25 September, 2024
Synopsis:
- A wire transfer is an electronic method to send money quickly and securely, often used for international transactions.
- It works through networks like SWIFT, where instructions are sent between banks to transfer funds.
- HDFC Bank offers convenient wire transfer options for both domestic and international transactions.
What Is Wire Transfer & How Does It Works?
Wire transfer is used to send money quickly from one location to another. In this article, you can get information on what a wire transfer is and how it works.
Wire Transfer - Meaning
A wire transfer is an electronic way to transfer money. It is also known as a bank transfer. Wire transfers have several advantages. This mode of transfer is fast and secure. A wire transfer happens from one bank to another. Typically, wire transfers are associated with overseas money transfers. They are also used to send money to India from abroad.
For instance, let’s say you stay in the United States (US) and your parents stay in India. You can send money to your parents from the US to India via wire transfer. Also, let us say an Indian student is studying abroad. The student’s parents can send money using the wire transfer service.
How Does a Wire Transfer Work?
We have now answered the question “what is a wire transfer?” Now, let us take a look at how the service works. In the past, banks used telegraphic wires to transfer money. This is how the term wire transfer was coined.
The most common way of wire transfer is through the SWIFT or Society for Worldwide Interbank Financial Telecommunication network. The SWIFT network is a messaging protocol. It has over 11,000 banks in 200-plus countries in its network. This network is used to send information from one bank to another. It also includes instructions for wire transfer.
Let us say a person in the US goes to Bank A. He wishes to transfer some money to India. The account he wants to transfer money to is with bank B. Bank A sends transfer instructions to Bank B. These instructions would include data. Firstly, the recipient’s name and bank account number. It will also have information regarding the transfer amount. Such instructions may not be directly sent from one bank to another. They may be sent via an intermediary bank. One needs to understand that there is no actual transfer of money. The money is deducted from the sender’s bank account. It is then added to the recipient’s bank account. That’s how wire transfer works.
Wire transfers are mostly used to send money overseas. Domestic wire transfers take a day. International wire transfers may take up to five days or even more.
What is Needed for an International Wire Transfer?
Here are the essentials needed to initiate an International Wire Transfer:
The recipient’s full name and address
The amount of the wire transfer
Name and address of the recipient’s bank
Recipient’s bank account number and account type
Recipient’s bank routing number
Recipient bank’s SWIFT or BIC code (when applicable)
Reason for the transfer
Costs Involved
Wire transfer involves certain costs. The remittance charges are mostly nil. The remitting or intermediary bank may levy a fee. There is a foreign currency conversion charge, which is a flat fee. Service tax is also levied. The service tax is a percentage of the total amount. It varies between 1 per cent and 0.1 per cent of the transferred amount.
Wire transfers are thus quick, convenient, and safe. Wire transfers make sending money abroad a breeze.
*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
