What is a telegraphic transfer (TT) and how does it work?

What is a telegraphic transfer?

A telegraphic transfer (TT) – also called a telex transfer – is the electronic transfer of funds from one bank account to another, primarily used for international money transfers. Telegraphic transfers typically travel through the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network, a secure financial messaging system that connects 11,500+ banks and financial institutions across 220 countries.¹

Telegraphic transfers are a convenient fund transfer method – they can be initiated online or in person at a bank. They not only stand out for their convenience and global coverage but are also considered very secure as they are governed by strict regulations, standards, and compliance checks.

Types of telegraphic transfers

A telegraphic transfer can be used to send funds abroad. This is called an outward telegraphic transfer. It can also be used to receive international payments. In this case, it is called an inward telegraphic transfer.

Telegraphic transfer vs wire transfer

The terms telegraphic transfer and wire transfer are often used interchangeably. By most accounts, a wire transfer is a modern interpretation of the term telegraphic transfer. Wire transfer is widely used in the US and Europe whereas telegraphic transfer is the common terminology in the Asia-Pacific region for the same kind of international transaction.

Telegraphic transfers (or international wire transfers) come under a larger grouping called electronic funds transfers (EFT), which also includes debit and credit card transactions, Automated Clearing House (ACH) transfers, direct deposits, and QR code payments among others.

Telegraphic transfer vs ACH transfer

Automated Clearing House (ACH) is an electronic network that processes financial transactions, usually within a country or region. The ACH network is specific to the US but similar networks exist in other parts of the world and go by different names – GIRO in Singapore, SEPA (Single Euro Payments Area) in the Eurozone, BACS (Bankers’ Automated Clearing Services) in the UK, and so on. Unlike telegraphic transfers, ACH transfers are typically domestic and mostly used for bill payments, payroll, etc. They are easy, affordable, and secure although comparatively slower. The ACH network does facilitate International payments in some places or financial institutions but in a limited capacity.

Benefits of telegraphic transfer

Telegraphic transfers are a versatile tool for transferring funds globally, whether it is to pay foreign suppliers, dispatch emergency funds to an overseas branch, or move money intended for investments or acquisition of assets. The key benefits of telegraphic transfers are:

• Convenience: Telegraphic transfers can be made online or in person, requiring just a bank account and a few details
  
• High transaction limit: Businesses can move a large sum of money in a single transaction. Telex transfers offer higher transaction limits than many other payment methods
  
• Security and reliability: Telegraphic transfers offer a high level of security as funds are routed through SWIFT's formal bank-to-bank network, which is fortified by strict standards and regulations. There is no physical handling of cash and funds in transit can be easily tracked
  

How telegraphic transfer works

A telegraphic transfer can be completed in just a few steps:

Step 1: Initiation

Say, you need to pay an overseas vendor. You make a transfer request with your bank by filling up a TT form. On this form, you will need to provide the recipient's bank details and transfer amount (more on this later).

Step 2: Verification and authorisation

Your bank verifies the information provided, authorises the transfer request if it finds everything to be in order, and deducts the amount from your account. The transfer is routed through the secure SWIFT network.

Step 3: Currency conversion and fees

Your bank informs you of the applicable transfer fees and foreign exchange rate, if a currency conversion is required. International transfers often see several intermediary banks involved, so multiple fees and bank charges could apply. The correspondent banks might deduct their fees directly from the payment amount when processing it.

Step 4: Completion

The transfer is completed when the beneficiary (vendor) receives the funds in their bank account.

Information required for telegraphic transfer

While filling up the TT form required to initiate a telegraphic transfer, you will need to furnish the following details to your bank:

• Beneficiary name as per their bank records
  
• Beneficiary bank name and branch address
  
• Beneficiary account number
  
• Beneficiary bank SWIFT code/BIC
  
• Transfer amount and currency
  
• Purpose of transfer (if required)
  

How long does a telegraphic transfer take?

A telegraphic transfer typically takes 1 to 5 business days, with same-day transfers possible on specific routes.

