Since the dawn of human civilization, people have bartered and exchanged money for goods and services.
When electronic communication became a reality with the telegraph, wire transfers were introduced in 1871. For the first time in history, money could be electronically exchanged around the world.
Today, wire transfers remain a popular tool in our economy. In this brief article, we’ll explain how wire transfers function, what they cost, and how effectively they send money from one electronic destination to the next.
Here is everything you need to know about wire transfers:
How Wire Transfers Work
Wire transfers provide an efficient way to move money domestically and around the world.
They are frequently used for large transactions like buying a car, helping a family member with expenses, or paying the down payment on a home.
While popular apps like Venmo may sound similar to wire transfer services, they aren’t in the same category. They don’t have the punitive fees generally associated with wire transfers (as we’ll discuss).
So, how does the wire transfer process actually work? Instead of relying on personal checks or cash, wire transfers shift money electronically from one bank to another.
Many wire transfers are facilitated by one of two networks: SWIFT (the Society for Worldwide Interbank Financial Telecommunication) and Fedwire (operated by the United States Federal Reserve). These networks allow banks to wire money both in the United States and around the world.
While the inner workings of wire transfers may seem rather complicated, the process itself is quite simple.
The Speed of Wire Transfers
Domestic wire transfers are typically completed in a single day (and often in just a few hours). Still, it’s recommended to start the transfer process in the morning to allow maximum time for both coordinating banks to complete the transaction.
If you’re wiring money internationally, expect a delay of at least two days.
While each bank is different, the process for sending wire transfers is pretty standard. All you’ll need to do is provide your bank with:
- Your bank account number
- The amount of money you would like to transfer
- The recipient’s name and bank account number
- Your SWIFT code (found on your bank statement or your bank’s website)
To complete the transaction, you’ll need to approve the details and pay the wire transfer fee. While wire transfers are generally very safe, be sure all of the information is 100 percent accurate, as it can be very difficult to recover funds if they’re sent to the wrong account number.
The Cost of Wire Transfers
Despite their efficiency and safety, wire transfers have one major drawback: fees.
While domestic wire transfers have lower costs, international wire transfers can get expensive. For example, though Chase bank charges $25 for outgoing domestic wire transfers, they charge $50 for money sent abroad. Many banks also charge recipients a small fee to receive incoming wire transfers.
There’s one main reason for the fees: every international wire transfer has to be processed by multiple systems. For example, if you send money to a bank account in Madrid, it will have to be cleared by both the U.S. wire transfer system and the one in Spain.
Because companies like SWIFT connect these global banks, they allow each branch to deduct their own fees, which you will have to pay to complete the transaction.
You’ll also need to factor in exchange rates for foreign currency, as the bank that converts your money will likely charge yet another fee.
Sending Money Home with uLink
While wire transfers are great for large transactions, there’s a better and more affordable way to send money to your loved ones abroad.
With uLink, you can skip the wait times and hidden fees and send money home fast. Thanks to our global network, you can send money to over 175,000 locations in over 70 countries worldwide. And with our preferred exchange rates for new customers to select countries and fees starting as low as $0, you can be rest assured that more of your money makes it back home.
Plus, after your 1st, 2nd, and 5th transactions, we’ll send you a $10 gift card to use at your favorite retailers. That’s $30 in gift cards sent right to your email after your first five transactions with uLink.
Miles from home — just moments away with uLink.