to the processing time. Do take note that the processing time only takes into consideration business days.

Currency Used

The currency you send also plays a factor in how long the processing time takes. More popular currencies like the Pound Sterling, US dollar, and Euro will often have quicker processing times. This is because they are traded regularly on foreign exchange markets. Meanwhile, less popular currencies will take longer to process.

How Safe Is a Wire Transfer?

An important consideration for wire transfers is safety. Exactly how safe are wire transfers? Fortunately, you can be at ease with wire transfers as long as the financial institution you work with is under federal regulations. Always ask for proof of this before you push through with your transactions. This will help you avoid wire transfer scams.

Safety Tips for Wire Transfer

How do you avoid wire transfer scams? First of all, do not trust anonymous fund transfers. These are basically transfers that come from anonymous people who want to hide their identity for various reasons. However, you're better off avoiding them as they are most likely scams. Also, make sure that you transact with a reputable bank or financial institution. If you can, ask for a referral or read some reviews. Getting the recommendation of a primary source will help you make your decision.

Conclusion

As long as you know about wire transfers and how they work, you should have no worries about transacting through it. These types of transaction methods are great for transferring money from one country to another. If you are in another country and need to send money to your family in your homeland ASAP, this may be the best way to do so. Wire transfers are fast and reliable.

Sure, they may be a little bit expensive, but there are ways on how to reduce those costs. They are also safe because it is usually the big banks and financial institutions that handle these transactions.

Do you need to send someone or receive money from someone that comes from a foreign land? No problem! You can do it through wire transfer.

We hope you learned a lot from our quick guide!