Wire Transfers – How Do They Work, and How Long do They Take?

By
Writers@Aspire
Published
August 5, 2022

When businesses need to send money, they usually make a wire transfer. A wire transfer is a favoured mode of payment because it is fast, secure, and easy to use. It is especially preferred when the amount to be moved is large, urgent, or has to cross international borders.

In this guide, we tackle the meaning of wire transfer, how a wire transfer works, and how it compares to other payment methods.

Wire Transfer Meaning

What is a wire transfer? It is an electronic transfer of funds between people or businesses. A wire transfer involves a sender and a recipient, and it is facilitated by one or more banks or non-bank money transfer service providers. The sender must pay the money up front, either from their bank account or in cash. Besides that, there is no physical exchange of cash in a wire transfer. Rather, the financial institutions involved exchange information, such as the amount to be transferred and the recipient’s bank account details.

A wire transfer – also called an over-the-wire transfer – can be both a bank-to-bank transaction and a non-bank transfer. An overseas bank transfer, for example, is a common type of wire transfer.

Wire transfers can also be domestic (sent and received in the same country) or international (sent from one country and received in another).

What is the SWIFT network?

That takes care of what wire transfer is. But how does it work? In a wire transfer, money moves between the financial institutions through networks such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT) or Fast and Secure Transfers (FAST, which is Singapore-specific) among others.

The SWIFT network is a secure messaging service used by financial institutions to exchange information, including instructions for wire transfers. It counts 11,000 institutions across 200 countries as its members, making it a universally-accepted network for international wire transfers. Organisations that use SWIFT are assigned a unique code with eight or 11 characters. This is called the Business Identifier Code (BIC), commonly referred to as the SWIFT code.

As for FAST, it is an electronic money transfer service in Singapore that helps customers of its member banks and non-bank financial institutions move funds locally in Singaporean dollars almost instantly, seven days a week and 24 hours a day (though this might be subject to the specific timings of financial institutions). It allows transactions of up to SGD 200,000 at a time, subject to the customer’s daily or monthly withdrawal limits.

How does a wire transfer work?

Let’s say a company with a global footprint needs to make an urgent overseas bank transfer. In order to wire the money, it must:

  1. Choose a financial institution to facilitate the transfer. This choice usually depends on how fast the institution can wire the money, what their charges are, and how easy the process is.
  2. Gather information. This includes the company’s own bank account number and the recipient’s name, contact details, bank account number, and SWIFT code. 
  3. Fill up and submit the wire transfer form, which can be done online or offline.   

Once the wire transfer is put into process, the initiating institution sends payment instructions to the receiving institution, which deposits the amount in the recipient’s bank account. The two institutions then settle the payment among themselves. In the case of some international payments, the transfer chain can include up to three or even four financial institutions.

How long does a wire transfer take?

While money transfers made over the wire are a fast way of moving money, they can take some time. That’s why it is important to have a fair idea of the transmission time before sending an urgent wire.

  • Domestic wire transfers: Transfers between FAST institutions are almost immediate. But in the majority of cases, domestic wire transfers usually take 24 hours. They are processed on the same day they are submitted and the money reaches the recipient the next day within a 24-hour time frame.
  • International wire transfers: Moving money across international borders naturally takes longer. While the request might be approved the same day, it might take up to 5 business days for the money to reach the recipient. Transfers between accounts held in the same financial institution are faster though and might even be completed within 24 hours.

What information is needed for a wire transfer?

A wire transfer typically requires the following information:

  • Sender’s full name and phone number.
  • Recipient’s full name, phone number, address, bank name and address, bank account number and account type (savings, current, etc).
  • For international transfers – Recipient’s BIC/SWIFT code and/or International Bank Account Number (IBAN). The BIC is a universal identifier for banks and other financial institutions. The IBAN is an alphanumeric code with up to 34 characters that identifies individual bank accounts for the purpose of sending and receiving cross-border payments.

The chosen financial institution might request additional information from the sender such as a government-issued ID (passport, driver’s licence), email address, proof of address (recent utility bill, bank statement), proof that they are the holder of the bank account from which the funds will be sourced, and the reason for the transfer.

What impacts wire transfer speed?


