What is a wire transfer: A thorough overview

A wire transfer is an electronic method of moving money between two banks or credit unions. They can be either domestic or international. 

In this article, we’ll show you what is a wire transfer, how do they work, their fees and more.

As wire transfers can get fairly pricey, you may want to find out about cheaper alternatives, like Wise. It can help you save up to 6x compared to banks – but more on this later.

What is a wire transfer, exactly?

Wire transfers are a way to move money from one bank or credit union to another electronically. That means there’s no need to handle cash or a check. 

You may not even need to visit your bank in person to set up a payment, if you have online banking. 

Electronic transfers like these are usually arranged using the SWIFT¹ (Society for Worldwide Interbank Financial Telecommunication) or Fedwire² networks. 

These networks allow banks to securely transmit messages and money both domestically and internationally.

SWIFT payments can be fairly slow and costly, as they involve several banks working together to pass the payment along - much like a series of connecting flights to get to a destination. 

However, each bank involved can deduct a handling fee if they choose to, which can lead to extra charges.

How does a wire transfer work?

You’ll often be able to set up your wire transfer via your online banking system - although some banks may still require you to visit in person and hand over details in a branch.

Usually, the information needed is quite similar, regardless of who you bank with. For example, Bank of America’s required information includes⁴:

• Account number of recipient
• Name of the recipient
• Address / zip code of the recipient
• Wire transfer routing number
• SWIFT code for international transfers

Depending on where you’re sending money to, you might also need to provide additional details such as the source of funds or reason for payment, to comply with the laws in your destination country.

How much does a wire transfer cost?

It’s common for banks to charge for sending and receiving wire payments. The exact fee will depend on your bank and account type. 

Incoming wires may cost around $15, with outgoing domestic wires $20-$30, and outgoing international wires more costly again, at around $30-$50.⁵

Remember, you may be charged an even higher fee - including interest and a cash advance charge - if you fund your wire payment with a credit card.

How to save money on wire transfers?

For international payments, you may want to try out Wise. Wise is a modern way of sending money abroad, which doesn’t come with the overheads of the SWIFT system. 

That means that sending money with Wise - and using the Wise account to send and receive payments - can be cheaper than regular wires. You can save up to 6x compared to regular banks. 

It takes just a couple of minutes to get a free Wise account – try it today! 

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💡 If you need to manage local and international business payments, you can also open a Wise Business account.

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How fast are wire transfers?

Usually, domestic wire payments are completed on the same day they are arranged, as long as the wire is initiated before the day’s cut off time.

That said, it can take several hours for the funds to show up in the recipient’s account, depending on the recipient bank’s own processes.

International wire transfers are more complex, and so tend to take a little longer. When sending an international wire via SWIFT or Fedwire, your payment will often need to pass through several correspondent banks - also known as intermediaries - before being received³. 

This process can take a few working days, depending on the procedures and cut off times of each intermediary bank.

How safe are wire transfers?

Wire transfers are fairly safe, because banks have to confirm the identity of their customers when they open an account. You’ll need to double-check you have the correct account information before you send a wire transfer.

And naturally, be wary of anything unusual about the payment - fraudsters are sophisticated, and you can still be caught out even with a relatively safe method of transmitting money.

Wire transfer alternatives 

If a wire payment isn’t the right option for you, you have a few other alternatives. Let’s take a quick look at the most popular.

Money Transfer Services

Another way to make a payment to someone is to use a money transfer service like Western Union and MoneyGram. These services may allow you to make a payment directly from your bank account, into the account of another recipient. In that way, they look similar to a regular wire. However, it’s worth noting that there may be additional fees compared to a wire arranged directly with your bank, which you’ll need to check.

Western Union, for example, notes that you may pay additional bank fees for funding payments through a bank wire, and the payment may not be allowed if it originates from a business account.⁶

ACH transfer

ACH transfers are used in many situations - when employers pay salaries, or when you get a tax refund, for example⁷. ACH payments are electronic payments, similar to wire transfers, but the transfer must clear before it is accessible by the recipient. This means it may take longer than a wire - although fees are usually lower, or even free.⁸

Apps and peer-to-peer payment methods

Other quick and easy ways to send money include peer to peer payment options like Venmo⁸ and PayPal⁹. You may also want to look at specialist payment providers and apps, such as Wise, for low cost international transfers.

Venmo offers payments between people based in the US, with a local US cell number¹⁰. PayPal can provide both domestic and international payments, but the fees for making a cross border payment are complex and fairly high.¹¹

If you want to send money to someone based abroad, it’s smart to shop around as there are many providers, offering varying fees. Check out the Wise account as a simple way to hold foreign currencies, and send and receive payments. 

This can work out much cheaper than sending regular international wires, or using an alternative provider. At Wise, we never hide extra fees and charges in the exchange rate. We just use the mid-market exchange rate. That means fair, cheap money transfers, every time.

Wire transfers may be a good choice - particularly if you’re sending money domestically, and need the payment to be received quickly. Right now, 45% of our transfers are instant money transfers. It’s worth investing some time in research before you get started, to make sure you know the fees you’ll need to pay, and find the best deal available for your payment.

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Sources checked on 8 April 2022