Takeaways
- Wire transfers are electronic payments sent via a network of banks.
- Depending on the provider, the average wire transfer fee hovers around $15-$25.
- Domestic wires are usually processed within one or two business days.
- The Office of Foreign Assets Control monitors international wire transfers.
- Completed wire transfer forms are used to send money from an issuer to a recipient, and include bank account numbers, transfer amounts, and the recipient's name.
What Is a Wire?
A wire transfer is an electronic transfer of money from one person, business, or entity to another. Unlike physical checks, wiring money transfers funds quickly and securely through a network of banks or transfer agencies.
Wire money is often used for high-value transactions, international transfers, or situations where payment speed and security are critical. Wire transfers can be domestic or international, depending on the recipient's location. They offer a reliable and fast way to send large amounts of capital, often transferring funds within a few hours to a few days.
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5 Steps to Wire Money
Most people don’t process wires using familiar funds transfer applications, like popular payment apps, bank mobile apps, or other online transfer methods. If you do need to make a wire transfer, here are the steps you need to take to move funds securely:
1. Choose a Provider
Selecting the right provider is crucial for a successful wire transfer. Traditional banks are the most common providers, but other financial institutions and online services offer wire transfers. Each provider has its own set of fees, exchange rates (for international transfers), and processing times.
According to a survey by the Federal Reserve, nearly 60% of wire transfers in the United States are conducted through traditional banks, while online and alternative services are growing in popularity due to competitive rates and convenience.[1]
Compare these factors to find the provider that best suits your needs. Some popular non-bank providers include Western Union, PayPal, and TransferWise, each offering unique advantages depending on the nature of your transaction.
2. Gather Payment Information
To make a successful wire transfer, you need accurate payment information, such as the recipient's full name, address, and bank account details. Here's what you need to complete a wire transfer successfully:
- Domestic transfers require the recipient's bank name, contact information, account number, transit number, and ABA routing number.
- International transfers require additional information, such as the recipient's International Bank Account Number (IBAN) and the Bank Identifier Code (BIC) or SWIFT code is required.
It pays to get this information correct because, according to a study by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), errors in payment information are one of the leading causes of delays in international wire transfers.
Make sure that you have the correct information so that you can avoid delays and additional payment processing fees.
3. Calculate Costs
Before initiating your wire transfer, make sure you fully understand all the associated costs. For international transfers, the sending bank can charge flat fees, the receiving bank can charge a fee, and potential intermediary bank fees. If you are sending money internationally, currency conversion fees may apply.
The average cost of a domestic wire transfer is roughly $25. In contrast, international transfers traditionally cost around $45 or more, depending on the banks involved and the amount being transferred. Be sure to factor these costs into your budget to avoid any surprises. Additionally, some providers offer fee calculators on their websites, allowing you to estimate the total cost before processing your payment.
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4. Fill Out the Wire Form
Once you have chosen a provider, gathered the necessary payment information, and calculated wire costs, the next step is to fill out the wire transfer form. This form is usually available online, or you can get a paper form in person at your bank. You must provide your information (or your business's information), the recipient's details, and the payment information. Double-check all information to ensure accuracy.
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Some providers may require identification or additional verification steps to prevent fraud. Filling out the form typically takes a few minutes, but thoroughness is crucial in avoiding any issues. According to the Consumer Financial Protection Bureau (CFPB), ensuring the accuracy of your information can prevent costly delays and errors.
5. Save the Wire Transfer Receipt
You will receive a confirmation or receipt after submitting the wire transfer form via your credit union or bank's online portal or at a branch location. This document contains essential information such as the transfer amount, the recipient's details, the date and time of the transfer, and a reference number.
Keep this receipt secure until the wire recipient confirms receiving the funds. In case of any issues or disputes, the receipt serves as proof of the transaction and can help resolve problems more efficiently.
Many consumer advocacy groups recommend maintaining thorough records of financial transactions as a best practice for personal finances and business finances alike. Your wire receipt is vital for tracking the transfer and addressing any potential problems that may arise.
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When to Wire Money
You can use wire transfers during the ordinary course of business or when making a large down payment to purchase your first home. Wires are ideal for big transactions such as buying or investing in real estate, paying for high-value goods, or transferring funds between bank accounts.
Wire transfers are also used in business to pay suppliers, settle invoices, and conduct international trade. Due to their speed, reliability, and security, wire transfers are often preferred for urgent payments where other methods, such as checks or standard electronic transfers, may not suffice.
Wires are such a prevelant and preferred transferring mechanism that a survey by the National Automated Clearing House Association (NACHA) found that 78% of businesses use wire transfers for urgent payments to vendors and suppliers.[5]
6 Common Times to Wire Money
Here are six realistic scenarios where wire transfers can be particularly useful:
1. Real Estate Transactions
Whether you are trying to buy a house, condominium, or investment property, large sums of money usually need to be transferred quickly during real estate purchases. For example, you might need to wire a down payment to secure a home purchase or pay for a property in full.
Wire transfers are the preferred method for real estate agents, brokers, and lenders to handle these transactions due to their speed and reliability. They ensure funds are available almost instantaneously, which can be crucial in securing time-sensitive deals.
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2. International Trade
Businesses in international trade often use wire transfers to pay suppliers or receive payments from overseas customers. Wire transfers allow for the quick and secure transfer of funds across borders, essential for maintaining smooth business operations.
According to the International Chamber of Commerce report, over 50% of international business payments are made via wire transfer.
3. Emergency Situations
Wire transfers provide a fast way to send money in emergencies, such as family crises or urgent medical expenses.
They are also used when other payment methods could be more feasible and quicker. For example, U.S. workers often rely on international wire transfers to send money to family members.
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4. Large Purchases
Wire transfers are often used for large purchases like buying a car, boat, or luxury items. Their security and speed make them ideal for transactions where large amounts of money must be exchanged.
According to the National Association of Automobile Dealers, wire transfers are commonly used to purchase high-value vehicles.
5. Business Transactions
According to a survey by NACHA, wire transfers are used by 78% of businesses for urgent vendor payments. Businesses use wire transfers to settle invoices and make payments to suppliers.
For example, if you work for a startup company that is going through an initial public offering, the funds collected during this equity capital raise are wired to your business bank account from an escrow account.
6. Transferring Funds Between Bank Accounts
Individuals may use wire transfers to move money between their own bank accounts, especially when dealing with large amounts or multiple currencies. This method is faster and more secure than other forms of transfer.
According to a study by the American Bankers Association, wire transfers are popular for individuals needing to move significant amounts of money between accounts.
Smart Summary
Wire transfers are a valuable tool for managing large or urgent payments, providing security, speed, and reliability that other transfer methods lack. While filing out a complete wire form can be a bit cumbersome compared to transferring smaller amounts of capital, it helps ensure a smooth and efficient transaction.
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Frequently Asked Questions
A general rule of thumb, once a wire is sent it cannot be reversed and is considered the property of the recipient. This is why you must ensure all the bank account information on the wire form is fully correct.
Domestic wires costs and fees vary by bank and credit union. However, the fees on inbound wires range from $0-$15 based on the type of account, and it generally costs $15-$25 for the average domestic wire fee.
(2) Swift. Payment Pre-validation: Say goodbye to unnecessary errors. Last Accessed January 14, 2025.