To make sure a wire transfer is completed at the earliest, the sender (and recipient) must pay attention to certain factors:

  • Holidays: These include bank holidays, national holidays, and even weekends when most financial service providers are closed.
  • Cut-off time: Most financial institutions have a daily cut-off time after which they do not process wire transfer requests. Cut-off times for same-day transfers vary from bank to bank. In Singapore, a bank might also have different cut-off times for transfers to different countries. The sender must pay attention to these daily timings if they want their transfer request to go through  on the same day.
  • Errors: Those who initiate a wire transfer are advised to take their time filling up the transfer form so as to avoid errors. The wrong SWIFT code or even an incorrectly spelled name can lead to the request being held up or rejected. The recipient, too, must take care to provide correct information to the sender or they will not receive the money on time.
  • Destination: Some international transfers take much longer than others, sometimes even a few weeks. This is because some countries have slower processing systems due to time zones, currency exchange issues, and local banking regulations regarding wire transfers, such as limits on the transfer amount. It helps to ask your bank for a list of countries that are slow to pay and be prepared for what’s to come. Additionally, for a wire transfer to get to a far-away destination, it might have to go through one or more financial intermediaries. This will, naturally, make the transmission period longer.
  • Others: Wire transfer speed can also be impacted by availability of funds, system outages, recipient institution’s processing rules, method of transfer (bank-to-bank is faster than most other methods), and so on.     

Wire transfer fees and how to keep them low

Wire transfers don’t exactly come cheap because they attract a processing fee. An overseas bank transfer in Singapore, for example, attracts a fixed transfer fee that averages SGD 20. Additionally, there might be a handling commission that differs according to the amount being transferred, as well as an agent bank charge imposed by the recipient institution. Charges for non-bank wire service providers are different and also depend on the transfer amount and how the wire is funded (through the sender’s bank account, credit card, or debit card). Many also offer loyalty points, which can be redeemed and used to lower the processing fee. It’s important to know all these factors before making a transfer.

Here are some more tips on how to wire money in the most cost-effective manner: 

  • Send your money in one lump sum rather than in multiple smaller tranches to save on processing fees. Fees can add up when the transaction passes through multiple intermediaries. 
  • Provide correct information to prevent a cancelled request. Retrieving funds held up due to an error can be expensive as well as lengthy. Also, many financial institutions offer customers a special rate, which is not guaranteed when they make a fresh transfer request. 
  • When sending money in a foreign currency, it is important to keep an eye on exchange rate fluctuations. Furthermore, most banks assign a fixed exchange rate upfront and might add an exchange fee. Looking at other financial service providers might help the sender get a lower exchange rate or avoid the exchange fee.

Aspire helps businesses manage their international payments smoothly by offering competitive foreign exchange rates, transparent fees that are up to four times lower than those charged by banks, and advanced spend management tools to manage all global expenses on one platform.  

Can a wire transfer be cancelled?

Because they are taken up almost immediately, wire transfers are almost always irreversible. However, in international transfers, the sender might be able to get a transfer request cancelled if done within 30 minutes and if the money hasn’t been deposited or it hasn’t already been claimed by the recipient.

Wire transfer versus telegraphic transfer

What is wire transfer, and how is it similar to or different from a telegraphic transfer?

This question often arises because the two terms are used interchangeably due to their shared history. In the 1990s, banks transferred money internationally via telex – a network of electronic machines that used text-based messages to communicate. Such a transaction came to be known as a telegraphic transfer, telex transfer, TT transfer, or simply TT. With technological advances, the old system gave way to the new system. But to this day, a wire transfer continues to be called a telegraphic transfer or TT transfer, even if the two aren’t exactly the same.

Alternatives to wire transfers

1. Cheques: In Singapore, cheques are cleared under the Singapore Automated Clearing House (SACH) system. Under SACH, both SGD-denominated cheques and USD-denominated cheques drawn on Singapore banks are processed. Universally, automated clearing house (ACH) transfers are slightly different from wire transfers because they are processed in daily batches while wire transfers are processed individually and quite often immediately.

2. Interbank GIRO transfers

The Interbank GIRO (IBG) System in Singapore allows businesses to make and receive one-time and recurring payments through its network of participating banks. Its greatest benefit is that you can set up your GIRO transactions just once and not worry about forgetting to pay your monthly bills. This makes GIRO transfers especially useful for regular payments that are also of a fixed amount. A GIRO transfer involves three parties – the customer, their bank, and a billing organisation. Those who wish to use GIRO must apply for it by filling up the GIRO Direct Debit Authorisation form and submitting it to the billing organisation, which will approve it. GIRO transfers are reportedly cheaper than FAST transfers.

How long do different money transfers take? 

  • Cheques: Compared to a wire transfer, a cheque takes longer to clear. For example, if a Singapore bank processes a FAST transfer immediately or within 24 hours, it might take up to two working days to clear a cheque.
  • GIRO transfers: The transfer takes one day to five days to clear, making it slower than a wire transfer under FAST, which prides itself on being instantaneous.
  • Wire transfer: 24 hours (domestic) and 1-5 days (international). FAST transfers can be instantaneous at times.

Conclusion

Now that we’ve discussed in detail what is a wire transfer, we know that it is a reliable, convenient, and fast way of getting money to any corner of the world. It comes for a price. But knowing that the money will get to its destination securely and on time is worth the expense.

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