What is a 'Wire Transfer'

A wire transfer is an electronic transfer of funds across a network administered by hundreds of banks around the world. Wire transfers allow for the individualized sending of funds from single individuals or entities to other individuals or entities, while still maintaining the efficiencies associated with the fast and secure movement of money. Wire transfers allow people in different geographic locations to safely transfer money to locales and financial institutions around the globe.

BREAKING DOWN 'Wire Transfer'

A wire transfer is used to transfer funds from one bank or financial institution to another. These transfers are considered remittance transfers under U.S. law. However, since the inception of wire transfers, the term has also come to represent any electronic transfer of money from one person to another.

No physical money is transferred between banks or financial institutions when conducting a wire transfer. Instead, information is passed between banking institutions regarding who the recipient is, what his bank account number is and how much money he is receiving. Nonbank wire transfers sometimes do not require bank account numbers.

The sender of a wire transfer first pays for the transaction up front at his bank. The recipient's bank receives all the necessary information from the initiating bank and deposits its own reserve funds into the correct account. The two banking institutions then settle the payment on the back end, after the money has been deposited. This is why no physical transfer is made during a wire transfer.

Types of Wire Transfers and Associated Costs

All legitimate wire transfers take two days or less to process, on average. If an electronic form of payment takes longer than a few days, it is not a true wire transfer. A domestic wire transfer is processed on the same day when it is initiated and can be received within a few hours. International wire transfers can be expected to be delivered within two business days.

The reason for the two differing lead times comes from the use of domestic Automated Clearing Houses (ACH) and foreign processing systems. A domestic wire transfer only has to go through a domestic ACH and can be delivered within a day. International wire transfers must clear a domestic ACH and also its foreign equivalent, adding a day to the process.

Wire transfers cost money to initiate, regardless of whether they are domestic or international transfers. Some providers of domestic wire transfers charge as little as $25 per transaction, but the fee can get as high as $35 or more. International wire transfers sometimes have a higher fee; it's possible to pay upwards of $45 to initiate an international wire transfer.

RELATED TERMS
  1. Bank Wire

    An electronic message system allowing major banks to communicate ...
  2. Transfer

    A change in ownership of an asset, or a movement of funds and/or ...
  3. Current Transfers

    A current account transaction in which a resident entity in one ...
  4. Email Money Transfer - EMT

    A retail banking service that allows users to transfer funds ...
  5. Transfer Tax

    Any kind of tax that is levied on the transfer of official documents ...
  6. Book Transfer

    The transfer of funds from one deposit account to another at ...
Related Articles
  1. Investing

    Best Ways to Send Large Sums of Money Abroad

    Understand why it may be difficult to send large sums of money internationally. Learn about the top five ways to send large sums of money abroad.
  2. Personal Finance

    8 Low-Cost Ways To Transfer Money

    If cost is your primary concern, there are several cheap(er) ways to move funds.
  3. Investing

    5 Money Transfer Tips For Foreign Workers

    If you are working in the U.S. as a foreign worker, here are some tips for sending money back home.
  4. Personal Finance

    How Credit Card Balance Transfers Work

    The pros and cons of credit card balance transfers.
  5. Personal Finance

    Sending Money? The Top Money Transfer Services

    Need to send money in a hurry? Here's a list of the major players in the money transfer business. Compare rates, times and other details before deciding.
  6. Investing

    Breaking Down Energy Transfer's Corporate Anatomy (ETE, ETP)

    Recently, Energy Transfer Partners (NYSE: ETP) and its general partner, Energy Transfer Equity (NYSE: ETE), completed the announced merger with Regency Energy Partners, a move that was designed ...
  7. Personal Finance

    The Credit Card Balance Transfer Trap

    Before you transfer a balance to a credit card with a lower interest rate, know how it affects new purchases and other fine-print traps that can cost you.
  8. Personal Finance

    3 Best Credit Cards for Balance Transfers in 2016

    Find out which credit cards offer the best balance transfer opportunities in 2016, including the longest introductory periods and the lowest costs.
  9. 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.
  10. Managing Wealth

    Review: Discover Checking Account

    Will having a Discover checking account save you money? It will save you fees.
RELATED FAQS
  1. How liquid are BlackRock mutual funds? (BLK)

    Discover if BlackRock mutual funds are liquid. Learn about the available payment options and how long it takes for a payment ... Read Answer >>
  2. How do you transfer common stock from one broker to another?

    Understand how common stock assets are transferred from broker to broker using the Automated Customer Account Transfer Service ... Read Answer >>
Trading Center