What is a Bank Giro Transfer
A bank giro transfer is a method of transferring money by instructing a bank to directly transfer funds from one bank account to another without the use of physical checks. Bank giro transfers are predominantly used in European countries, such as Germany, Austria, the Netherlands, and Sweden, as well as in Asia. In these cases they are seen as an effective way for companies to receive payments from foreign customers.
A bank giro transfer is also known as a "Giro credit".
BREAKING DOWN Bank Giro Transfer
The bank giro transfer was developed to help companies increase their ability to receive payments on the goods and services that they provide. Customers can pay using a giro transfer either through the mail or online. Giro transfers have become a more accepted payment method than checks as they provide security when lost or stolen. Giro transfers can be processed more quickly than a standard check.
The term “giro” has Dutch, German, and Italian roots and means “circulation of money.”
Example of a Bank Giro Transfer
In a bank giro transfer the one sending the funds (paying party) sends a request to the entity, to whom it is forwarding the money. This request is sent to the giro center. The giro center verifies the funds are available in the paying party’s account, then immediately debits them. The giro center simultaneously credits the same amount to the payee’s account. A transfer document is sent to the recipient of the funds, along with updated account statements to both parties. In some cases recipients receive hundreds of payments daily – e.g. a large utility company, processing residential and consumer bill payments. In most cases, giro transactions are electronic, often using singular reference numbers.
New Methods of Payments (in Addition to Bank Giro Transfers)
Many consumers In the United States and worldwide use forms of online payments. While the giro transfer is a common form, other forms of payment, in addition to physical checks, include electronic checks (along with online banking more broadly), debit cards, mobile payments (in a range of app forms), and others. The Automated Clearing House (ACH) network has helped promote the efficiency and security of payroll, direct deposit, tax refunds, consumer bills, tax payments and many more services.
Digital wallets have also become increasingly popular. These systems securely store users' payment information and passwords for numerous payment methods and websites. Digital wallets also allow many in developing nations to participate more fully in the global financial system. Digital wallets allow participants to accept payments for services rendered, as well as receive funds or remittances from friends and family in other nations.