Telegraphic Transfer: Meaning & how it works

While the term “telegraphic transfer” sounds like antiquated, centuries-old tech, it’s still a common – albeit imperfect – way for Kiwis to send and receive money from overseas.

In this post, we’re covering all things TT, including requirements, processes, fees, and speed. We’ll also touch on Wise Business, a low-cost alternative for cross-currency transfers.

What is a telegraphic transfer (TT)?

The telegraphic transfer is an old-fashioned name for an international bank transfer. The phrase originated in the late 19th century, when banks began telegraphing Morse code to relay payment instructions, eliminating the need to dispatch physical cash between branches. Western Union pioneered the first electronic bank transfer service in 1871.¹

While the name is somewhat archaic, it’s still a common phrase for an international bank transfer in New Zealand – non-Kiwis may not understand it, though. Equivalent terms include SWIFT transfers, bank transfers, wire transfers, telex transfers, and international transfers.

How does a telegraphic transfer work?

Modern telegraphic transfers don’t use Morse code. Nowadays, banks exchange payment instructions via a global messaging network, typically the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

The sending bank transmits payment details to a recipient bank, or an intermediary if the sender and recipient don’t have a reciprocal relationship.

Reciprocal, inter-bank relationships involve “nostro” (ours) accounts, where a bank holds a foreign-currency account with another bank. This account is known as “vostro” (yours) from the perspective of the hosting bank.

After the initial payment message is validated, the banks use their nostro-vostro accounts to adjust balances and settle foreign currency payments, potentially adding on various fees and FOREX markups. The receiving bank releases the funds, minus any fees, once the settlement has been confirmed.

Key identifier codes for telegraphic transfers

It’s worth understanding the lingo when using telegraphic transfers.

• BIC/SWIFT: This 8-to-11-character Bank Identifier Code (BIC) allows the sending bank to recognise the receiving bank on the SWIFT system.
• Account number: This 15 or 16-digit account number enables the receiving bank to credit the correct account once the funds arrive. In New Zealand, account numbers are usually formatted as XX-XXXX-XXXXXXX-XX.
• IBAN: Used primarily by European, Middle Eastern, and Caribbean banks. New Zealand hasn’t adopted IBANs, so Kiwis don’t need to provide one when receiving funds (use the SWIFT code and account number instead).

SWIFT codes for major New Zealand banks

We’ve compiled a cheatsheet of the SWIFT codes for the biggest banks in New Zealand. Kiwi SWIFT codes must be 8 or 11 digits.

• ANZ: ANZBNZ22XXX
• KIWI Bank: KIWINZ22XXX
• TSB Bank: TSBANZ22XXX
• Rabobank: RABONZ2WXXX
• BNZ: BKNZNZ22XXX
• ABS: ASBBNZ2AXXX
• Westpac: WPACNZ2WXXX

The 8-digit New Zealand BIC code comprises a 4-digit bank code, a 2-digit NZ country code, and a 2-digit location code. This shorter SWIFT code is often enough.

The “XXX” signifies the primary bank branch to form an 11-digit BIC code, which is sometimes required. Although rare, recipients sometimes send a specific branch number instead of “XXX” to finish an 11-digit SWIFT code.

How to send an overseas telegraphic transfer from New Zealand

While we no longer erect telegraph poles, in-person or over-the-phone transfers are still possible in New Zealand, albeit with additional fees. Most Kiwis save time and money by doing them online.

1. Gather the recipient’s details (see below)
2. Log in to your online banking portal or app
3. Find the international transfer page
4. Enter the transfer amount
5. Review the fees and exchange rate
6. Click confirm to send your transfer

What is required to send a telegraphic transfer from New Zealand?

You’ll need to gather some details from the recipient before sending an international transfer.

• Full name (as per bank account)
• Address
• Account number or IBAN
• SWIFT/BIC code
• Bank name
• Branch address
• Purpose of the transfer, such as invoice or remittance (sometimes required)

When receiving a telegraphic transfer, simply provide the same information to the sender. Savvy business owners put these details on their invoices.