Several factors impact processing time. Here's what to keep in mind to avoid unwanted delays:

• Cut-off times and time zone differences: A TT request submitted after the close of business hours will only be processed the next day, leading to one day lost. Similarly, time zone differences may have a bearing on cut-off times at the receiving bank's end, which can also cause delays
  
• Bank holidays and weekends: If not accounted for, these can cause unnecessary delays in paying foreign suppliers or settling important invoices, causing a strain in business relationships
  
• Incorrect transfer details: Providing inaccurate beneficiary and account details can result in a rejected request or funds being sent back to the sender's bank account with no refund of the applicable transfer fees
  
• Intermediary banks: Correspondent banks can compound processing time delays with their own compliance checks, especially if the transfer involves many such banks
  

Telegraphic transfer fees and charges

A single telegraphic transfer often involves multiple fees, including an arrangement fee charged by the sending bank and separate charges imposed by each correspondent bank. However, the bulk of the cost is at times on account of a foreign exchange mark-up, if the transfer requires a currency conversion. Finally, the recipient can also be charged a fee by their bank for receiving the foreign funds.

To avoid a price shock, it's important to stay informed about the various transfer fees, currency conversion charges, and any hidden fees (such as agent bank charges) involved.

Also remember that fees vary from bank to bank. An example: an outward telegraphic transfer from a DBS Bank Singapore multi-currency business account incurs a 30% fee or 1/8% commission (not less than SGD $10 or more than SGD $120) along with an SGD $35 cable charge.² Meanwhile, OCBC Bank Singapore telegraphic transfer fees for an outward remittance with currency conversion from a foreign currency account include a 1/8% commission (minimum SGD $10, maximum SGD $120) plus agent fee (if applicable), or a fixed fee based on the remitting currency coupled with an SGD $20 cable charge.³

Telegraphic transfer checklist

Paying attention to just these 4 points can save you a lot of trouble when making a telegraphic transfer:

• Don't provide inaccurate information (wrong bank account number, misspelt name, wrong SWIFT code, etc). Take care to verify your information before submitting it to your bank
  
• Ensure your bank account has sufficient funds for the transfer
  
• Be informed about the fees involved, especially charges imposed by intermediary banks that might not be so clear at the onset
  
• Pay attention to the exchange rate and mark-up charged if a currency conversion is required. Compare with mid-market rates to see if your bank is offering you a good deal or if you can do better with another provider
  

Why it pays to make international transfers with Aspire

When it comes to sending money abroad or receiving foreign funds, many Singapore businesses trust Aspire. Here's why:

• Low FX fees and no hidden costs: Starting at 0.22% above mid-market rates, our FX rates are among the lowest in the market. The converted amount and applicable fees are shown upfront, so you don't get a nasty surprise at the end
  
• Fast delivery: Make same-day transfers in 15+ currencies, all from the Aspire app
  
• Multiple currencies: Our multi-currency business account supports 30+ currencies in more than 130 countries, allowing you to make international transactions locally in major foreign currencies without paying FX fees
  

Conclusion

With high-level security, international reach, and high transaction limits, telegraphic transfers are hard to beat as an international money transfer option. But the comparatively high costs and slow delivery times associated with TT payments might not make them a good fit for Singapore small businesses and start-ups. This is especially true when fintechs such as Aspire offer an all-in-one financial services solution complete with multi-currency business accounts, corporate cards, expense management, and budgeting tools while also specialising in fast and affordable international money transfers.

FAQs

What is a telegraphic transfer?

A telegraphic transfer (TT) is an electronic method of transferring funds from one bank account to another, typically used for overseas transfers.

How long does a telegraphic transfer take?

A telegraphic transfer usually takes 1 to 5 business days, although same-day delivery is available on some routes. A telegraphic fund transfer between accounts in the same bank can take minutes even if the sender and recipient are in different countries.

What are the disadvantages of TT payment?

Telegraphic transfers involve multiple fees and can sometimes be comparatively slow, especially if multiple intermediary banks are involved.

How is TT different from SWIFT transfer?

The two are essentially the same as a telegraphic transfer using the SWIFT network. Telegraphic transfer is a more general term for an international bank-to-bank fund transfer.

Is telegraphic transfer safe?

Yes, a TT is considered to be safe as it uses formal bank-to-bank networks with strict regulations, compliance, and security features in place.

Is telegraphic transfer the same as bank transfer?

Yes, because it is used to move funds from one bank account to another.