What is a wire transfer?
Updated 5:13 a.m. UTC Jan. 25, 2024
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A wire transfer is a way to send and receive money securely anywhere in the world. Whether you’re making a down payment on a house or sending money to family abroad, a wire transfer can be quick and easy. Yet there are drawbacks, including costly fees and no margin for error—if you get something incorrect, the wrong person may get the cash and there’s little chance of getting it back.
What is a wire transfer?
A wire transfer is a type of electronic payment that moves funds between two different accounts. It can be used for personal or business purposes. Wire transfers can be sent to domestic or international accounts. You can either send directly through your own bank or use a nonbank provider such as Walmart or MoneyGram.
There’s typically a fee to send wire transfers even when using your own bank. On the plus side, however, wire transfers offer a degree of security.
“Wire transfers are a secure method of sending money, as they are processed through a secure network and typically require multiple layers of authentication to complete,” said Tommy Gallagher, a former investment banker and founder of digital banking site TopMobileBanks.
How does a wire transfer work?
Before sending a wire transfer, you must know where and to whom the money is going. Required information for transfers includes:
- Recipient: name and contact information.
- Destination: bank information or physical address.
To send a wire transfer to a bank, you’ll need the recipient’s bank account number and routing number if the bank is domestic (or the SWIFT BIC number if it’s international). For certain countries you may also need the International Payments System Routing Code. The wire transfer company will prompt you for the code if you do need it and the receiving bank should provide it when asked.
For wire transfers to nonbanks—businesses like Western Union or CVS—you’ll also need the recipient’s name and address, which will be the pickup location.
About wire transfers
Wire transfers are a fast and secure method of payment between two parties—people, businesses or even governments. Unlike a check, which can take a week to clear, the funds from a wire are confirmed and usually withdrawn as the transfer is initiated.
There are strict rules surrounding wire transfers and very little room to make changes once the transfer has been initiated. It’s important to ensure the recipient’s details are correct because wire transfers cannot be canceled. If you make a mistake or fall prey to a scam involving wire transfers, there is little to no recourse for recovering your funds.
If you do encounter a problem, contact the wire company right away. You can submit a complaint to the Consumer Financial Protection Bureau (CFPB) if things go awry and aren’t corrected.
If you’re in the U.S. and wiring money to a person or business in another country, you have some minor protections under federal law. You have up to 30 minutes to cancel the wire if the cash hasn’t been picked up. This only applies though if you use a remittance transfer company—a business that provides at least 500 wire transfers in a calendar year.
When should you use a wire transfer?
There are a few common scenarios when a wire transfer is a good option for sending money.
“Wire transfers are often used for large business transactions such as buying real estate, paying for equipment or settling large debts,” said Andrew Lokenauth, expert at Fluent in Finance.
That way you don’t have to worry about sending physical cash or worrying if a check will bounce.
Another time to use a wire transfer is for international transactions, whether sending money to family abroad or purchasing real estate overseas. “[T]hey offer a fast and secure way to move money across borders,” he said.
Different types of wire transfers
Domestic wire transfers. The sender and the receiver are in the same country. In the U.S., domestic wires have few federal protections.
International wire transfers. A wire is international you’re wiring money to a person or business in another country,
Remittance wire. This is when you use a company that provided more than 500 wire transfer services in the last calendar year and will provide 500 this year in the natural course of its business. This can include large banks and companies—businesses for which wire transfers are its main service and for which wires make up only a small percentage of their income. Think TransUnion and Walgreens.
Pros and cons of wire transfers
| PROS | CONS |
|---|---|
Fast delivery times
| Costly fees
|
Secure payments
| No room for error
|
Potential limits
|
Pros of wire transfers
Wire transfers come with a few advantages to consider.
Fast delivery times. You don’t have to wait days for funding when using wire transfers, particularly when sending money domestically. International funds could arrive within minutes or take a few days, depending on the financial institutions involved and compliance requirements.
Secure payments. Unlike a check, wire transfer funds are immediately confirmed and withdrawn. They can’t be canceled, so there’s no risk of suddenly losing money you are owed by someone else.
Cons of wire transfers
There are, of course, some drawbacks to consider as well.
Costly fees. The median fee to receive a domestic wire transfer is $5, while the median fee to send one is $25. For international wire transfers, those numbers jump to $25 and $50, respectively.
No room for error. If you accidentally input the wrong account number or routing number, your wire transfer could be sent to the wrong person or business. If this happens, you typically have no ability to cancel or request a refund. It’s important to double and triple check the recipient details to make sure the funds arrive where they’re supposed to go.
Potential limits. While wire transfers can be a safe way to send or receive money, they’re not always available. “Not all banks offer wire transfer services, and some countries may have restrictions on incoming wire transfers,” said Gallagher.
Alternatives to wire transfers
Looking for other ways to send money? Here are some options to explore.
Mobile wallet. Apps and digital payment networks, sometimes called peer-to-peer payment platforms, allow you to send money between accounts on the same platform. Transactions are usually immediate, but fees can apply and there is a limit on how much you can send. Examples include Zelle, Venmo, PayPal, Apple Pay, Google Pay and Samsung Pay.
ACH transfer. You can set up an automated clearing house (ACH) transfer to an individual or business using the same bank account information as you would need for a wire transfer. This option is slower, but ACH transfers can be reversed or stopped if an error is made.
Money order. Money orders are available at most post offices, grocery stores and pharmacies and cost as little as $1. They tend max out at $1,000 and only the named recipient can cash it.
Cashier’s check. You can request a cashier’s check from your bank or credit union. The fee is typically $10 or more and it essentially certifies the funds so the recipient knows the check won’t bounce. The bank can send on your behalf or you can get a physical check and deliver it yourself.
Frequently asked questions (FAQs)
An ACH is slower than a wire transfer, taking a few days to complete rather than 24 hours or less. Additionally, an ACH transfer can be stopped or reversed, which is not possible with a wire transfer.
A domestic wire transfer is sent between two bank accounts within the same country.
Typically, both parties pay separate fees to their bank for the wire transfer. The sender pays an outgoing wire transfer fee while the recipient pays an incoming wire transfer fee. The cost is usually higher for international transfers than domestic ones.
Your bank first receives the wire transfer funds then deposits the money into your account. If a fee is charged, that amount will be deducted from the funds.
A domestic wire transfer is typically completed within 24 hours. An international wire transfer may take several days, depending on the country and the recipient’s account.
Wire transfers are generally considered a safe form of payment. There is no risk of the money getting lost or stolen as there would be when using cash or a check. On the other hand, there is a risk of making a mistake and being unable to recuperate the funds if you accidentally send them to the wrong account.
You will need basic contact information for the recipient, as well as their bank account number and routing number. For accounts outside the U.S., you’ll need the bank’s Society for Worldwide Interbank Financial Telecommunication (SWIFT) number.
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