Drawbacks of sending telegraphic transfers

Although telegraphic transfers have evolved since the days of Morse code, there are still a few downsides to consider.

• Speed: While some telegraphic transfers occur instantly, many take between 1 and 5 business days to finalise.
• Requirements: The receiver must provide the sender with complex account and personal details. Any errors could result in delayed or lost payments.
• Irreversibility: Once funds have been sent offshore, the international transfer is virtually impossible to reverse.
• Cost: Multiple fees and high hidden FOREX charges often leave the recipient with less than expected.

Costs involved when making a telegraphic transfer

Senders get stung by a slew of fees and markups, substantially reducing the final payment amount for the receiver. Working out exactly how much a telegraphic transfer will cost is tricky because of undisclosed fees and hidden FOREX markups.

While fees vary by bank and currency, most traditional SWIFT transfers cost between 3% and 8% of the total transfer amount.

International transfer fees

First up, the sending bank will typically charge a transfer initiation fee, usually $30 or less. Some banks, such as ANZ, waive this charge when using the ANZ GoMoney mobile app or internet banking.²

Currency conversion markups

The sending bank typically converts NZD to a foreign currency, or vice versa, before sending it across borders.

Instead of using the mid-market exchange rate you see on Google, most banks markup the conversion and keep the change. This hidden commission isn’t disclosed upfront and can amount to 1-4% of the total transaction amount – a hefty whack for larger transfers.

Intermediary bank fees

When the sending and receiving banks lack a reciprocal agreement, the funds pass through one or more intermediaries. These corresponding “middle-person” banks also charge their own fees, typically between $10 and $30 per bank.

Intermediary fees aren’t usually stated upfront as they vary by currency and routing path.

Receiving international payment fees

Before funds finally hit the recipient’s account, the receiving bank charges an incoming SWIFT transfer fee, often around $10 or $20. BNZ, for example, charges $10 for receiving international transfers.³

Wise Business: Smarter Way to Make International Payments

Kiwis sending money across borders may find Wise Business offers a faster, simpler, and more cost-effective alternative to SWIFT telegraphic transfers.

Senders pay a low and transparent transfer fee while also ensuring conversion isat the mid-market exchange rate with no hidden markups. Our transparent pricing policy means you’ll know exactly what a transfer will cost you upfront – no hidden surprises.

Wise Business helps streamline overseas business payments without foreign transaction fees, saving up to 6x compared to other providers.

• Free to register — Send money to 140+ currencies with no hidden exchange rate markups
• Make up to 1,000 transfers at once with the Wise batch payments feature
• Fast, low-cost payouts to customers, freelancers, employees, investors, and suppliers globally
• Automate invoice payments, recurring transfers, and international payroll
• Fast and fully secure payments through Wise, even for large amounts

Tired of hidden fees and complex processes when making overseas payments?

Start sending with a Wise Business account! 🚀

This general advice does not take into account your objectives, financial circumstances or needs and you should consider if it is appropriate for you.

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Frequently Asked Questions

1. Is a telegraphic transfer the same as a standard bank transfer?
The term telegraphic transfer usually refers to an international bank transfer. Other synonyms include wire transfers, SWIFT transfers, T/T or TT payments, and telex transfers.

2. How long does a telegraphic transfer typically take to arrive?
The telegraphic transfer can take 1 to 5 business days to finalise. However, most international transfers take 3 to 5 business days. Bank operating hours and public holidays may affect the timeframes.

3. Do I need a SWIFT/BIC code to send money overseas?
Yes. When doing an international bank transfer, you need a SWIFT/BIC code to send funds to the correct financial institution. Some countries, particularly those in Europe, use IBAN codes.

4. What fees are involved in a telegraphic transfer?
Typical TT fees include a sending bank fee, a FOREX markup, an intermediary fee (if required), and a receiving bank fee.

5. How can I avoid international bank transfer fees?
Some banks may waive the initial international transfer fee. An alternative service like Wise Business could help you avoid FOREX markups, intermediary bank fees, and receiving fees.

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Sources:

1. Western Union: Fascinating things about WU history
2. ANZ: International money transfers
3. BNZ: Rates and fees