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.

RELATED TERMS
  1. Transfer

    A change in ownership of an asset, or a movement of funds and/or ...
  2. Book Transfer

    A book transfer is the transfer of funds from one deposit account ...
  3. Transfer Price

    Transfer price is the price divisions within a company used for ...
  4. Balance Transfer Fee

    A balance transfer fee is an expense charged in return for the ...
  5. Instructing Bank

    An instructing bank is one of the banks that plays a role in ...
  6. Electronic Funds Transfer Act

    The Electronic Funds Transfer Act is a consumer protection law ...
Related Articles
  1. Personal Finance

    How Credit Card Balance Transfers Work

    The pros and cons of credit card balance transfers.
  2. Tech

    Best Ways to Send Money to the Phillipines

    When you need to send funds to friends or family in Metro Manila or elsewhere in the Philippines, these four services make it fast and simple.
  3. Tech

    5 Money Transfer Technologies And Their Risks

    New technology makes cash swaps simple, but are the risks worth the convenience?
  4. Managing Wealth

    Review: Discover Checking Account

    Will having a Discover checking account save you money? It will save you fees.
  5. Insights

    Mobile Money: Using Your Cell Phone To Transfer Funds

    Are you up to date on how easy it is to move your money around with your cell phone?
  6. Personal Finance

    Sending Money: MoneyGram vs. Western Union (WU, MGI)

    Comparing the differences between the services – and the fees.
  7. Taxes

    4 Ways To Minimize Estate Taxes

    These four strategies will ensure that most of your money goes to your loved ones, and not to the government.
  8. Insights

    How Online Banking Is Overtaking Traditional Banking

    Is traditional banking doomed to be surpassed by online banking?
  9. Tech

    Mobile Payments Could Replace Cash By 2016

    Could paper money be replaced by mobile payments in the near future?
Trading Center